Will there be any problems if I register what is called a “virtual office” as the address during the set-up of my Japan subsidiary company or branch office?
★ Explanation ★
1. Advantages and disadvantages of using a virtual office as a head office
As discussed in Q22, the location registered as a head office does necessarily have to be the same location where business occurs. This allows the setting-up of a virtual office as the location of the head office without any problems. It is actually not uncommon for small businesses run by an individual or an online business to use virtual office.
(A) The Advantages of a Virtual Office
- Costs for rental and phone bills are lower;
- Mail and postal items can be forwarded to a specific address; calls can be automatically transferred or be answered by representatives;
- Compared to costs in leasing of physical office, a virtual office is much cheaper;
- The address could be a prime location in a city center;
Particularly for (iv), while it would seem to help in gaining the trust of supplies, business partners, or clients, and provides some advantages, there are also disadvantages to it that one should be aware of. On gaining the trust of suppliers and the like, it should be noted that there is a general perception of virtual offices being used mostly by groups engaging in bank transfer fraud and illicit acts. Because of this, it is natural that recently, companies with virtual offices as their head offices are finding it more difficult to gain public trust. A lack of trust can cause disadvantages for the business, such as the following.
(B) The Disadvantages of a Virtual Office
- It is difficult to open a bank account;
- There are cases where applications for social insurance or labor insurance are denied;
- It is difficult to get loans for starting a business approved by financial institutions;
- It is difficult to gain customers
There are several industries where customers cannot transact with a business that has no corporate account. So even if the business has found a potential customer, without an account, an actual transaction may not even occur. It is also important to note that some virtual offices are not allowed for company registration.
(C) Regarding the requirements for the business manager visa approval
As discussed in Q22, if one is unable to meet the requirements for the business manager visa on-top of the necessary permits and licenses, one cannot conduct business. There is a high chance of a declined application when using a virtual office. Because of this, when there is a need for business manager visa as well as various permits and licenses to conduct business, it is best to avoid registering a virtual office as the main office.
2. Avoiding the disadvantages that come with a virtual office
A virtual office can be considered quite similar to a rental office. To avoid the disadvantages such the difficulty in establishing trust that virtual offices face, try using a rental office instead. In using a rental office, not only can you rent a physical address and telephone number, but also a space for you to conduct work.
Advantages of a Rental Office
- Since it is possible to rent an already-furnished office (chairs, desk, space, and equipment), it costs less compared to making a lease contract personally and borrowing from the building owner;
- Having a physical office would raise trustworthiness;
- Responses can be made promptly since there is no need to wait for mail or phone calls to be forwarded.
However, rental offices can be rather pricey. Therefore, if the business were to expand, it would be more advisable cost-wise to rent a regular office rather than leasing a rental office.