【2025】The Real Cost of Starting a Business in Japan

"Can I afford to start a business in Japan?"

"What kind of tax do I need to pay when I start a company in Japan?"

"What is the best way to start a company in Japan?"

If you have these questions, this article is written for you.

In this article, we will explain the cost of incorporation/branch office registration in Japan, taxes, and everything about costs you need to know before starting a company in Japan.

This guide breaks down the costs based on the type of company set up—whether it's a joint stock company, a limited liability company, a branch office, or a representative office.

Choosing a suitable business structure

There are mainly 4 different types of business structures you can choose from in Japan:

1. Kabushiki Kaisha or KK (stock company)

2. Godo Kaisha or GK (limited liability company)

3. Branch Office

4. Representative Office (駐在員事務所 Chuzai-in Jimusho)

1. Kabushiki Kaisha or KK (stock company)

Kabushiki Kaisha (KK) is ideal for businesses aiming to raise external funding, enhance credibility, or project a more formal corporate image. It is the preferred structure for larger companies, foreign large firms expanding into Japan, and ventures seeking investment through stock issuance.

• Advantages: Recognized and respected by banks and investors, ability to issue shares, strong corporate governance.

• Disadvantages: Higher setup cost, more complex governance requirements (e.g., shareholder meetings, director terms), notarization required.

2. Godo Kaisha or GK (limited liability company)

Godo Kaisha (GK) is best suited for small businesses, startups, or single-owner ventures prioritizing flexibility and low costs. It is a Japanese equivalent for the U.S. LLC, it allows for a more informal structure and faster decision-making.

• Advantages: Low cost, minimal compliance, and flexible structure. Appealing to U.S. companies due to LLC similarity and eligibility for pass-through taxation under U.S. law. Can be fully owned by a U.S. entity, ideal for subsidiaries.

• Disadvantages: Less prestige in Japan, cannot issue shares, and may face challenges with investors or banks. Disputes can arise if profit-sharing isn’t clearly defined.

👉Read also: Godo Kaisha vs Kabushiki Kaisha: Company Types in Japan

3. Branch Office

A branch office allows a foreign company to conduct business in Japan without forming a separate legal entity. It’s simpler and faster to set up than a KK or GK, but is fully liable under the foreign parent company. A branch office is best suited for foreign companies that want to test the Japanese market without fully committing to incorporation, do not plan to raise local funds, and prefer lower initial setup costs. 

• Advantages: Easy setup, no incorporation needed. Can do business, hire staff, and sign contracts. No capital investment requirement, with simpler governance and accounting.

• Disadvantages: Not a separate legal entity—parent company bears full liability. Limited local flexibility, cannot raise funds in Japan, and must appoint a Japan-resident representative director and handle local filings.

4. Representative Office (駐在員事務所 Chuzai-in Jimusho)

A representative office allows a foreign company to maintain a presence in Japan without forming a legal entity or conducting commercial business activities. It’s ideal for market research, PR, and liaison work when exploring the Japanese market without engaging in sales.

• Advantages: Easy and cost-free to set up, no registration or capital required, and not subject to corporate tax. Can hire staff and support visa applications for non-sales roles.

• Disadvantages: Cannot conduct sales, sign contracts, or open a corporate bank account. Limited to non-commercial activities, and hiring staff may still trigger social insurance obligations.

Comparison chart of different business structures

Which type of business structure should I choose?

Your choice of business structure affects your initial capital, company registration, tax obligations, and how you can hire employees.

Initial costs and capital investment

Here are the typical start up costs and fees.

Establishing a Kabushiki Kaisha (KK)

• Revenue Stamp Fee: ¥40,000 (can save ¥40,000 stamp fee when using electronic articles of incorporation)

• Notarization Fee: ¥30,000 (depends on the capital, max ¥50,000)

• Certified Copy Fee: Approx. ¥2,000 (¥250 per page)

• Registration License Tax: ¥150,000 (or 0.7% of capital, whichever is higher)

= Establishment cost total: Approx. ¥182,000 (electronic filing) ~ Approx. ¥222,000 (paper filing)

• Company Seal: Around ¥5,000 ~ ¥20,000

• Office Setup (Serviced Office, Virtual Office, or Leased Space):

  • Security Deposit: 3-6 months of rent

  • Monthly Rent: Depends on city, often ¥200,000+ in Tokyo

• Minimum Capital: No legal minimum, but ¥5 million is generally required for a business manager visa for foreign residents

Establishing a Godo Kaisha (GK)

• Revenue Stamp Fee: ¥40,000 (can save ¥40,000 stamp fee when using electronic articles of incorporation)

• Certified Copy Fee: Approx. ¥2,000 (¥250 per page)

• Registration License Tax: ¥60,000

= Establishment cost total: Approx. ¥62,000 (electronic filing) ~ Approx. ¥102,000 (paper filing)

• Company Seal: Around ¥5,000 ~ ¥20,000

• Office Setup (Serviced Office, Virtual Office, or Leased Space):

  • Security Deposit: 3-6 months of rent

  • Monthly Rent: Depends on city, often ¥200,000+ in Tokyo

• Minimum Capital: No legal minimum, but ¥5 million is generally required for a business manager visa

Establishing a branch office

• Registration License Tax: ¥60,000 or ¥90,000 (¥60,000 for Japan representative registration only without opening an office, and ¥90,000 for branch office registration)

• Translation Fee: ¥20,000–¥50,000+ (for documents from the parent company)

• Certified Copy Fee: Approx. ¥2,000 (¥250 per page)

= Establishment cost total: Approx. ¥97,000 (for Japan representative registration only) ~ ¥127,000 (branch office registration)

• Company Seal: Around ¥5,000 ~ ¥20,000

• Office Setup (Serviced Office, Virtual Office, or Leased Space):

  • Security Deposit: 3-6 months of rent

  • Monthly Rent: Depends on city, often ¥200,000+ in Tokyo

• Minimum Capital: No legal minimum, but ¥5 million is generally required for a business manager visa

Notes on the branch office:

• No Articles of Incorporation are created, and the parent company’s necessary documents must be translated and submitted.

• No legal entity created in Japan (the parent company is liable).

• Must appoint a Japan-resident representative director.

Establishing a representative office

Technically free since there is no need for registration, articles of incorporation, tax office notification, etc.

You cannot conduct sales, sign contracts, or open a corporate bank account, and activities are limited to non-profitable activities such as market research.

Use a virtual office to reduce the startup costs

💡Did you know that you can use a virtual office address for incorporation, branch office registration, and a representative office?

MailMate's virtual office + virtual mail services are a bilingual service for foreign entrepreneurs who want to start a business in Japan.

• Virtual office service: With MailMate, you can choose premium locations to register your business. (Shinjuku or Minato-ku in Tokyo, and Hakata or Tenjin in Fukuoka)

• Japanese phone number service with bilingual receptionist: MailMate will answer incoming calls and relay the message to you.

• Virtual mail service: MailMate receives your business mail at a virtual address, scans and uploads it to your dashboard, where you can read, forward, or request translation for Japanese documents.

• Bill payment service: MailMate also offers a bill payment service and will pay it on your behalf by taking it to the local convenience store, so that you will never miss a payment.

MailMate also helps entrepreneurs successfully start companies in Japan!

👉Read also: Are Virtual Offices Legal? 9 Industries That Can’t Use Them

Required Documents and Registration Process

Here are the important documents required and the process.

For KK and GK company formation

1. Decide on the office location

2. Make a company seal

3. Create the Articles of Incorporation document

4. Have the Articles of Incorporation notarized at a notary office that operates under the jurisdiction of the Legal Affairs Bureau responsible for your company’s registration area

   • 3 copies of the Articles of Incorporation

   • Identification documents

   • Seal registration certificates of all the incorporators

   • Revenue stamp: ¥40,000 (can save ¥40,000 stamp fee when using electronic articles of incorporation)

   • Registered seal of the incorporators, or a personal stamp, and an authorization letter for representatives

   • Payment of ¥50,000 for the notary public

   • Issuance fee of ¥250 per copy of the Articles of Incorporation

5. Deposit capital into a designated bank account

6. Register your company incorporation documents at the Legal Affairs Bureau

   • Application for Authority to Do Business

   • Registration License Tax Payment Slip

   • Articles of Incorporation

   • Founders' Written Decision

   • Letter of Acceptance of Appointment from the Director

   • Letter of Acceptance of Appointment from the Auditor

   • Director's Seal Registration Certificate

   • Seal Notification Form

   • Documents proving capital deposit

👉Read more in detail about company formation: The Total Guide to Company Formation in Japan

For registering a branch office

1. Decide office location and select a representative of the Japanese branch (can be either a Japanese national or a foreign national but must have an address in Japan)

2. Research the trade name and confirm suitability for the purpose

3. Prepare documents required for registering the Japanese branch

   • A document to acknowledge the existence of the head office

   • A document certifying the qualifications of the representative in Japan

   • A copy of the Articles of Incorporation of the foreign company or other documents sufficient to identify the nature of the foreign company

   • Translation of the 3 documents above

   • If there is a provision regarding the method of public notice under Article 939, Paragraph 2 of the Companies Act, a document certifying this must be provided *It is common practice to consolidate the documents above into a single affidavit

4. Get the affidavit notarized by an embassy or consulate of the country where the foreign company's headquarters are located (fee varies but typically costs around ¥500~¥2,000)

5. Submit all the prepared documents to the Legal Affairs Bureau that has jurisdiction over the proposed location of the Japanese branch office

   • Affidavit

   • Original copy of the foreign company's register and its Japanese translation

   • The representative's personal seal and a personal seal certificate

   • Company seals to be used at the Japanese branch office (must have at least one company seal)

For setting up a representative office

1. Appoint a representative (if a foreigner, then needs either "Intra-Company Transferee Visa" or "Engineer/Specialist in Humanities/International Service Visa")

2. Decide the Office Address (Since a representative office is not a legal entity in Japan, the lease contract must be signed under the individual name of the representative and not the company)

3. Apply for the necessary visas for foreigners starting in Japan (if necessary)

Post-Incorporation/Registration Costs and Obligations

After the KK/GK incorporation or registration of the branch office, some things need to be handled.

After KK/GK incorporation and branch office registration

1. Notify/file at the tax office

   • Notification of Incorporation

   • Notification on the Establishment of a Salary-Paying Office

   • Application for Filing the Blue Return

   • Application for Special Approval Concerning Payment Date of Income Tax Withheld at the Source

2. Notify/file at a Labor Standard Inspection Office

   • Notice of Establishment of Labor Insurance Affiliation

   • Tax Return for Estimated Insurance Premium for Labor Insurance

3. Notify/file at a Japan Pension Service Office

   • Notification of New Application for Health Insurance and Employee's Pension

   • Notification of the Acquisition of Eligibility for Health Insurance and Employee's Pension

   • Notification of Dependents Eligible for Health Insurance

4. Notify/file at a Public Employment Security Office

   • Notice of Establishment of a Workplace Covered by Employment Insurance

   • Notice of Acquisition of Eligibility for Employment Insurance

Corporate tax rate

Source: Overview of corporate income taxes | JETRO

Example: taxable income is 10 million yen / total amount tax is 2,626,400 yen

Source: Overview of corporate income taxes | JETRO

Consumption tax: 10% if the taxable sales in Japan exceed ¥10 million in either the base period or the first 6 months of the previous fiscal year

Tax Returns: Filed annually, with financial statements and payroll documents

Make sure to prepare employment contracts, determine working hours, and manage fiscal year planning from the beginning.

Note: A branch office in Japan is generally taxed in the same way as a KK or GK, but only for income earned in Japan. Tax will be filed under the foreign company's name.

Read also: Japan’s Tax Regulations: 6 Pointers for Startups

Frequently Asked Questions (FAQ)

How much does it cost to start a business in Japan?

Startup costs vary depending on the structure you choose in Japan. A Kabushiki Kaisha (KK) typically costs around ¥182,000–¥222,000 to establish, while a Godo Kaisha (GK) is cheaper at approximately ¥62,000–¥102,000. Branch offices cost around ¥97,000–¥127,000, while representative offices are free to set up but limited in functionality.

Which type of business structure is best for foreign entrepreneurs in Japan?

It depends on your goals. KK is best if you want credibility and the option to raise capital. GK is ideal for small businesses or subsidiaries looking for flexibility and lower costs. Branch offices work well if you want to do business in Japan without forming a separate entity. Representative offices are great for market research and PR but can't engage in sales.

Do I need a Japanese business address to incorporate a company?

Yes. All company types require a registered office address in Japan. Services like MailMate offer virtual office addresses for company registration in premium locations like Shinjuku, Minato-ku, and Fukuoka.

Can a foreigner own 100% of a Japanese company?

Yes. Foreign nationals or corporations can fully own a KK or GK. 

In Closing

For foreign direct investment, Japan remains to be a stable gateway to Asian markets. Even though the start-up costs can be significant, the transparent company registration process and access to a skilled workforce make it a worthy choice.

Whether you're forming a limited liability company, joint stock company, or branch office, Japan offers long-term growth potential for both small businesses and large companies alike. 

Consider using Mailmate’s services for incorporation, so that you can establish and run your company efficiently!

Next article: 

• Japan Business Card Etiquette: What to Know and Do

• The Japan Startup Visa: A Speedy Guide

• Obtaining a Spouse Visa in Japan: The Easy How-To Guide