Investing in Japan
How to Set Up Business in Japan
Initial Cost Estimation
Model Case
Basic Premises of Model Case
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Initial Costs (in Tokyo)
(All figures shown in $US; 1 $US=JPY110)
| Kabushiki Kaisha | Branch | |
|---|---|---|
| Short-term housing and temporary office | ||
| Rent (3 months) for temporary office | 0 - 9,090 (*1) | |
| Deposit for temporary office | ||
| Rent (3 months) for temporary housing (in extended-stay apartment) | 4,360 | |
| Subtotal | 4,360 - | |
| Obtaining visas | ||
| Certificate of eligibility (through proxy) | 1,820 | 1,360 |
| Two general-entry visas (actual cost) | 50 | |
| Re-entry permit (through proxy) | 230 | |
| Subtotal | 2,100 | 1,640 |
| Company establishment and tax notices | ||
| Costs to register company (licenses, taxes, obtaining official copies, etc.) | 2,530 | 920 |
| Paid-in capital (*2) | - | 0 |
| Name seals for company and personal use | 450 | |
| Company registration and notices (through proxy) | 2,270 | 1,820 |
| Tax notices (through proxy) | 410 | |
| Social insurance notices (through proxy) | 1,180 | |
| Subtotal | 6,840 | 4,780 |
| Hiring local personnel | ||
| Fee paid to recruiting agency (for hiring manager); equivalent to 30% of expected first year income (JPY 12 million) | 34,360 | |
| Fee paid to recruiting agency (for hiring administrative staff); equivalent to 30% of expected first year income (JPY 6 million) | 17,180 | |
| Subtotal | 51,540 | |
| Setting up a permanent office | ||
| Monthly rent (includes "maintenance" fee) (*3) | 2,110 | |
| Security deposit (equivalent to ten months' rent) (*3) | 21,090 | |
| Fee paid to real estate broker (equivalent to one months' rent) (*3) | 2,110 | |
| Basic office equipment and furnishings (for three people), including computers, printers, phones, faxes, desks, chairs, etc. | 8,730 | |
| Fire and accident insurance (one year policy) | 360 | |
| Subtotal | 34,400 | |
| Setting up permanent housing (for foreign national) | ||
| Monthly rent (includes "maintenance" fee) | 2,270 | |
| Security deposit (equivalent to four months' rent) | 9,090 | |
| Fee paid to real estate broker (equivalent to one months' rent) | 2,270 | |
| Subtotal | 13,630 | |
| Total | 112,870 - | 110,350 - |
(*1) Rental fees and required security deposits for temporary offices vary among the private companies and public organizations that offer such facilities. JETRO-operated Invest Japan Business Support Centers (IBSCs) are another option open to firms wishing to set-up business in Japan. Located in Japan's major metropolitan areas (Tokyo, Yokohama, Nagoya, Osaka, Kobe and Fukuoka), IBSCs provide free temporary office space (for up to 50 business days) and various support and services. For more information, please contact your nearest JETRO office.
(*2) The model case does not include paid-in capital, as paid-in capital amounts vary by business type. Therefore, the total initial cost for setting up business in Japan will be the above total plus the paid-in capital. The minimum requirement for paid-in capital was abolished under Japan's new Corporate Law (it was formerly JPY10 million), therefore new entrants are free to set the paid-in capital amount themselves. They must, however, take into consideration when setting up business in Japan various requirements (set forth in relevant rules and regulations), such as those in relation to visa eligibility and dividend distribution.
(*3) Source: "2005 White Paper on Landed Property", Ikoma Data Service System Co., Ltd.
<Outline of Model Case>
The model case is based on the most common type of new business operation established by foreign firms entering the Japan market (1) "kabushiki kaisha" (joint-stock company) or 2) a branch office). The model case assumes an initial staff of three: one person from the foreign firm (who typically serves as managing director) and two Japanese nationals (one manager-level person and one administrative staff). The Japanese nationals are hired via a recruiting/staffing agency.
The company makes use of a temporary office for the first three months to complete incorporation procedures and then moves into a permanent office. Similarly, the foreign national (managing director) lives in an extended-stay apartment or hotel for three months and then moves to permanent housing in a residential area in Tokyo preferred by expatriates.
In the model, it is assumed that the company engages the services of a professional to handle many aspects of setting up the business, such as registering the company, paying taxes and submitting necessary documents/forms and the like.
Tokyo is used as the location for this model case. Please refer to the below map for an idea of start-up costs in other cities/regions. (Tokyo is the base, at 100; therefore, initial start-up costs, for example in Sendai, will be 69% of that for Tokyo.) This comparison does not include pain-in capital amounts.
* Comparison chart of initial start up costs in Japan's major business areas.
(33KB)
* For more information on the business environments of Japan's regions.
This model case is meant to be only a "guide". The actual costs of setting up a business in Japan vary from company to company (and depend on current economic and business conditions).
