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Advantage of incorporation of company

Even Non resident and foreign national can incorporate a company in Japan.

In other website, you may be able to find how to incorporate a company in Japan.

But, other website do not explain the way to setting up a company in Japan by non resident of Japan.
So, you are lucky to find this website.

Before you start to incorporate a company in Japan, you need to know the merit  to make a company in Japan.

Company can use wider tax deduction than individual

If you are managing a business in Japan as private concern ( = without legal entity ) and earn certain amount of money, you should set up a company and acquire juridical personality.

Because when you have a legal entity in Japan, you can apply for some kind of tax deduction.

Assumed your customers purchase some items from you and pay money to your company.
Then you receive money from your company as salary.

In that case, you can reduce the amount of income tax by means of employment income  deduction.
( I have already explained about employment income deduction by taking up an example.

In this page, you can find details to calculate income tax in Japan.

Assumed that you operate your business and get profit of 100 yen

rate of income tax 10 %
the amount of employment income deduction 5 yen

The amount of income tax is as below.

In the case of private concern. :  100 yen × 10 % = 10 yen

In the case of company and you receive salary of 100 yen from the company.

The amount of income tax : ( 100 yen –   5 yen ) × 10 % = 9.5 yen.

By incorporation of company, you can reduce your taxable income and reduce the amount of income tax.

Company can limit your liability

Other than taxation, there is merit of having a Company in Japan.
Assumed that you fail in your business and owe a lot of debt.
If you operate your business under your company’s name, you do not bear debt.
But, if you operate your business without legal entity, you need to bear debt.

Demerit of having company

I want to let you know this legislation.

As for corporate resident tax ( Houjin jumin zei = 法人住民税)

Once you incorporate a company, even if your company does not make any profit, your company needs to pay corporate resident tax of at least 70,000 yen per a year.

Bank account under the name of company

If non resident incorporate in Japan, she ( her company ) may be able to open bank account in Japan.

It is almost impossible to open bank for non resident of Japan.

But, once a person incorporates a company in Japan, her company can get legal address in Japan.
And if her business has substance in Japan, there is a possibility that she can open bank account by name of her company.
( I can support you to open bank account in Japan. )

On the other hand, even if you incorporate a company in Japan, you can not acquire status of residence in Japan automatically.

Kind of company

If non resident of Japan has  already company in her home country, she can establish branch office ( Shiten = 支店) in Japan.
( However, cost to register a  branch office in Japan is higher than incorporating a Limited Liability Company = Godo Gaisha = 合同会社 ).

There are some kind of legal entity in Japan.

For instance

1   Limited Liability Company ( Godo gaisha = 合同会社 )
2  Joint-stock corporations (Kabushiki gaisha= 株式会社 )

Joint-stock corporations and limited liability companies are similar. Because, liability in them is limited to the assets contributed by equity participants.

But compared with joint-stock corporations, limited liability companies have larger range of freedom of self-government by its articles of incorporation.

And, unlike joint-stock corporations, Limited Liability Company do not need to to have their financial statements approved annually by their members and do not have to publish its financial results ( Kessan kokoku ).

joint-stock corporations Announcement of financial statements is required.
limited liability company Announcement of financial statements is NOT required.

Limited liability company Original shareholder of company ( = member. They are called ” Shain = 社員 “ But, in Japanese language, ” employee” is also called ” 社員 “) should participate in operating of the company
Joint-stock corporations Original shareholders who do not participate in managing of business is allowed.

If you just want to have legal entity and want to save cost to incorporate a company, you can select Limited Liability Company

 

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