Expand into Japan: Your gateway to a technologically advanced market.
Expanding into Japan unlocks access to one of the world’s most technologically advanced markets, supported by a highly skilled workforce and a strategic position in Asia. The scope for growth is immense—but so are the challenges of setting up a business in a new regulatory landscape.
An Employer of Record (EOR) offers a smarter path, enabling seamless market entry while ensuring full compliance—without the complexities of establishing a local entity. Continue reading to understand how to register your company in Japan within weeks and how an EOR can simplify your expansion efforts here.
The business benefits of registering your company in Japan
Japan offers compelling reasons for international businesses to set up operations.
Here’s why:
- Advanced economy: As the world’s third-largest economy, Japan provides a stable and prosperous market for various industries.
- Skilled workforce: Japan’s strong emphasis on education and innovation has produced a highly skilled and disciplined labor force there.
- Strategic location: Situated in the heart of Asia, Japan serves as a gateway to other Asian markets, facilitating regional expansion.
- Robust infrastructure: Japan’s world-class infrastructure supports efficient business operations and logistics.
- Strong intellectual property protection: Japan has stringent IP laws, ensuring
security for your business innovations.
While establishing a local entity in Japan offers long-term advantages, it involves managing regulatory complexities, language barriers, and stringent procedures. For businesses seeking a faster, compliant entry, an Employer of Record (EOR) is an efficient alternative.
What is the difference between standard company registration and expanding through an EOR?
Businesses expanding into Japan can either register their company directly in a traditional way or choose a slightly unconventional, but practical option, partnering with an EOR.
Here’s a quick comparison:
Aspect | Company registration | Employer of record (EOR) |
Purpose | Establish a legal entity for long-term operations | Test new markets or manage remote teams |
Control | Full control over operations | Limited control (EOR handles HR/admin) |
Cost | High initial investment (registration, legal fees) | Predictable, bundled service fee |
Compliance | Full responsibility for legal and tax compliance | EOR ensures compliance with Japanese laws |
Setup time | 2 to 4 weeks (Depends on the completeness of documentation and procedural efficiency) | A few weeks (No dependencies) |
Scalability | Complex and time-consuming | Quick and flexible workforce adjustments |
While direct registration offers complete control, using an EOR simplifies the process, especially for businesses seeking a cost-effective and low-risk market entry.
How EOR simplifies Japan company registration
Expanding into Japan doesn’t have to be complex. Partnering with an Employer of Record (EOR) offers a streamlined, hassle-free way to enter the market. Here’s how:
- Rapid market entry: Skip the lengthy registration process and start operations within weeks.
- Compliance management: EORs handle labor laws, payroll taxes, and contract regulations.
- Cost efficiency: Avoid expenses like share capital deposits, legal documentation, and office setup.
- Streamlined global payroll: Manage salaries, benefits, and tax filings via a single platform.
- Focus on core business: While the EOR handles administrative tasks, you can concentrate on strategic growth.
Now that you know the benefits of using an EOR, it’s important to understand the company registration process. Whether you choose the EOR route or decide to set up independently, a clear picture of the process will help you make an informed decision.
A step-by-step guide to registering a company in Japan
The process of company registration in Japan involves multiple steps. Here’s a simplified roadmap:
Step 1: Define the legal structure
Choose a suitable business structure based on your goals. Options include:
- Kabushiki Kaisha (KK): A joint-stock company that is suitable for larger enterprises.
- Godo Kaisha (GK): A limited liability company; it is ideal for smaller businesses.
Step 2: Secure a registered office address
Secure a registered office in Japan with a physical address for official business operations.
Step 3: Prepare the articles of incorporation
Draft the company’s articles of incorporation, detailing its objectives, governance structure, and shareholder rights.
Step 4: Notarize the articles of incorporation
Have the articles notarized at a notary office for a KK. You don’t need to complete this step for a GK.
Step 5: Deposit initial capital
Deposit the required capital into a bank account under the company’s name.
Step 6: Register the company
Submit the necessary documents to the Legal Affairs Bureau to officially register the company.
Step 7: Obtain licenses and permits
Depending on your business activities, acquire any required licenses or permits.
Step 8: Register for taxes
Register with the relevant tax authorities for corporate tax, consumption tax, and social insurance.
After registration, companies must comply with Japan’s employment, privacy, and tax laws to avoid non-compliance, litigation, or fines.
Legal and compliance considerations in Japan
To stay compliant in Japan, businesses must adhere to:
- Labor laws: Japan has strict labor laws, including regulations on working hours, overtime pay, and employee benefits.
- Data protection: Companies handling customer data must comply with Japan’s Act on the Protection of Personal Information (APPI).
- Annual filings: Businesses must submit financial statements, tax returns, and other corporate filings.
Note: Failure to comply can lead to fines, legal penalties, or business suspension.
These compliance requirements increase your risk exposure and expenses. You must factor these costs into your Japan expansion plans.
The real cost of registering a business in Japan
Understanding the financial requirements is essential. Here’s a breakdown of the costs involved:
- Capital requirements: While there is no minimum capital requirement, it’s common to start with at least ¥1,000,000. (As of recent regulations, a KK can be established with capital as low as ¥1. However, in practice, many companies start with a higher capital, such as ¥1,000,000.)
- Registration fees: Approximately ¥150,000 for a KK and ¥60,000 for a GK. (Calculated at 0.7% of the capital amount)
- Notarization fees: Around ¥50,000 for notarizing the Articles of Incorporation (KK only).
- Professional services: Legal and administrative assistance can range from ¥200,000 to ¥500,000, depending on the service provider.
- Office rental: Costs vary based on location and size; for example, Tokyo’s average monthly rent per tsubo (approximately 3.3 square meters) could be around ¥20,000 to ¥40,000.
Understanding Japan’s tax system for businesses
Once your company is registered, you must also comply with Japan’s tax regulations.
Key taxes include:
- Corporate tax: 15% on annual income up to ¥8 million and approximately 23.2% for income above this threshold.
- Consumption tax (VAT): 10% on goods and services (some exemptions apply).
- Withholding tax: Required for payments to non-residents and some domestic transactions.
- Social insurance contributions: Employers must contribute to employee benefits, including health insurance, pension, and employment insurance.
You can save on many of these registration and compliance costs by opting for an EOR.
Cost savings with EOR
EORs bundle multiple expenses into a single predictable fee. Because you do not require an entity setup, it eliminates share capital requirements and many setup fees.
Cost comparison: standard registration vs. EOR
Cost category | Company registration (JPY) | EOR (JPY) |
Setup fees | ¥200,000–¥500,000 | Not applicable. |
Legal documentation | ¥50,000–¥100,000 | Included in monthly fees |
Payroll & compliance | ¥30,000–¥50,000 monthly | Included in monthly fees |
Ongoing maintenance | ¥100,000 annually | Included in monthly fees |
Time investment | 3–6 months | 2–4 weeks |
Note: These costs may vary depending on your business structure and the time of registration. For the latest costs, consult an expert. Or speak to our team for a clear comparison of the cost of registering a business versus using Multiplier’s EOR.
Take the stress out of your Japan expansion with Multiplier
Expanding into Japan can be seamless with Multiplier, offering a hassle-free, compliant, and cost-efficient market entry solution.
Why choose Multiplier?
Local hiring expertise: Easily generate employment contracts and onboard Japanese talent with compliance ensured.
Effortless payroll management: Our platform guarantees accurate and timely salary payments.
Comprehensive HR solutions: From leave tracking to expense management, we handle all HR processes.
Compliance assurance: Our local experts ensure your business stays aligned with Japan’s strict labor laws.
Competitive benefits packages: Provide localized, attractive benefits to hire and retain top talent.
Reliable support: Our dedicated team offers timely assistance whenever needed.
Whether you opt for full company registration or an Employer of Record (EOR), compliance and cost-efficiency remain critical.
With Multiplier’s EOR services, you can hire top talent in Japan without the complexities of setting up a legal entity. This allows you to test market viability, reduce costs, and minimize risks—all while focusing on growing your business at full speed.
Book a demo today to see how we can help you expand into Japan seamlessly and hassle-free!
