Starting a Business in Japan as a Foreign Company: Entity Types, Costs, Timeline

If you run marketing or general management at an overseas company weighing Japan, the first decision is not how to incorporate — it is whether to incorporate yet at all. For many companies the fastest, cheapest route to first revenue is to appoint a vetted local distributor or agency and sell through them, then set up an entity once demand is proven. When you do incorporate, the practical choice is usually between a godo kaisha (GK, Japan’s LLC-equivalent) and a kabushiki kaisha (KK, Japan’s joint-stock company), with a branch office as the middle path.

The single message of this guide: pick the lightest vehicle that clears your actual goal in Japan — research, selling, or credibility with banks and enterprise buyers. Whether you are starting a company in Japan or setting up a company in Japan as a subsidiary, this covers the entity types, the real costs, the timelines, and the one recent rule change that trips up first-time readers.

Disclosure: LOads is itself a bilingual Japan marketing agency, so we have a commercial interest in the partner-first path — we have written this guide openly so you can weigh our reasoning rather than have the bias sprung on you later.

Bottom line, as a decision tree: haven’t proven Japanese demand yet → sell through a vetted partner, no entity. Proven demand and you need credibility with banks or big enterprise buyers → kabushiki kaisha (KK). Proven demand but credibility is not the gating issue → godo kaisha (GK), for cost and speed. The 30-million-yen number you have seen almost certainly refers to a founder’s visa, not to registering your company.

One distinction that saves a lot of confusion: a company opening a Japan arm is registering a subsidiary or branch — the registration itself requires no Business Manager Visa, and per JETRO’s establishing-a-business guidance non-residents may incorporate (since a 2015 rule change a representative director need not even be a Japan resident). Only an individual founder who will personally relocate to run the business needs the keiei-kanri (Business Manager) residence status, where the October 2025 reform bites. If you are the first reader, treat the visa discussion below as a side note: most entries appoint a Japan-resident representative director, or hire staff through an employer of record, and avoid the visa question entirely.

The five options, from lightest to heaviest

There are really five vehicles, on a spectrum from “barely a footprint” to “full local company.” If you have not yet proven Japanese demand, skim this and jump to the partner-first path.

1. No entity yet — sell through a local partner. Appoint a distributor, reseller, or sales agency and reach the market without incorporating — one of several routes to sell in Japan. For when you haven’t proven demand, or want revenue before committing capital.
2. Representative office — the lightest legal presence, for research and liaison. It cannot conduct sales and generally cannot hold a bank account or lease in its own name.
3. Branch office — lets a foreign parent operate and sell without forming a new corporation. It can hold a bank account and lease in its own name, but the parent company stays legally liable.
4. Godo kaisha (GK) — Japan’s LLC-equivalent: cheaper than a KK, no articles notarization, ownership and management unified. For a limited-liability subsidiary at the lowest cost, where buyers don’t demand the most prestigious form. (Apple Japan and Amazon Japan both operate as GKs.)
5. Kabushiki kaisha (KK) — Japan’s joint-stock company and the 90%-plus standard form: highest credibility with banks and enterprise buyers, required if you ever raise equity or list.

The table below is a decision aid, not a quote — the “relative setup cost” column is directional; treat unattributed ranges as illustrative.

Timelines are typical, not promises. The spread reflects prep before filing, not the registry: a KK needs its articles notarized first and a branch needs parent-company documentation, so they take longer to get filing-ready. The Legal Affairs Bureau (the government registry that completes incorporation) itself takes the same ~7–10 business days for every form once filings are clean.

But the timeline that matters for a go-to-market plan is time to first revenue, not time to register. Registration is weeks; operational readiness is months. A corporate bank account alone adds 3–6 months. Realistically, selling through a vetted partner reaches first revenue in about 2–3 months, versus roughly 6–10 months to build a direct entity and start invoicing. Plan around the operational clock.

KK vs GK: the choice most subsidiaries actually face

Once you decide to incorporate, this is the fork. Both give limited liability and a real Japanese company. On cost and friction, a KK requires notarization of its articles (roughly ¥50,000) and a higher registration-and-license tax — a minimum of ¥150,000 for a KK versus ¥60,000 for a GK, which skips notarization; watch for service-firm “all-in” figures that bundle notary and scrivener fees, and ask whether a number is government tax only or everything included. On credibility, a KK is the form Japanese banks, large enterprises, and government buyers instinctively trust and is required if you ever raise equity or list, while a GK unifies ownership and management, simpler for a wholly-owned subsidiary.

Our rough rule: default to a GK for cost and speed unless your Japanese buyers or banks will visibly weigh a KK’s prestige — then pay for the KK. Selling to large enterprises or the public sector usually justifies the premium.

What’s legally required to register

Whichever corporate form you pick, the legal requirements for setting up a company in Japan are a short, concrete list — and none require a Business Manager Visa. You need a representative director (since a 2015 rule change, no longer required to reside in Japan), a registered Japanese address, a registered company seal (inkan) — the corporate stamp Japan still uses in place of a signature — articles of incorporation (a KK must have them notarized, a GK need not), capital paid in (legally from ¥1, realistically much more), and post-incorporation tax and labor filings. Which entity carries what:

For sector-specific licenses and the wider legal landscape, see doing business in Japan.

What starting a business in Japan really costs (and the 1-yen myth)

The unavoidable floor is small: form a GK with a Japan-resident representative and no relocated expat, and your only mandatory government cost is about ¥60,000 in registration-and-license tax (¥150,000 for a KK), plus a tax/accounting retainer. Everything above that is optional scale, not a legal requirement. The intimidating six-figure-dollar numbers you have seen all bundle office, staff, and capital that stays your company’s money.

The most common mistake is comparing numbers that describe different scenarios. The figures you will see quoted are all real — they sit on a rising staircase, each bundling more than the last (anchored at ¥150 to USD 1, mid-2026). Per the JETRO Invest Japan setup guide (JETRO is Japan’s official investment-promotion organization), 1 yen is the legal minimum capital — practically misleading, since it gets you a registration, not a bank or landlord that takes you seriously — while **¥15 million (~USD 100,000)** is JETRO’s realistic minimum to actually operate. An agency-sourced, illustrative figure of ~USD 55,000–75,000 covers a lean, locally-staffed entity with no expat. At the top, JETRO’s model-case estimate of ~USD 264,000–289,000 for a subsidiary (~USD 70,000–101,000 for a branch, which has no paid-in-capital requirement) describes a fully-loaded two-person Tokyo operation — it bundles office, an expat’s housing and visa, and a recommended ~30-million-yen paid-in capital that stays the company’s money, not a fee.

That last 30-million-yen figure is a modeling choice, not a legal floor — and a separate thing from the mandatory 30-million-yen visa threshold below. Neither is a registration requirement. Read the JETRO totals as “cost to stand up a staffed Tokyo operation,” not “the fee to incorporate.”

Total cost of ownership runs beyond day one. On an annual basis a Japanese entity carries a minimum corporate resident tax of roughly ¥70,000/year (the kintō-wari per-capita levy) owed even in a loss-making year, plus a tax and accounting retainer in the low six figures of yen per year (effectively mandatory) and an office lease and deposit (often several months’ rent up front in Tokyo). An entity above the sales threshold must also register for and remit Japan’s 10% consumption tax under the qualified-invoice system — administration a partner absorbs on your behalf (selling SaaS in Japan covers the mechanics). A partner arrangement incurs none of this standing overhead.

The partner-first path — and the numbers behind it

Here is the option incorporation firms rarely quantify, because it generates no formation fee. The U.S. government’s own Country Commercial Guide for Japan states plainly that most foreign firms enter Japan via a local agent, distributor, or representative first. That is not a fallback; for many companies it is the recommended first move.

The tradeoff, stated directionally: a distributor or agency partnership can put you in market for roughly USD 10,000–20,000 with first revenue typically 2–3 months out, versus USD 55,000–75,000 and 6–10 months for a direct Tokyo entity build. Those partner-versus-direct figures come from an agency source and are illustrative, not authoritative — but the shape is right: partner-first is materially cheaper and faster to first revenue, and it defers capital until demand is proven.

There is also a reversibility case incorporation firms never make: if Japan does not work out, ending a distributor agreement is a notice period away, whereas unwinding a KK or GK means liquidation filings, a final tax return, and months of wind-down. Choosing the lightest vehicle is really a decision about the cost of being wrong — and partner-first keeps that cost low.

The catch is control and data: sell through a distributor and you inherit their relationships but cede pricing, customer data, and brand. So the load-bearing word is vetted. Before you sign, establish concretely — does the partner already carry directly competing lines; will they accept a non-exclusive trial rather than demand broad exclusivity up front; and will they give you end-customer-level data, or only a monthly order total? A partner who insists on exclusivity before any proven sales, or refuses to share who your customers are, can quietly sit on your product — walk away. This is why we usually advise a hybrid: run your own demand generation and keep the data while a partner handles fulfillment. We cover the sequencing in Japan market entry strategy and the mechanics in finding a distributor in Japan. If vetting a Japanese partner is the part you are unsure about, a free pre-consultation can talk through a first-pass shortlist before you commit.

Two honest caveats before you treat partner-first as risk-free. First, tax: selling through a partner usually keeps your foreign parent below Japan’s permanent-establishment and consumption-tax registration thresholds — but confirm with a tax adviser, because a dependent agent who habitually concludes contracts for you, or holding stock in Japan, can create a taxable presence even without an entity (the concept follows Japan’s tax treaties and National Tax Agency guidance). Second, domain trust: partner-first defers a .co.jp domain — the address Japanese buyers trust most — because .co.jp is restricted to entities registered in Japan, so until you incorporate you launch on a .com or /ja/ subdirectory, a sequencing trade-off we cover in multilingual SEO for Japan.

The October 2025 visa change — and who it actually affects

This is the number causing the most confusion. Effective October 16, 2025, Japan overhauled the Business Manager Visa (keiei-kanri) — the residence status for a founder or manager who personally runs a business here — raising the effective capital requirement to 30 million yen and adding Japanese-language, employee, experience, and certified-business-plan conditions.

It applies only to an individual founder who needs that visa to live in Japan and run the company. It does not change the minimum legal capital to register a KK or GK (still effectively 1 yen), and does not touch a company registering a branch or subsidiary staffed by locals or existing-status people — so if your Japan arm is run by a resident representative director, the 30-million-yen figure is not your problem. The scope is set out in JETRO’s visa and residence-status guidance and administered by Japan’s Immigration Services Agency; because immigration rules shift, verify the current position there or with a Japanese law firm.

One rule everyone forgets: FEFTA notification

Inbound foreign investment can trigger an obligation under the Foreign Exchange and Foreign Trade Act (FEFTA, or Gaitame-hō) — a law requiring either prior notification or a post-facto report to the Bank of Japan for certain inbound investments, a step the JETRO setup flow lists explicitly. Depending on your sector you may have to notify before you invest, and in sensitive sectors clearance can take weeks. It is rarely a blocker, but scope it early rather than discover it late.

Entity choice is a go-to-market decision, not just a legal one

The entity question only matters because it gates how fast and how credibly you can sell — and Japan’s channels behave differently from the West (search is a two-engine market, not Google-only). A local partner already ranks, runs the local ad platforms, and holds relationships a cold entity lacks. For depth, see search engines in Japan, B2B marketing for Japan market entry, and Japanese SEO agencies.

In our experience the most common failure is a company that spends six months and serious capital standing up a Tokyo KK, then finds it has no pipeline because no one localized the funnel. The entity was never the bottleneck; demand generation was.

Where LOads fits

LOads is a bilingual Japan marketing partner, founded in 2018 in Fukuoka; our CEO, Kosuke Tsunawaki, has 14+ years in digital marketing. Across our work with overseas teams one pattern recurs: the companies that win in Japan usually prove demand before they commit to a structure, and the ones that struggle bought the structure first — that experience, not a theory, is where this guide’s partner-first bias comes from.

To be clear about scope: we don’t file your incorporation, open your bank account, or draft your distributor contract — that is work for a gyōsei-shoshi (administrative scrivener), a scrivener, or your law firm, and we refer trusted formation partners when you’re ready. What we do is help you prove demand and localize acquisition first, running localized campaigns on your own ad accounts so you own the data. Our fee is a transparent percentage of media — as our own reference, not an industry standard: around 20% of spend, dropping to 15% above ¥10M/month, with clients typically running ¥1M+/month in media. A typical first engagement is a fixed-scope demand-proof sprint of about 2–3 months before any entity commitment, so you can size the step before raising your hand.

If you are early, start with a free pre-consultation: a read on your Japan market opportunity and one strategy call, no entity required. For the broader picture, our Japan market entry guide ties entity choice to the full go-to-market plan.

Frequently asked questions

Does an overseas company need a Business Manager Visa to open a subsidiary or branch in Japan?

No. Registering a KK, GK, or branch requires no Business Manager Visa, and per JETRO’s establishing-a-business guidance non-residents may incorporate. The visa matters only if a specific non-resident intends to relocate and personally run the business; most entries appoint a Japan-resident representative director instead.

KK vs GK — which entity should a foreign company choose?

Default to a godo kaisha (GK) for lower cost and faster formation. Choose a kabushiki kaisha (KK) when credibility with Japanese banks and large enterprise or public-sector buyers matters, or when you may raise equity or list. Both give limited liability; the choice is mostly prestige and future fundraising.

How much does it really cost to set up a company in Japan?

The mandatory government floor is small: ~¥60,000 registration tax for a GK (¥150,000 for a KK) plus an accounting retainer. Larger quoted numbers are a staircase (at ~¥150 to USD 1): 1 yen legal minimum capital; ~¥15 million JETRO’s realistic minimum to operate; ~USD 55,000–75,000 for a lean locally-staffed entity; and JETRO’s two-person Tokyo model case at ~USD 264,000–289,000, which bundles office, an expat’s housing and visa, and a recommended ~30-million-yen paid-in capital that stays your money.

How much does a Japanese company cost per year to keep running?

A Japanese entity carries a minimum corporate resident tax of ~¥70,000/year (the per-capita kintō-wari levy) owed even in a loss-making year, plus a tax/accounting retainer in the low six figures of yen annually, plus consumption-tax administration once above the sales threshold. Selling through a partner avoids this standing overhead.

How long does registration take for a KK, a GK, and a branch office?

Typically (not guaranteed): a GK about 1–2 weeks, a KK about 2–3 weeks, a branch about 3–4 weeks. The registry reviews all forms in the same ~7–10 business days; the spread is prep before filing. A corporate bank account can add a further 3–6 months, so plan around the bank account, not just the registration.

Did the October 2025 rule change raise required capital to 30 million yen, and does it apply to my company?

The 30-million-yen figure is the Business Manager Visa capital threshold effective October 16, 2025, for founders who need that visa to live in and run a business in Japan. It did not change the minimum legal capital to register a KK or GK, which remains effectively 1 yen — so if your Japan arm is run by a resident representative director or existing-status staff, it does not apply to you.

Can a foreigner incorporate in Japan without living there?

Yes. A foreign company or individual can incorporate without residing in Japan, but a Japan-based representative director makes a corporate bank account and institutional trust far easier to obtain. This is separate from any personal visa question.

Should we appoint a local distributor or partner instead of setting up our own entity first?

Often, yes. The U.S. Country Commercial Guide notes most foreign firms enter Japan via a local agent or distributor first — faster, cheaper, and it defers capital until demand is proven. The tradeoff is reduced control over pricing, customer data, and brand; a common middle path is to run your own demand generation while a partner handles fulfillment.

How hard is it to shut down a Japanese company if Japan does not work out?

Materially harder than ending a partnership. Dissolving a KK or GK requires a dissolution resolution, liquidation filings, a final corporate tax return, and deregistration — typically several months of wind-down and professional fees. Ending a distributor agreement is usually a notice period away, a real argument for proving demand through a partner before you incorporate.