Setting Up a Business in Japan: What to Know Before You Incorporate

Japan is one of the world's largest life science and healthcare markets, but entering it takes more preparation than many expect. This page lays out, from a practical standpoint, the key points an overseas life science or healthcare startup should understand before establishing a base in Japan. It starts with the most important question — whether you actually need a Japanese entity at all — then covers using a local partner such as a DMAH in the early stage, and gives an overview of company types, registered address, status of residence, opening a bank account, accounting and tax, and human resources.

Please read first.

English-language information on setting up a base in Japan is limited, and most public support and procedures are conducted in Japanese. In the early stage, working through a trusted local partner is, in most cases, more efficient than rushing to incorporate. For regulated products under the PMD Act, using a DMAH (Designated Marketing Authorization Holder) lets you place a medical device on the Japanese market without setting up your own Japanese entity. Make full use of public resources as well, such as JETRO (Japan External Trade Organization) and your own country's embassy in Japan.

Contents

1. Before You Set Up a Japanese Entity — Assess Calmly First
2. Start Lean — Use a Local Partner First
3. Company Type and Incorporation (KK / GK)
4. Local Representative and Status of Residence
5. Opening a Bank Account
6. Accounting and Tax
7. Human Resources and Social Insurance
8. Public Support Desks
9. Reference Materials
10. Related JPRO Pages

1. Before You Set Up a Japanese Entity — Assess Calmly First

Before deciding to incorporate, weigh the following realities of the Japanese market against your expected return.

• Cost vs. expected return: Setting up and running an entity carries real fixed costs. Be honest about the return you expect within a realistic timeframe.
• Language: Contracts, dealings with the authorities, and negotiations are mostly conducted in Japanese.
• Business customs: Distribution and commercial practices are distinctive and can be hard to read from the outside.
• Difficulty of dismissal: Once you hire permanent employees, reducing headcount or withdrawing is not easy (see Section 7).
• Slow decision-making: Reaching agreement with Japanese counterparts often takes more time and more people than expected.
• Fundraising hurdles: Domestic VCs that invest in overseas-born ventures are limited, and grants such as AMED's are mostly aimed at Japanese companies.

TIP

Japan is a unique market: English is not widely spoken and Japanese dominates, and both commercial practices (including distribution) and employment customs are distinctive. For that very reason, rather than rushing to incorporate, consult JETRO or your country's embassy in Japan first, validate the market through a local partner, and then decide whether to set up an entity. It also helps to secure the accounting firm and law firm you will need first.

▸ On fundraising: How Foreign Startups Can Raise Funds in Japan

2. Start Lean — Use a Local Partner First

You can enter the Japanese market without setting up your own entity, by using distributors and a DMAH, among others.

If you need office space, a shared office inside a life science / startup ecosystem is a good first step: it puts you within reach of academia, operating companies, VCs, and consultants.

▸ DMAH: Designated Marketing Authorization Holder — Summary

▸ Life Science & Healthcare Startup Hubs in Japan

3. Company Type and Incorporation (KK / GK)

Once you decide a Japanese entity is necessary, the most common choices are a KK (Kabushikikaisha, joint-stock corporation) or a GK (Godokaisha, similar to a U.S. LLC). Please confirm the procedural details, including setup costs, via the reference materials below.

• KK — the most common company type, and the first choice if you need to raise capital from outside investors.
• GK — no articles-of-incorporation notarization required, so you reach the registration filing faster than a KK (though document preparation and review still take days); adopted by major foreign firms such as Apple, Google, and Amazon.

Registration requires a real, physical address (a P.O. box is not acceptable). A virtual office may work at the very start, but note that bank account opening will scrutinize whether you have genuine substance. In Tokyo, the Tokyo One-Stop Business Establishment Center (TOSBEC) supports notarization, registration, tax, social insurance, and immigration procedures in one place (English available). You can also engage a judicial scrivener (shiho-shoshi) office or similar.

▸ Tokyo One-Stop Business Establishment Center (TOSBEC, Tokyo Metropolitan Government): https://www.startup-support.metro.tokyo.lg.jp/onestop/en/

TIP — Choosing between KK and GK

KK — advantages: widely recognized; can raise capital from VCs by issuing shares; a non-public KK can be set up with a single director, needs no board of directors, and is easy to control as a 100% shareholder. Disadvantages: higher cost due to notarization; an obligation to publish financial results every year (a balance sheet — or a summary for small companies — via the Official Gazette, a newspaper, or electronic public notice), so part of your financial information becomes publicly viewable; if a board of directors is established, it requires three or more directors plus a statutory auditor or equivalent (a wholly foreign-owned subsidiary usually does not establish one). Even with a board, directors are not required to reside in Japan (the residency requirement was abolished in March 2015, regardless of whether a board exists; for account opening, having a Japan-resident representative still helps — see Section 5).

▸ Reference: Comparison of types of business operation (JETRO, Section 1.2): https://www.jetro.go.jp/en/invest/setting_up/section1/page2.html

GK — advantages: lower cost and faster registration; no obligation to publish financial results (financials stay private); members execute the business directly with no board; flexible articles of association; easy for the overseas parent to retain control; widely adopted by major foreign firms. Disadvantages: a newer form, so the "representative member" title may be less familiar to some counterparties; cannot issue shares, so it is not suited to VC fundraising.

Rule of thumb: if you are self-funded, a GK is a strong option; if you will raise from VCs, a KK is effectively required. For consolidated accounting, either a KK or a GK is a consolidated subsidiary when wholly owned (consolidation turns on control, not on company type). Either form allows full headquarters control of a wholly-owned subsidiary.

▸ Company Establishment in Japan – KK & GK

▸ Incorporating Your Business (JETRO, Section 1): https://www.jetro.go.jp/en/invest/setting_up/section1/

▸ Cost Estimation (JETRO): https://www.jetro.go.jp/en/invest/setting_up/modelcase/

4. Local Representative and Status of Residence

• Choosing your Japan representative: An overseas company launching in Japan will almost always need the support of an accounting firm, and having a Japan-resident representative greatly improves your chances of opening a bank account. Common options include: a Japanese national resident in Japan; a holder of a Business Manager (or other qualifying) status of residence living in Japan; or an expatriate seconded from the parent company who resides in Japan. We do not, however, recommend the use of a nominee ("name-lending") representative who is not actually involved in management: this misrepresents your business substance and can create problems for bank account opening (which verifies business substance under anti-money-laundering rules), immigration, and tax.
• Representative's residency: Since March 2015, a KK/GK no longer needs a Japan-resident representative director. (A branch office, by contrast, requires at least one representative resident in Japan.) In practice, however, opening a corporate bank account is very difficult without a Japan-resident representative — it is effectively a near-requirement (see Section 5).
  ▸ Comparison of types of business operation (JETRO, Section 1.2): https://www.jetro.go.jp/en/invest/setting_up/section1/page2.html
• Business Manager status: Under the revision effective October 16, 2025, the main requirements include capital of, in principle, ¥30 million; at least one full-time employee; management experience or a related degree; Japanese-language ability; confirmation of the business plan by a professional; and a physical office. Existing holders have a transition period until October 16, 2028.
  ▸ Business Manager (Immigration Services Agency): https://www.isa.go.jp/en/applications/procedures/nyuukokukanri07_00092.html
• Startup Visa: For the preparatory stage before the Business Manager requirements are met. Operated through certified local governments and similar bodies; since January 2025, available for up to two years.
  ▸ Startup Visa (METI): https://www.meti.go.jp/english/policy/economy/startup_nbp/startup_visa.html

TIP

If you send an expatriate from the parent company to serve as representative or manager, apply directly for the Business Manager status. If a foreign national will start from the preparatory stage, the Startup Visa allows up to two years. If you place someone already living in Japan (a permanent resident, spouse of a Japanese national, or a locally hired Japan resident) as representative or in management, a new work visa may not be needed. For visa arrangements, use an administrative scrivener (gyosei-shoshi) office (or a lawyer); for hiring Japanese management talent, use a recruitment agency.

▸ Startup Visa

▸ Visas and Status of Residence (JETRO, Section 2): https://www.jetro.go.jp/en/invest/setting_up/section2/

5. Opening a Bank Account

Opening a corporate bank account is often a hurdle for foreign-owned and newly established companies. Banks examine your business substance, whether you have a Japan-resident representative, and your transaction track record, so opening can take time or require additional documents. For corporate account opening, please refer to the following.

▸ Reference | Section 1. Incorporating Your Business (Setting Up Business, JETRO): https://www.jetro.go.jp/en/invest/setting_up/section1/reference.html

▸ 参考 | Section 1. 登記（日本での拠点設立方法, JETRO）: https://www.jetro.go.jp/invest/setting_up/section1/reference.html (Japanese)

TIPS

• In practice, opening a corporate account is difficult without a Japan-resident representative. Where possible, appoint one, put real substance in place (a physical office, your own website, a Japanese-language business plan), and apply to several banks.
• Who handles the account-opening procedure: With a power of attorney and identity documents, a person other than the representative — including an engaged accounting firm's staff — can in principle act as the applicant who handles the procedure. In practice, however, banks expect someone with genuine ties to the business; a structure of "overseas-resident representative plus an external accounting firm only" tends to be viewed unfavorably in screening. Having a Japan-resident officer or employee handle it is the strongest approach.
• Aiming straight for a megabank can lead to a newly established foreign-owned company being turned down. A workable approach is to first open accounts at online banks, regional banks, or shinkin (credit unions), build a track record, and then expand to a megabank.
• If you are considering a megabank, it is worth consulting the megabank advisory desk that JETRO can direct you to.
• If the overseas parent wants to control the subsidiary's funds, always move money via internet banking and require multi-party approval (a "double approval" / multi-step approval that separates the person who creates a transfer from the person who approves it), so that the Japan-resident representative cannot execute payments alone. This is a standard feature of Japanese corporate internet banking, offered by megabanks and major online banks. Note that whether approval from abroad is possible varies by bank, so confirm with each bank before opening the account.
• If you outsource day-to-day payment operations to an accounting firm, never lend out IDs, passwords, or tokens — this breaches the banks' internet-banking terms. Instead, register the firm's staff as a user with "create/draft" (transfer-data entry) rights only, and keep approval rights and the approval token with the parent company. Reconcile statements against the books monthly.

6. Accounting and Tax

A Japanese company is subject to corporate tax, consumption tax, and local taxes, and must file various notifications with the tax office and others after incorporation. Day-to-day bookkeeping (recording, closing, and filing) also arises. Make active use of outsourcing to an accounting firm or similar.

TIPS

• You can outsource accounting work (bookkeeping, closing, tax filing, payroll) to a Japanese accounting or tax accountant's office from right after incorporation, so you can operate before placing accounting staff locally.
• Having your own (home-country) accounting firm introduce a Japanese office can make consolidated-accounting coordination easier and more efficient, and easier to align with the parent's accounting policies and closing schedule.
• Consolidated perspective: transactions between the parent and the Japanese subsidiary (products, services, royalties, etc.) are subject to Japan's transfer pricing rules, which require arm's-length pricing and documentation.
• A company with capital of ¥10 million or more is a consumption-tax taxable enterprise from the outset. If your customers are mainly B2B, consider early whether to register under the qualified-invoice (Invoice) system.
  ▸ Reference: Overview of consumption tax (Section 3.6, JETRO): https://www.jetro.go.jp/en/invest/setting_up/section3/page6.html

▸ Taxes in Japan (JETRO, Section 3): https://www.jetro.go.jp/en/invest/setting_up/section3/

▸ Other principal corporate taxation regarding international transactions (Section 3.9, JETRO): https://www.jetro.go.jp/en/invest/setting_up/section3/page9.html

7. Human Resources and Social Insurance

Hiring employees triggers an obligation to enroll in social insurance and labor insurance. Japanese labor law strongly protects employees, so scaling down or withdrawing after hiring is not easy.

• Social insurance applies from day one: A company — even one with only a single director (president) — is subject to Health Insurance and Employees' Pension enrollment, with notification due within 5 days of establishment. Non-enrollment risks retroactive collection of up to 2 years' premiums and surcharges.
• Dismissal is not easy: Dismissing a permanent (regular) employee is allowed only where it is objectively reasonable and socially acceptable. Redundancy dismissals are subject to a four-part test established in case law; in practice, settlement via voluntary-resignation encouragement or enhanced severance is common.

TIPS

• Because dismissing a permanent (regular) employee is difficult once hired, at least in the early stage, hiring on fixed-term contracts or service (contractor) agreements is realistic. Note that officers who manage the company (a representative director, a representative member, etc.) are, in principle, in a mandate relationship with the company rather than employment, and are not "permanent employees" — they can be dismissed at any time by a shareholders' resolution and are not subject to the employee dismissal rules (Labor Contracts Act). That said, for a "dual-status officer" (a director who also serves as, e.g., a department head), labor law may apply to the employee portion.
• Removing an officer (control by the overseas parent): If the overseas parent controls the Japanese subsidiary with 100% ownership, the parent, as sole shareholder, can dismiss a Japanese representative director (as a director) at any time by a shareholders' resolution (Companies Act Art. 339(1); dismissal itself is possible even without just cause, but absent just cause, damages may arise — Art. 339(2)). What a board of directors can do, by contrast, is "remove a representative director from the representative role" (stripping the power of representation; Companies Act Art. 362(2)(iii)) — this does not take away the person's status as a director. Please consult a professional on the specific corporate-governance design.
• Social and labor insurance procedures and HR administration can be handled by a labor and social security attorney (sharoshi) office; however, many accounting firms have a sharoshi in-house or work with a partner sharoshi office, so the firm to secure first is the accounting firm.
• For hiring Japanese talent, especially management talent, use a recruitment agency.

▸ Human Resource Management (JETRO, Section 4): https://www.jetro.go.jp/en/invest/setting_up/section4/

▸ Applicable establishments and insured persons (適用事業所と被保険者, Japan Pension Service): https://www.nenkin.go.jp/service/kounen/tekiyo/jigyosho/20150518.html (Japanese)

8. Public Support Desks

When setting up an entity, a good approach is to first consult JETRO's website and, as needed, the IBSC. Gathering information through your own country's network in Japan — including your embassy — is also efficient.

• JETRO Invest Japan Business Support Center (IBSC): Across six locations (Tokyo, Yokohama, Nagoya, Osaka, Kobe, Fukuoka), it offers bilingual consultation, referrals to specialists, and free temporary office space for up to 50 business days (conditions apply; partially for a fee).
  ▸ Invest Japan Business Support Center (IBSC) (JETRO): https://www.jetro.go.jp/en/invest/jetros_support/ibsc/
• JETRO guide to establishing a base (registration, account opening, etc.): A practical reference covering the flow of incorporation, required documents, and corporate account opening.
  ▸ Reference | Section 1. Incorporating Your Business (Setting Up Business, JETRO): https://www.jetro.go.jp/en/invest/setting_up/section1/reference.html
  ▸ 参考 | Section 1. 登記（日本での拠点設立方法, JETRO）: https://www.jetro.go.jp/invest/setting_up/section1/reference.html (Japanese)
• Your country's embassy in Japan: A commercial or trade section may offer market-entry support or introductions to local providers. Embassies in Japan can be found in the Ministry of Foreign Affairs' list of foreign missions.
  ▸ Foreign Missions in Japan (Ministry of Foreign Affairs): https://www.mofa.go.jp/about/emb_cons/protocol/index.html

Separately, the relevant ministries and economic bureaus run initiatives to promote inward investment (such as the INVEST JAPAN Offices).
▸ INVEST JAPAN Offices (Incentive Programs, JETRO): https://www.jetro.go.jp/en/invest/support_programs/incentive/offices/

9. Reference Materials

Reference materials in English

• Setting Up Business (JETRO): https://www.jetro.go.jp/en/invest/setting_up/
• Section 1. Incorporating Your Business (JETRO): https://www.jetro.go.jp/en/invest/setting_up/section1/
• 1.2 Comparison of types of business operation (JETRO): https://www.jetro.go.jp/en/invest/setting_up/section1/page2.html
• Reference | Section 1. Incorporating Your Business (account opening, etc.; JETRO): https://www.jetro.go.jp/en/invest/setting_up/section1/reference.html
• Cost Estimation (JETRO): https://www.jetro.go.jp/en/invest/setting_up/modelcase/
• Section 2. Visas and Status of Residence (JETRO): https://www.jetro.go.jp/en/invest/setting_up/section2/
• Section 3. Taxes in Japan (JETRO): https://www.jetro.go.jp/en/invest/setting_up/section3/
• 3.6 Overview of consumption tax (JETRO): https://www.jetro.go.jp/en/invest/setting_up/section3/page6.html
• 3.9 Other principal corporate taxation regarding international transactions (JETRO): https://www.jetro.go.jp/en/invest/setting_up/section3/page9.html
• Section 4. Human Resource Management (JETRO): https://www.jetro.go.jp/en/invest/setting_up/section4/
• Investing in Japan Q&A (JETRO): https://www.jetro.go.jp/en/invest/setting_up/qa.html
• Invest Japan Business Support Center (IBSC) (JETRO): https://www.jetro.go.jp/en/invest/jetros_support/ibsc/
• INVEST JAPAN Offices (Incentive Programs, JETRO): https://www.jetro.go.jp/en/invest/support_programs/incentive/offices/
• Experts Finder (Directory for doing business in Japan, JETRO): https://www.jetro.go.jp/en/invest/setting_up/directory/ — a self-registered directory of foreign-language-capable specialists and providers; listings are not endorsed or guaranteed by JETRO, so verify each provider yourself.
• Business Manager (Immigration Services Agency): https://www.isa.go.jp/en/applications/procedures/nyuukokukanri07_00092.html
• Startup Visa (METI): https://www.meti.go.jp/english/policy/economy/startup_nbp/startup_visa.html
• Foreign Missions in Japan (Ministry of Foreign Affairs): https://www.mofa.go.jp/about/emb_cons/protocol/index.html
• National Tax Agency JAPAN (English): https://www.nta.go.jp/english/index.htm

Reference materials in Japanese

• Setting Up Business (日本での拠点設立方法, JETRO): https://www.jetro.go.jp/invest/setting_up/
• Reference | Section 1. Incorporating Your Business (参考 | Section 1. 登記, JETRO): https://www.jetro.go.jp/invest/setting_up/section1/reference.html
• Applicable establishments and insured persons (適用事業所と被保険者, Japan Pension Service): https://www.nenkin.go.jp/service/kounen/tekiyo/jigyosho/20150518.html

Note: Figures and requirements above reflect information confirmed as of 2025. Programs and amounts are subject to revision; please confirm the latest details via each primary source.

10. Related JPRO Pages

Setup & Operations

• Startup Visa
• Company Establishment in Japan – KK & GK
• Life Science & Healthcare Startup Hubs in Japan
• How Foreign Startups Can Raise Funds in Japan

Regulatory & Local Partner

• DMAH: Designated Marketing Authorization Holder — Summary