Japan is an East Asian Island country comprised of four major islands; Honshu, Hokkaido, Kyushu, and Shikoku. The total population of the country is estimated at 126 million people making it one of the most densely populated countries in the world. The capital city of Japan is Tokyo.
Japan is known for its rich culture, exquisite taste in cuisine, meticulous management skills, moral high ground, social courtesy, craftsmanship, engineering, and technology among many other things. Management methods such as SIGMA, Lean Thinking Management, Just-in-time purchasing, etc. adopted by world-leading companies, have originated in Japan.
In short, in major part, the ways things and systems are managed globally, are actually acquired from Japan. Ikebana (the art of arranging flowers), origami (the art of folding paper), bonsai (dwarfing trees to customized shapes), and many other artistic disciplines took birth in Japan thousands of years ago.
Having the third largest economy in the world, Japan and its people are hundreds of years ahead of most of the countries on the planet.
Types of business structures in Japan
Japanese business horizon is the epitome of structural performance and management that has various business formats to offer, each suiting levels of investors and entrepreneurs. The structures are flexible and customizable according to the needs and scope of the business.
The below tabulation represents the most popular business structures in Japan:
| S# | Types of business structures | Local name | Min. paid-up capital required ($USD- approx.) |
| 1. | Corporation | Kabushiki Kaisha (KK) | 7,500 |
| 2. | Limited Liability Company (LLC) | Godo Kaisha (GK) | 1 |
| 3. | Closely Held Corporation | Yugen Kaisha (YK) | $22,000 |
| 4. | Unlimted/General Partnership | Gomei Kaisha (Gk) | Not applicable |
| 5. | Limited Partnership | Goshi Kaisha (GSK) | 37,000 |
Corporation
A corporation in Japan requires at least one director and one shareholder to form. The company is treated as a separate legal entity from its shareholder(s) who have limited liability.
Usually, corporations are formed to benefit the owners and the society in general. Products and services offered by a corporation are generally consumed by the owners, their families, and the society they interact with.
LLC
An LLC is a limited liability company that only requires a symbolic paid-up capital for formation. Owners of an LLC are separate from the company, which is recognized as a legal person. All liabilities arising from the business fall on the company and not the owners.
Closely Held Corporation
A YK is similar to a corporation but differs in that the rules pertaining to the structure and operations are stricter than the latter. It requires a minimum of two shareholders and a director to form. Unlike companies elsewhere that have a corporate structure that lacks empathy and personal touch, Japanese companies are mostly family-owned businesses. Toyota is a prime example of a closely held corporation; being headed by family members since 5 generations.
General Partnership
A general partnership requires at least two persons to come into existence. The owners of the company are personally responsible for the liabilities equally.
Limited Partnership
In a limited partnership, there are two sets of partners. Ones that are general in nature; whereby meaning that they are responsible for liabilities in a personal capacity. The second set of partners is assigned as ‘limited partners’, meaning that their responsibility towards liabilities is limited to the extent of their share in the business.
Note that there must be at least one partner designated as a general partner in a limited partnership format.
Costs involved in the registration process of a company in Japan
Several factors impact the costs incurred during the registration and incorporation process of a company in Japan. The sector or industry the company deals in, the size of the company, and the location are some of the major areas that affect the overall cost.
Here are a few costs that are most likely to be incurred:
Legal fees
Companies may need to hire a lawyer to help with the registration and incorporation process. Legal fees can range from $400 to $1500 or more, depending on the complexity of the company structure and the services required.
Registration fees
The registration fee for a KK is $1,000, while the fee for a YK is $500. The fee for a GK is also $500, but it may be reduced to $300 if the company is registered online.
Notarization fees
Notarization fees are required for certain documents, such as the company’s articles of incorporation. The fees for notarization ranges between $80 to $250
Stamp duty
Companies may need to pay stamp duty on certain documents. The cost of stamp duty depends on the value of the document and can range from $5 to $10.
Other expenses
Companies may incur other expenses such as accounting fees, office rent, and utilities.
Overall, the total cost of registering and incorporating a company in Japan can range between $1,500 and $4,000 or more, depending on the factors mentioned above.
Cost of doing business in Japan
Although it is difficult to predict the actual volume of expenses of a company; heavily relying on the structure and format of the company. However, the expected expenses are listed below:
Labor costs
Labor costs in Japan are generally high compared to other countries, with a minimum wage of $7 per hour. Companies also need to pay social insurance contributions and other benefits, which can add to the overall labor costs.
Taxes
Japan has a corporate tax rate of 30% on taxable income, but it may be lower for small and medium-sized enterprises. There are also consumption taxes, property taxes, and other taxes that companies need to consider.
Rent and utilities
Office rent in major cities such as Tokyo and Osaka can be expensive, and utilities such as electricity, water, and gas can add to the overall cost.
Transportation and logistics
Shipping and transportation costs can be high, especially for companies that import or export goods. There may also be customs duties and other fees associated with international trade.
Compliance costs
Companies need to comply with various regulations and requirements, which can add to the overall cost of
