What do I need to prepare or take note of regarding tax saving measures before establishing a company?
★ Explanation ★
1. Capital Amount
Although the amount of capital will be considered before establishing the company, the amount at the time of establishment is very important. Specifically, these two things are to be generally considered: “Capital of less than 10 million yen” and “Capital of more than 10 million yen and less than 100 million yen”.
(1) In the case of capital that is less than 10 million yen
If the capital of the new company is 10 million yen or more, it will be taxable for its consumption tax from its first year of establishment. If the business plan expects to have tax payment of consumption tax from the first year of establishment, it is common to set up a corporation with less than 10 million yen in capital to be tax-exempted during the first year.
(2) In the case of capital that is more than 10 million yen and less than 100 million yen
In Japan, there are several points where tax benefits can be obtained for companies with a capital of less than 100 million yen. Examples of tax benefits that can be received by companies with capital of 100 million yen or less include:
① The reduced tax rate (15%) can be applied to those with an income of 8 million yen or less per year.
② All expenses of up to 8 million yen for 2 years can be deductible.
③ Small and medium-sized enterprises, etc. who submit a blue declaration can repay their deficits.
④ Small-scale depreciable assets less than 300,000 yen combined (up to 3 million yen in one fiscal year) can be deductible.
⑤ Excluded from the scope of standard external taxation of corporate business tax.
⑥ Retained earnings are exempted from the scope of taxation.
⑦ Various special depreciation and special deductions can be applied.
⑧ Statutory provision rates for the allowance for loan losses are applicable.
（Note）However, if the capital of the parent company is 500 million yen or more and the Japanese subsidiary is a fully-owned one, ①, ②, ③, ⑥, and ⑧ cannot be applied.
Moreover, when the capital is less than 10 million yen and more than 10 million yen, the amount of per capita rate of corporate residence tax changes. For example, in Tokyo, when the capital is less than 10 million yen, the amount per capita is 70,000 yen a year, but if the capital exceeds 1 billion yen even by 1 yen, the amount of per capita rate becomes 180,000 yen.
2. Fiscal Year
Aside from considering what to do with the fiscal year before establishing the company, it is also important to set the fiscal year from the viewpoint of consumption tax.
As mentioned above, if you set up a company with a capital of less than 10 million yen, for the first year of establishment it will be a consumption tax-exempt company, but in the second year of establishment, if taxable sales in a specific period exceed 10 million yen, it will become a taxable company. The specified period is 6 months after the start of the previous fiscal year of that fiscal year. Note that instead of taxable sales, it can be judged by the amount of salary paid during a specific period.
Here, there is a special case called short-term business year. The short-term business year refers to the previous business year that falls under any of the following.
① If the previous fiscal year is less than 7 months
② If the previous fiscal year is more than 7 months and less than 8 months, and the period from the day after the start to end of the previous fiscal year is less than 2 months
Because the previous fiscal year, which is a short-term fiscal year, is not a specific period, if the first term is 7 months and the second term is 12 months, the consumption tax exemption period is up to 19 months.
3. Establishment Costs and Start-up Costs
The start-up costs for establishing a company and the start-up costs for preparing the company for opening are capitalized as deferred assets and can then be depreciated at will.
The establishment costs are those that the company will bear before the company is set up, such as costs for preparing articles of incorporation and regulations, costs for offering stock, printing of stock application form and stock certificate expenses, handling fees of financial institutions, expenses of founding general meeting, registration of corporation establishment, etc.
The start-up costs are the costs for preparation before starting the business once the corporation is established. This includes various expenses such as office rent, employee salaries, advertising expenses, consumables expenses, etc.
Establishment costs and start-up costs are expenses that occur before the company is established or before the business operations start. These costs are items that will be deducted from the established corporation, and you can save money in full by obtaining and saving evidence such as receipts