Japan Business Registration Guide 2026 — KK, GK, Sole Proprietorship

Overview — Legal Forms for Businesses in Japan

Japan recognizes several legal structures for commercial activities:

👉 Kabushiki Kaisha (KK, 株式会社): Joint-stock company. Most common form for serious businesses. Minimum capital: ¥1 (reduced from ¥10M in 2006). Limited liability. Requires directors, statutory auditors (in some cases), and shareholder meetings. Most prestigious corporate form.

👉 Godo Kaisha (GK, 合同会社): Limited liability company (similar to US LLC). Minimum capital: ¥1. No board of directors required. Flexible management structure. Increasingly popular for startups, joint ventures, and holding companies.

👉 Sole Proprietorship (個人事業, Kojin Jigyō): Individual business owner. No minimum capital. Unlimited personal liability. Simplest setup — register with the tax office (no company registration required). Popular for freelancers, consultants, and small-scale businesses.

👉 Other Forms: Yūgen Kaisha (有限会社) — no longer available for new registration (grandfathered only). Gōmei Kaisha (合名会社) and Gōshi Kaisha (合資会社) — partnership forms with unlimited liability (uncommon for foreign-owned businesses).

Kabushiki Kaisha (KK) — 株式会社

The KK is the most established corporate form in Japan, used by most large and medium-sized businesses:

👉 Characteristics: Separate legal entity with limited liability for shareholders. Shares can be transferred (with restrictions in private companies). Must have at least one director (取締役). A board of directors (取締役会) is required if the company has statutory auditors (監査役) or is a public company. Must hold annual shareholder meetings.

👉 Capital Requirement: Minimum ¥1 (since 2006). No maximum. Capital can be contributed in cash or assets in kind. For practical purposes, at least ¥1–10M is recommended for credibility with landlords, banks, and business partners. For certain visa categories (Business Manager visa), ¥5M minimum capital is typically required.

👉 Registration Steps:

1. Company Seal Registration (印鑑登録): Have a company seal (会社印鑑) made at a seal shop (印鑑店). This is required for registration and all official documents.
2. Articles of Incorporation (定款): Draft the articles (定款) including company name, purpose, registered office, capital, and director structure. Must be notarized by a public notary (公証人) if the company issues shares or has restrictions on transfer.
3. Capital Payment: Deposit the capital into a bank account in the company's name (the representative director's personal account may be used temporarily, but this is risky).
4. Registration at Legal Affairs Bureau (法務局): Submit the application for commercial registration (商業登記). Documents required: notarized articles of incorporation, director's acceptance letter, capital payment certificate, seal registration certificate. Fee: approximately ¥150,000–250,000 (including notary fees, registration fees, and stamp duties).
5. Tax Registration: After registration, file with the tax office (税務署) for corporate tax (法人税), consumption tax (消費税), and local taxes.

Godo Kaisha (GK) — 合同会社

The GK is a more flexible corporate form introduced in 2006, similar to a US LLC or UK LLP:

👉 Characteristics: Limited liability for all members (社員). No board of directors required — management is by members or appointed managers. No statutory auditor requirement. No shareholder meetings. Profits are distributed according to the operating agreement (定款). More flexible but less recognized than KK for some business purposes.

👉 Management: Members (社員) are the owners. Managers (業務執行社員) run the day-to-day business. The operating agreement specifies profit distribution, voting rights, and manager appointments. Very flexible — can be structured like a partnership or a corporation.

👉 Registration: Similar to KK but simpler: articles of incorporation (定款) must be notarized if the GK has certain types of members (including corporations) or restrictions. Registration fee is lower than KK — approximately ¥60,000–100,000 total (notary + registration). The GK does not need to hold shareholder meetings or file annual reports of shareholder changes.

👉 When to Choose GK: Joint ventures (simpler to structure), holding companies (no need for shareholder management), startups (lower setup cost, simpler governance), and foreign subsidiaries where the parent will manage the company directly.

👉 Disadvantages: Less prestigious than KK. Some business partners (especially large Japanese corporations and banks) prefer dealing with KKs. Cannot do an IPO as a GK (must convert to KK first). Certain tax elections may be less favorable.

Sole Proprietorship — 個人事業

The simplest way to start a business in Japan, ideal for freelancers and small operations:

👉 No Company Registration: No need to register with the Legal Affairs Bureau. Simply file a Notification of Commencement of Business (開業届) with your local tax office within 1 month of starting. You will need a My Number (マイナンバー) and potentially a business seal.

👉 Unlimited Liability: You are personally liable for all business debts. Creditors can pursue your personal assets. This is the main risk. Business insurance (professional liability, product liability) is strongly recommended.

👉 Taxation: Business profits are taxed as personal income (所得税) at progressive rates (5–45% national + 10% inhabitant tax). You can claim business expense deductions. Social insurance (National Pension and Health Insurance) is paid as a Category 1 insured person (full premium, no employer share).

👉 Blue Return (青色申告): Sole proprietors can file a "Blue Return" which allows a special deduction of up to JPY 650,000 (if you maintain proper bookkeeping). You must file the Notification of Approval for Blue Return (青色申告承認申請書) within 2 months of starting the business.

👉 Consumption Tax: If your taxable sales exceed JPY 10 million in the previous year (or if your capital is ¥10M+ for companies), you must register for and charge consumption tax (10%). In the first 2 years of business, consumption tax is generally exempt (there are some exceptions for companies with capital of ¥10M+).

Registration at the Legal Affairs Bureau — 法務局

All companies (KK, GK, and other corporate forms) must register at the Legal Affairs Bureau:

👉 Commercial Registry (商業登記): The registration makes your company a legal entity. The registry is public — anyone can search for company information (name, address, directors, capital). Registration is done at the Legal Affairs Bureau with jurisdiction over your registered office address.

👉 Required Information: Company name (商号), registered office (本店所在地), business purpose (事業目的 — must be as broad as practical), capital amount (資本金), directors/representative director (取締役/代表取締役), and any restrictions on share transfer.

👉 Post-Registration Steps: After registration, obtain a corporate seal certificate (印鑑証明書) from the Legal Affairs Bureau. File for corporate tax registration (法人設立届出書) with the tax office within 2 months. Register for consumption tax if applicable. File for local tax registration with the prefectural and municipal tax offices.

👉 Timeline: Registration takes approximately 1–2 weeks from submission. Total setup time including notarization and bank account opening: 2–4 weeks for KK, 1–3 weeks for GK.

Tax Registration with the National Tax Agency

After company registration, you must register for tax purposes:

👉 Corporate Tax (法人税): File Notification of Establishment of Corporation (法人設立届出書) within 2 months of incorporation. The effective corporate tax rate is approximately 30% (including national, prefectural, and municipal taxes, and the business tax (事業税) for larger companies). Small companies (capital ≤¥100M) pay a reduced national rate of ~15% on the first ¥8M of taxable income.

👉 Consumption Tax (消費税): Register if your taxable sales in the previous year exceeded ¥10 million or if your capital is ¥10M+. The standard rate is 10% (8% for food takeout/delivery). Filing is generally annual (with prepayments for large businesses). The simplified taxation system (簡易課税制度) may be available for certain businesses.

👉 Withholding Tax (源泉所得税): If you have employees, register for withholding tax on salaries. Withholding is required for: salary income (tax table applied), interest, dividends, and fees paid to certain professionals (lawyers, tax accountants, etc.). File withholding tax returns monthly (or semiannually for small businesses).

👉 Local Taxes: Register with the prefectural and municipal tax offices for: Inhabitant Tax (住民税 — on corporate income) and Fixed Asset Tax (固定資産税 — on real estate and depreciable assets owned by the company). These are typically filed annually.

Special Considerations for Foreign Entrepreneurs

Foreign nationals face additional requirements when starting a business in Japan:

👉 Business Manager Visa (経営管理ビザ): To operate a business in Japan (not just own shares), you need a Business Manager visa. Requirements: ¥5M minimum capital (or equivalent scale), a dedicated office space (not virtual), and a viable business plan. The visa is initially issued for 1 year (renewable).

👉 Registered Address: You need a physical address in Japan for the company's registered office. This can be your residence (if you live in Japan and the landlord permits business use) or a shared office/rental office. Virtual offices are generally not accepted for registration.

👉 Bank Account: Opening a corporate bank account in Japan has become significantly more difficult since 2024. Banks require extensive documentation: registration certificate, articles, seal certificate, business plan, and proof of business purpose. Some banks require the representative director to be a Japanese resident. Japan Post Bank (ゆうちょ銀行) may be the easiest option for new companies.

👉 Professional Assistance: It is highly recommended to work with: a judicial scrivener (司法書士, shihō shoshi) for company registration, a tax accountant (税理士, zeirishi) for tax registration and compliance, and an administrative scrivener (行政書士, gyōsei shoshi) for visa applications.

FAQ

What is the difference between a KK and a GK?

KK (Kabushiki Kaisha) is a traditional joint-stock company with directors and shareholders. GK (Godo Kaisha) is a flexible LLC-style company with member management. Both offer limited liability. KK is more prestigious; GK is simpler and cheaper to set up.

How much capital do I need to start a company in Japan?

Minimum ¥1 for KK or GK. For a Business Manager visa, ¥5M minimum capital is typically required. Practically, ¥1–10M+ is recommended for business credibility. Capital can be contributed in cash or assets in kind.

Do I need a visa to start a business in Japan as a foreigner?

Yes, you need a Business Manager visa (経営管理ビザ) to operate a business in Japan. Requirements include ¥5M capital, dedicated office space, and a viable business plan. Pure investment (passive ownership) may be possible on other visa types.

What is the corporate tax rate in Japan?

The effective corporate tax rate is approximately 30% (national + local). Small companies (capital ≤¥100M) pay a reduced national rate of ~15% on the first ¥8M of taxable income. Consumption tax (10%) applies on taxable sales.

Can a foreigner be a director of a Japanese company?

Yes. There is no requirement for directors to be Japanese residents (though having at least one resident director simplifies bank account opening and compliance). Foreign directors need a visa if they will work in Japan.

What is the Blue Return system for sole proprietors?

The Blue Return (青色申告) system allows sole proprietors a special deduction of up to JPY 650,000 if they maintain proper bookkeeping. File the approval application within 2 months of starting the business. Also allows loss carry-forward and certain other benefits.

How much does it cost to register a company in Japan?

KK: approximately ¥150,000–250,000 (notary + registration + seal). GK: approximately ¥60,000–100,000. Professional fees (judicial scrivener) add ¥100,000–300,000. Tax accountant retainer: ¥30,000–100,000/month for compliance.

Do I need consumption tax registration?

Registration is mandatory if your taxable sales exceeded ¥10M in the previous year or if your capital is ¥10M+. New businesses are generally exempt for the first 2 years (except companies with capital of ¥10M+).