business-incorporationAs an international investor, you have many avenues for starting a profitable business in Japan. Each option should be carefully considered, so you can choose the best path for you and your company.

1. Short-term vs. long term visa

You don’t need to be legal resident to start a business in Japan. However, you do have to be a legal resident if you want to appoint yourself as your company’s representative director. The decision to apply for a long-term visa should be based on your long-term business plans, and your intention to stay in Japan to personally handle day-to-day business operations yourself. Some investors have no desire to stay in Japan for extended periods, and prefer having a qualified representative director (who is at least a legal resident with an unrestricted activity visa) manage their company on their behalf as they travel back and forth to their home country. For this kind of investor, the standard 90-day tourist visa is enough time to incorporate a new company and hire an expert representative director they can trust. They can leave and enter Japan again at their convenience, without having to apply for residency status.

However, if you are intent on eventually managing your business yourself, with you as your own representative director, then you will have to acquire the right kind of long-term visa. An acceptable long-term visa for this role is either the family visa (spouse or child of Japanese national or legal resident) or the Business Manager visa. To apply for the Business Manager visa, the incorporation of your company must already be completed, with a physical office address secured for immigration purposes.

2. Establishing a representative office

japan-buildingsAll representative offices are not authorized to conduct business or do any marketing activities. They are usually established prior to the expansion of a foreign parent company, performing various tasks such as market research, branding, and research and development. The procedures for registering a representative office are very simple, with few requirements and regulations.

3. Establishing a Japanese Branch Office

The Japanese branch office is legally considered a branch of the foreign corporate entity. In contrast to the representative office, the branch office is authorized to conduct business in Japan. However, there are specific legal, financial, and tax issues that may complicate the feasibility of launching a branch office. We strongly recommend a thorough assessment of your company’s expansion goals before committing to register as a branch office.

4. Incorporating as a Japanese Joint Stock Company or Limited Liability Company (Kabushiki Kaisha or Godo Kaisha)

Registering as a stock company (Kabushiki Kaisha-KK) or Limited Liability Company (Godo Kaisha-GK) is the preferred route for most foreign investors in Japan, because of the benefits it confers on businesses committed to the Japanese market. You do not need a resident visa to incorporate your company, though you may need the services of a representative director (who is at least a legal resident with an unrestricted activity visa) to carry out certain transactions on your behalf such as opening a bank account or leasing an office.

If you want to eventually be your company’s representative director, you will need to apply for an appropriate resident visa. If you are the spouse or child of a Japanese national or legal resident, you can qualify for a family visa, which allows unrestricted activities. Otherwise, you must apply for a Business Manager visa in order to assume your company’s representative directorship.

While it’s undoubtedly true that foreign investors have to clear many legal and regulatory hurdles to establish a company in Japan, you have many options for simplifying the process for compliance. With the right guidance, your business can take advantage of the profitable opportunities unique to the Japanese market, without the burden of costly oversights and critical delays.