Start A Sole Proprietorship

1/28/2022

This article is aimed at individuals already living in Japan, who want to establish their own business in the country.

Nevertheless, there are basic information and links to different sources within the article to help those who are planning to move to Japan and start their own independent business as well.

If you're considering establishing a company, you probably have something you want to sell; whether it’s a product or simply your time in the form of services. However, that doesn't mean you need to establish a company.

Starting A Sole Proprietorship In Japan

For people want to run a business by themselves, one-man business or Sole Proprietorship (個人事業 kojin jigyo), can be a good option.

It has many advantages over a company; for example the process for filing taxes is simpler and you don’t have to hire an accountant. You can also expense a portion of your apartment rent if you work out of it. A sole proprietor does not necessarily work alone - you can still employ other people, and of course self-sponsor your visa.

It is possible for anyone to set up a Sole Proprietorship at any time and there is no need for a startup fee. Except in the case of some outside employment prohibition created by one’s current employer, it is even possible for an already employed individual (salaried employee) to set up a Sole Proprietorship to bring in some extra income.

What Visa Do You Need?

To establish a business in Japan you will need to hold either permanent residents status (永住者 - Eijusha), long term resident status (定住者 - Teijusha), a "Spouse or Child of Japanese National" visa (配偶者 - Haigusha), a "Spouse or Child of Permanent Resident" visa (永住者の配偶者等 - Eijusha no haigusha tou), or obtain an "Investor / Business Manager" visa (投資家/経営者 - Toshi-keiei).

Detailed information about working and long-term stay visas can be found on the Ministry of Foreign Affairs of Japan "MOFA" website.

You can also read the details about laws and regulations concerning the immigration services on Immigration Bureau of Japan website.

Individuals who would like to start their own Sole Proprietorship are required to file a Blue Form called "Notification of Commencement of Business" (個人事業の開廃業等届出書 - Kojin Jigyo no Kaihaigyo Todokedesho) with their local tax office at their Ward / City within 30 days of the business’s establishment.

Do You Need A Special Permit?

Depending on the type of business you decide to establish you will require one or few permits. Since the most common businesses which foreign residents in Japan decide to establish are, export-import trading companies, restaurants and language schools, below only related permits to those activities are referred to.

Exporting & Importing – While you don’t need permit for this type of business, you need to pay required customs tariffs for Japan, and in some cases the country you are exporting to. Make sure you know about related import/export laws in all countries involved before commencing your business. On Japan Customs website you can read about outline of export and import.
Restaurant – To start a restaurant you require a permit from the Local Public Health Center "保健所 - hoken-jo", and if you intend to operate after 22:00 or serve alcohol you also need to obtain a permit from the Public Safety Commission "公安委員会 - koan-iinkai". For more information click here: Starting A Restaurant In Japan
Language School – For opening a specialized private school a permit from the Ministry of Education is required, however no permit is needed to run an "Eikaiwa - 英会話" or other types of after-school class.

Register With The Post Office

If you are using your home address as your business address, you’d better inform the post office. You just need to fill out a half-page form at your local post office. Adding your company name to the name and address of your residential mail box would help too.

Note: if you are living in rented property, it might be necessary to obtain a written consent from the property owner, especially if you have regular visitors.

Taxes

You will be required to pay sole proprietor tax "個人事業税 - kojin jigyo-zei", income tax "所得税 - shotoku-zei", and residential tax "住民税 - jumin-zei".

Make sure to keep records of revenues and expenses as well as bills and receipts issued or received in relation to your business; at the time of filing your taxes they may ask for these references. For more details visit National Tax Agency Japan Website.

Do You Speak Japanese?

Unless your business is a niche business targeting foreigners who speak your language, a working level understanding of Japanese is vital. If you have to communicate with Japanese and do not speak the language, you will always be dependent on someone else, and that is a huge handicap as an entrepreneur.

When Not To Use A Sole proprietorship?

If you want to share ownership of a business with other partners or perhaps investors, you need to establish a company. Also keep in mind that the sole proprietorship is not a separate entity, which makes you personally responsible for any negative outcome like bankruptcy.

Related Reading:

18 Comments

Halal In Japan

Boyo link

4/10/2020 17:39:23

I would like to know if it’s possible to give your sole proprietor business a different name from my last day and if so how to have the name registered.

4/10/2020 18:00:33

Individuals who would like to start their own Sole Proprietorship are required to file a Blue Form called “Notification of Commencement of Business” (個人事業の開廃業等届出書 - Kojin Jigyo no Kaihaigyo Todokedesho) with their local tax office at their Ward / City within 30 days of the business’s establishment.

For more details, please check with your local tax office and depending on the nature of your business with your local city hall as well.

Dianne

4/24/2020 03:30:23

Thank you for this very informative post. I have a few questions, if it is okay:

1- if I am starting an online store selling items to customers outside Japan, will I need to apply for Kojin Jigyo?
2- Is it possible for me to apply for Kojin Jigyo if my visa is Specialist in Humanities?

Thank you very much in advance.

4/25/2020 14:43:12

You will find answer to your questions in "Taxes In Japan" blog-post.

In the blog categories click on the "Work", find and read the blog. If you have any questions please let us know.

jrc

7/25/2021 12:07:35

Hi. I have the same question as Dianne, and I checked the "Taxes in Japan" blog post like you instructed, but still can't find the answer to those questions.
Can you maybe help answer those here?

Thanks in advance!

7/26/2021 16:57:53

This is the reply to "jrc" who has the same questions as Dianne:

In "Taxes In Japan" blogpost, there is a chart (Scope Of Income Subject To Taxation) which answers your question about taxes related to income from sources in Japan and outside the country; if this chart doesn’t answer your question you need to visit your local tax office and ask for more details.

Regarding your visa "Specialist in Humanities", as mentioned in this blogpost (It is possible for anyone to set up a Sole Proprietorship at any time and there is no need for a startup fee. Except in the case of some outside employment prohibition created by one’s current employer, it is even possible for an already employed individual (salaried employee) to set up a Sole Proprietorship to bring in some extra income).

11/30/2020 09:31:02

This is fantastic. Thanks very much for taking the time. Just started an 英会話 up and needed clarification. Perfectly laid out and informative. Cheers

abby

1/7/2021 16:49:18

can a tattoo artist or a semi permanent make up artist apply kojin jigyo? what form should fill up?

1/8/2021 18:51:37

As long as your business is legitimate you can apply for Kojin Jigyo. Check it out with your local city office to see if you need a permit. I believe the form would be the same as mentioned:

Individuals who would like to start their own Sole Proprietorship are required to file a Blue Form called "Notification of Commencement of Business" (個人事業の開廃業等届出書 - Kojin Jigyo no Kaihaigyo Todokedesho) with their local tax office at their Ward / City within 30 days of the business’s establishment.

ＡｙｉｍＲａｎｄｙ

6/5/2021 13:51:21

I want to start a tire company in do I need to have sole proprietorship to start. Thanks

6/6/2021 16:42:07

Yes, whether a company or sole proprietorship; You are going to establish a business, and your business needs to be registered for taxes,…

Scott

6/22/2021 20:47:03

How do I register a trade name other than my family name with the Company registrar in Japan? Can it be done online?

6/23/2021 17:01:09

You can register any proper name you like with the Company registrar in Japan, if you are establishing a company.

As far as I know, to register a company, whether you or your lawyer should do the paper work. In the beginning of this blogpost, click on the link where it says "establishing a company" for more information.

Pelham Higgins

12/20/2021 15:57:05

Great website - thanks.

From a tax perspective only, where can I find some information that explains how a kojin jigyo compares to a KK for a single person business in Japan?

12/20/2021 16:57:57

In the beginning of the blogpost click on the "establish a company" and visit the "Start A Company In Japan". And at the bottom of the blogpost click on the Taxes In Japan. You will find general information and many link for further checking:

https://www.halalinjapan.com/blog/start-a-company-in-japan

https://www.halalinjapan.com/blog/taxes-in-japan

Sanjay Chahar

2/26/2022 17:06:29

Hello I am a Japanese language student i can apply sole proprietorship ?????

2/28/2022 10:41:12

If you want to work in Japan while studying, you’ll need to obtain ‘Permission to Engage in Activity Other than that Permitted by the Status of Residence Previously Granted’, which you can apply for at an Immigration Bureau Office once you arrive in Japan.

As a general rule, this permission will entitle you to work up to 28 hours a week during term-time and eight hours a day during official holiday periods.

Follow the link below for more information.

https://www.halalinjapan.com/blog/scholarships-for-international-students