A Q&A Guide to Incorporating a Business in Japan: Everything You Need to Know

This article is contributed by Kreston Proworks, who has incorporated over 1000 companies in Japan.

As of 2025, Japan holds the position of the fourth-largest economy in the world. For the foreseeable future, it is expected that Japan will continue to maintain this ranking. However, within Japan lies a massive megalopolis—a seemingly endless expanse of concrete, people, railways, and, most importantly, opportunity.

This city is Tokyo, where nearly half of Japan’s entire GDP and wealth is concentrated. In fact, Tokyo currently holds the title of the city with the highest GDP in the world, even surpassing New York City. With Tokyo being the wealthiest city on the planet, it is undoubtedly one of the most attractive and strategic locations to start a business and tap into a vast ocean of economic potential.

However, turning this ambition into reality is often easier said than done. Due to the language barrier, heavy bureaucracy, and complex administrative processes, establishing a company in Japan can be incredibly challenging for foreigners. Even attempting to locate accurate information on how to incorporate a business often leads to dead ends.

This is largely because of constant changes in regulations and the widespread misinformation available—made worse by the translation gap and lack of official English documentation.

That’s why today, us here at Kreston Proworks are going to address some of the most common and pressing questions our clients have when they begin the process of setting up a business in Japan.

Q. Do I need a Visa and reside in Japan to set up a business?

No, you do not need a visa or be physically present in Japan to establish a company. Since regulatory reforms in 2015, the Japanese government removed the legal requirement of having a local resident as a representative director in order to incorporate a business.

This change has made it significantly easier for non-residents and foreign entrepreneurs to establish a business entity in Japan. As a result, a company can be established in Japan remotely, i.e. without being present in Japan using proxies.

Q. What are the basic requirements for setting up a company in Japan?

To start a company in Japan, you will need a few key components. First, you must have a registered address in Japan. This preferably should be a physical office or in case that he company does not plan to apply for visa or business licenses that require physical office, a virtual office might be an option.

In either case, the business address will have to be in a reputable commercial (not residential) building supported by a lease agreement. You will also need to clearly define your business objectives and prepare Articles of Incorporation written in Japanese. Additionally, you will need to have capital funds available deposited in a Japanese bank account prior to company registration to show financial readiness for the business.

Q. How much do I need for the capital fund?

Legally speaking, you can start a company in Japan with as little as 1 JPY in capital. However, this is not practical. In order to successfully open a corporate bank account in Japan, it is strongly recommended to have at least 1,000,000 JPY in initial capital. If you intend to apply for a Business Manager Visa or sponsor work visas for foreign employees in the future, you will need a minimum of 5,000,000 JPY in capital funds as required by respective regulations.

Be aware that the Japanese government is currently discussing increasing this minimum requirement to somewhere between 10,000,000 and 30,000,000 JPY in the near future due to the increase in foreign nationals exploiting this visa just to reside in Japan without actually engaging in business, and other unethical activities.

Q. How do I store the Capital funds in a Japanese Bank account?

This is where things become complicated. Japanese law prevents individuals who do not have legal residence status from opening a personal bank account in Japan. This is due to the country’s stringent anti-money laundering regulations.

To resolve this issue, many service providers—including Kreston Proworks—offer resident Representative Services. These services provide your company with a Japanese representative who can serve as the face of the company and the initial custodian of the capital funds in their Japanese bank account as proof that the money is held domestically.

Q. How would I get a bank account in Japan?

Appoint a Japan-Resident Director

• Either an internal Japan resident team member, trusted local partner or a foreign national with proper residency (e.g., Business Manager visa) should serve as the resident representative

Secure a Credible Office & Landline

• Rent a physical office (not just virtual), set up a landline—both significantly enhance legitimacy in the bank’s eyes.

Ensure Adequate Capital Injection

• Deposit funds into the subsidiary (via personal or third party accounts initially) to meet the ¥1M+ expected minimum; ¥5M if also applying for a visa

Prepare Comprehensive Application Documents

• Bring all essentials: corporate registry, seals, seal certificate, director IDs, residence cards, proof of address, business plan, Articles of Incorporation, and capital deposit proof

Choose a Foreign-Friendly Bank

• Opt for banks or foreign bank branches experienced with foreign-owned subsidiaries (MUFG, SMBC, Mizuho have dedicated desks)

Demonstrate Genuine Business Activity

• Be prepared to show operations (invoices, supplier contracts) and explain business nature clearly to reduce perceived risk.

Start with Internet or Regional Banks

• If major banks reject the application, consider applying with agile regional or online banks, although they may still require a resident representative.

Q. Is a Japanese corporate bank account necessary?

Yes, it is.

Capital Deposit Requirement (K.K. only)

• For a Kabushiki Kaisha (K.K.), Japanese law (Company Act Article 34) mandates that capital must be deposited through a bank account. Without it, incorporation cannot be completed

• For a Godo Kaisha (G.K.), it's technically possible to use a receipt from a representative instead—but this limits your ability to incorporate as a K.K

Essential for Operations

• After incorporation, a corporate bank account is crucial for day-to-day business: paying suppliers, receiving customer funds, payroll, VAT filings, etc. Without it, your company cannot function financially

Required by Authorities & Partners

• Banks, tax offices, and suppliers expect a corporate account. It demonstrates legal compliance and earns trust in Japan's formal business ecosystem

Q. What banks would you recommend?

Japan has three major "Mega Banks"—Mizuho Bank, MUFG (Bank of Tokyo-Mitsubishi UFJ), and SMBC (Sumitomo Mitsui Banking Corporation). These institutions are highly trusted and prestigious, but also extremely selective. Without a credible resident representative and have checked all the boxes discussed above, opening an account with them can be nearly impossible. This is where the role of a nominee representative becomes particularly critical.

If you do not have a resident representative or wish to explore alternatives, we recommend trying net banks or regional banks such as Rakuten Bank, PayPay Bank, Shinsei Bank, or Resona Bank. These institutions often have more relaxed requirements and are more accessible to newly incorporated or foreign-owned entities.

Q. Do I need to hire Japanese employees?

No, hiring Japanese employees is not a requirement for company incorporation. Additionally, if you are applying for a Business Manager Visa, you do not need to hire Japanese employees either. For visa purposes, you must meet one of two criteria: either invest a minimum of 5,000,000 JPY in the company or hire two full-time employees. Most entrepreneurs find it more cost-effective and simpler to meet the capital investment requirement instead of hiring staff right away.

Q: What are the biggest mistakes made during incorporation?

One of the most common and critical mistakes companies make during incorporation in Japan relates to their Articles of Incorporation and the declaration of low capital funds. Many entrepreneurs assume that if their business objectives are accepted by the Legal Affairs Bureau at the time of incorporation, they are automatically authorized to engage in those business activities. However, this is a major misconception. Certain industries in Japan require additional licenses and government approvals to legally operate—even if your company is legally incorporated.

As a result, a company may legally exist on paper but still be unable to conduct business if it lacks the necessary permits or licensing. This can create significant problems when applying for a corporate bank account, as banks will often reject applications from companies whose stated objectives involve regulated activities for which they are not licensed.

Furthermore, if the capital fund listed in your Articles of Incorporation is too low—particularly if it’s less than ¥1,000,000—banks may view your business as high-risk and reject your account application on financial grounds. A low capital fund can also negatively impact visa applications, supplier contracts, and your general business credibility.

The same applies to maintaining a reputable commercial business address and having a legal presence in Japan. Banks typically require proof of a genuine physical office and a representative based in Japan to show that your operations are legitimate and grounded in the country.

They also need to verify that real people are behind the business, such as by checking official IDs, proof of address, and the backgrounds of directors—this helps them prevent fraud, money laundering, and other illicit activities. Many banks now insist the company’s representative or CEO reside in Japan and hold a valid visa—preferably business manager status if they are foreigner —before approving an account. Likewise, certain licenses mandate having a resident qualified person in charge of the designated business activity; establishing a legal presence ensures compliance with these regulatory requirements.

Q. What happens if I make a mistake during incorporation?

In most cases, mistakes made during the incorporation process can be corrected. However, doing so often comes at a cost—both in time and money. Corrections usually require the submission of additional legal documents, payment of new government filing fees, and in some cases, amendments to critical items such as capital structure or business objectives. These changes can be burdensome and may delay the launch of your business operations.

That said, one of the most critical and often irreversible mistakes involves the corporate bank account application. If your company is rejected by a bank during the application process, that rejection will likely be logged in the bank’s internal system. As a result, any future attempts to open an account at that same bank will be automatically denied, regardless of whether the issues have been corrected or the company structure has changed. In effect, that bank becomes permanently closed to your business.

This is why it is absolutely vital to ensure that all aspects of your company’s incorporation—particularly the accuracy of your application, the qualifications of your representative, and the legitimacy of your business objectives—are fully compliant and error-free before submitting any applications to financial institutions. Taking extra care at the beginning can prevent long-term consequences that may be difficult, or even impossible, to undo.

Q: What about using the Start-Up Visa instead of the Business Manager Visa?

This is currently one of the biggest misconceptions among foreign entrepreneurs considering entry into the Japanese market. As of 2025, the Start-Up Visa is considered by most professionals to be a less effective and more restrictive version of the Business Manager Visa. However, we will discuss this in another article.

These are just the basic essentials that anyone considering incorporating a company in Japan should understand before beginning the process. However, this only scratches the surface. Once you actually begin the incorporation process, you'll quickly discover that there are many more steps involved and a great deal more to learn. In addition, there are specific strategies and tailored approaches to incorporation in Japan that vary case by case. These can make your setup process significantly smoother—if executed correctly.

This is why it is often crucial to consult with a knowledgeable service provider who can help you navigate Japan’s complex landscape of bureaucracy. Doing so can save you time, reduce unnecessary stress, and even help you avoid substantial financial losses. Small errors in paperwork, tax filings, or legal documentation can end up costing hundreds of thousands of yen due to the need for corrections, re-submissions, additional government fees, and penalties. Having an experienced partner can make all the difference in ensuring your entry into the Japanese market is efficient, compliant, and cost-effective.

Meet Kreston Proworks

Kreston Proworks is a bilingual business support firm specializing in market entry, company formation, visa, accounting, payroll, and tax services in Japan. As a member of Kreston Global, with over 750 offices in 110 countries, the firm supports foreign entrepreneurs and companies entering the Japanese market.