Licenses and permits required to do business in Japan
According to a survey on trends in foreign-affiliated companies published by the Japan External Trade Organization (JETRO), in the JETRO Report on Investment in Japan 2021, the 2nd most difficult obstacle in doing business in Japan is the struggle in securing a labor force (e.g., managerial positions, engineers, foreign language speakers, and even general workers). In 5th place, many companies find the administrative procedures provided by the government to be a nuisance (e.g., time it takes for an application to be approved, complexity of procedures, etc.). In 9th, we have the difficulty in obtaining visas (understanding the proper status of residence, difficulty in obtaining work visas and family visas, etc.).
As mentioned above in 5th place, there are many activities that require permits and approvals to start a business in Japan. These procedures are so complicated that even Japanese companies struggle with applying and must ask for help from specialists such as administrative scriveners, which can be a real disincentive for foreign companies.
Some of the licenses that are required before starting a business in Japan are: construction business license to undertake construction work above a certain limit, building lots and buildings business license to act as a broker for buildings and land, antique dealer license to buy and sell used cars and used clothing, Paid employment placement business license to allow for recruitment agencies to receive an introduction fee from the client company, and employment agency license that allows employment agencies to dispatch temporary workers to companies. There are other types of business licenses as well, including major ones such as the dispatch business license to dispatch workers to companies for remuneration, the telecommunications business license required before starting certain message application services, the general cargo transportation business license to transport cargo using an actual carrier, and a private car rental business license for rental car businesses.
Why choose Shiodome Partners?
In Japan, services that are performed by lawyers in other countries are subdivided into different types of specialists, such as administrative scriveners for licensing procedures and judicial scriveners for company registration. It is often difficult for most foreign companies to understand where to go to for assistance, therefore we make it simple by laying out what services you may need and choose the right specialists for the job all in one-firm.
Shiodome Partners offers services in English, Chinese, Korean, and Japanese. We also took the liberty of bringing all the professionals together in a one-stop firm. This includes an administrative scrivener as a professional in licensing procedures and visa, a social insurance labor attorney as a professional in labor, a certified tax accountant as a professional in tax, and a judicial scrivener as a professional in company establishment. It is rare to find a firm that can provide an all-inclusive service that gathers all the professionals needed for business needs. Shiodome Partners can provide a one-stop solution for clients who are planning to expand their business in Japan, eliminating the hassle in searching for all the different specialists and having to contact each firm for a simple set-up. One of the main reasons why our clients choose us is that we specialize in obtaining the necessary permits and licenses to start a business.
Many of the requirements for permits and licenses are made up of people, assets, and business locations. Let’s look at the main requirements for each of the following permits and licenses:
Construction Business Permit
This permit is required when undertaking construction work above a certain limit.
(1) A person responsible for the management of business operations, etc.
The applicant company must provide sufficient evidence for its ability to properly manage business operations.
For example, a person must have at least five years of experience in business management operations (as a director role or related) at a company with a construction license.
(2) Full-time engineers
To ensure that the construction work can be carried out properly, it is required to have a certain number of full-time engineers. There are 29 types of construction work, and each type of work has its own set of qualifications. If you do not possess any qualifications, there may be an exemption if you have more than 10 years of work experience.
This is allowed for “general” construction permits, but not for “specific” permits.
A “specified” contractor is one that directly undertakes construction work from the client and subcontracts the work to a subcontractor with a value of 40 million yen or more (60 million yen or more if the type of work is “complete construction”). Otherwise, the category is “general”. The construction license itself is required when the contractor undertakes work of 5 million yen or more (15 million yen or more in the case of complete construction).
The company’s assets are examined to determine whether it has the financial resources to carry out the entirety of the construction work. This criterion is different for “specified” and “general” companies. In the general category, the company must have a net worth of at least 5 million yen. In the specific category, the amount is determined as show below:
A place of business where all the contract work is done will be required.
The office space is required to be equipped with a telephone, desk, various office ledgers, etc., and to have space for office work and visitors.
Residential land and building transaction business permit
A licensed real estate agent is required.
A licensed real estate agent is required to work full-time and engage exclusively in the business of building construction.
The ratio of licensed real estate agents must be at least one out of every five persons engaged in the real estate transaction business of the company (representative directors are required to have the permit).
Although it is not strictly a requirement, after receiving a notice of permission, you will be asked to either deposit 10 million yen with the Legal Affairs Bureau or join an association that requires an initial cost of about 1 million yen and an annual running cost. After these procedures are completed, you will receive your “license” and therefore start your business.
The office must be the address registered as the head office or branch office in the company’s transcript. A virtual office or other similar offices will not be permitted. Using an ordinary detached house or a room in an apartment as an office is not allowed in principle, but there are exceptions under certain regulations.