KK vs GK vs Branch Office: Which Structure is Right for a Foreign Company?
Foreign companies entering Japan choose between three structures: a Kabushiki Kaisha (KK), a Godo Kaisha (GK), or a registered branch office. For most US and Australian B2B tech companies, a KK is the right choice — it carries the most credibility with Japanese enterprise clients, banks, and government bodies. A GK is faster and cheaper to set up and works well for holding structures, wholly-owned subsidiaries with no local sales function, or companies whose clients don't have strong KK preferences. A branch office is rarely the right answer: it creates direct parent liability, offers no tax advantages over a subsidiary, and is viewed with more suspicion by Japanese banks.
What is a Kabushiki Kaisha (KK)?
A Kabushiki Kaisha is Japan's equivalent of a joint-stock corporation — the same legal form as Toyota, Sony, and SoftBank. It has shareholders, a board structure (minimum one director), and issues shares. Under Japan's Companies Act (reformed 2006), the minimum paid-in capital is technically ¥1, though a KK without substance will struggle to open a bank account or obtain a Business Manager visa.
For B2B enterprise sales in Japan, the KK signal matters more than it does in Western markets. Large Japanese corporations — particularly in manufacturing, finance, and government-adjacent sectors — have procurement departments that conduct entity verification before any vendor relationship. A KK registers on that screen immediately. A GK sometimes does not.
What is a Godo Kaisha (GK)?
Introduced in 2006, the GK is Japan's LLC equivalent — with limited liability for all members and a governance structure similar to a US LLC. No notary is required for GK articles of incorporation, the registration tax is lower (¥60,000 flat vs ¥150,000 minimum for a KK), and the ongoing compliance burden is lighter. Notable GK users include Amazon Japan G.K., Apple Japan G.K., and Google Japan G.K. — all of which are GKs, in part for US tax-transparency reasons.
What is a Branch Office?
A branch office is not a separate legal entity. It is a Japanese registration of your parent company. The parent company bears direct legal liability for all branch obligations. Japanese banks treat branches with more caution than subsidiaries. The Business Manager visa framework is less clear for branch-only structures. Branches make sense in specific scenarios: testing a market with a single representative before full incorporation, or where the parent company's brand is the commercial asset (e.g., a globally recognized law firm or financial institution). For most tech companies, a subsidiary is the better path.
KK vs GK vs Branch: Side-by-Side Comparison
| Factor | KK | GK | Branch |
|---|---|---|---|
| Separate legal entity | Yes | Yes | No |
| Parent liability | Limited to capital | Limited to capital | Unlimited |
| Govt registration fee | ¥150,000 minimum | ¥60,000 flat | ¥90,000 |
| Notary required | Yes (¥30k–¥50k) | No | No |
| Setup timeline | 4–6 weeks | 2–4 weeks | 4–6 weeks |
| Bank account ease | Moderate — KK is the most bank-preferred entity type, but all foreign-owned entities face strict KYC and 4–8 week processing times. See Banking section. | Moderate | Hard |
| Enterprise credibility (JP clients) | High | Moderate | Low |
| Business Manager visa | Clearest pathway | Possible | Less clear |
| US check-the-box | No (per se corp) | Eligible | N/A |
| Board / governance | Required (min 1 director) | Flexible | Requires Japan rep |
| Best for | Enterprise sales, investors, visa applicants | Holding cos, US tax structures, lean entry | Market probing only |
* Fees at mid-2025 rates. ¥150/USD approximate. Confirm current exchange rate before financial planning.
How to Incorporate a Company in Japan: Step-by-Step
Incorporating a KK in Japan takes approximately 4–6 weeks from document preparation to receiving your Certificate of Registered Matters. The process involves five main steps: drafting and notarizing the Articles of Incorporation, depositing paid-in capital, filing at the Legal Affairs Bureau, registering with the tax office, and enrolling in social insurance. You do not need to be a Japanese resident to incorporate — but you will need a Japan-resident representative director if you plan to open a bank account or apply for a Business Manager visa.
- 1Decide entity name, address, and capital amount
Company name must be unique in Japan. A physical office address is required — virtual offices accepted for incorporation but treated with caution by banks. Capital: ¥1 minimum by law; ¥30 million practical minimum for a standard Business Manager Visa. If you do not have ¥30M yet, the Startup Visa allows you to incorporate with less capital and gives you up to a 2-year runway to reach the ¥30M threshold — our team supports both paths. (1–2 weeks for decisions and document prep)
- 2Draft and notarize Articles of Incorporation (KK only)
Notarization at a Japanese notary public costs ¥30,000–¥50,000 and typically takes 1–2 days. GKs skip this step entirely. Articles must be in Japanese or accompanied by a certified Japanese translation.
- 3Deposit paid-in capital into a temporary bank account
Wire the capital into a temporary Japanese bank account. Non-resident founders generally cannot open a personal bank account in Japan — they must use the personal account of a Japan-resident representative or a professional proxy to receive the paid-in capital. The bank issues a deposit certificate (振込証明書), which is required for the registration filing.
- 4File registration documents at the Legal Affairs Bureau (法務局)
Submit Articles, deposit certificate, director ID documents, and registered seal (hanko) certificate. Pay registration tax: ¥150,000 minimum for KK (0.7% of capital if higher); ¥60,000 for GK. Processing takes 7–14 business days.
- 5Receive Certificate of Registered Matters
This is your corporate birth certificate. You'll use it to open a bank account, register with the tax office (due within 2 months of incorporation), enroll in social insurance, and apply for visas.
- 6Register with the National Tax Agency and local tax offices
File "Notification of Commencement of Business" within 2 months. Register for corporate tax, consumption tax (if applicable), and withholding tax. Register with the local prefecture and municipality for local taxes.
- 7Enroll in social insurance (社会保険)
Register with the Japan Pension Service and Hello Work (employment insurance) before the first employee starts. Failure to enroll can affect visa renewal outcomes as of 2026.
Do You Need a Japan-Resident Director?
Since a March 2015 Ministry of Justice update, Japan no longer legally requires any director to be a resident of Japan. A wholly non-resident board is permitted. However, this does not mean residency is unimportant operationally: major Japanese banks will often not open a corporate account without a Japan-resident representative director. If no executive is relocating initially, appoint a trusted local hire, advisory firm, or a nominee director service (temporary) to satisfy this requirement.
The Business Manager Visa After October 2025: What Changed and What It Means for You
Japan's Business Manager visa — required for any foreign national who will manage or operate a Japanese company — was fundamentally reformed effective October 16, 2025. The minimum capital requirement increased sixfold, from ¥5 million to ¥30 million (approximately USD $200,000). New requirements for management experience, Japanese language proficiency, and full-time employee hiring were added simultaneously. This is the most significant tightening of this visa category in over a decade and directly affects every US or Australian executive planning to relocate to Japan to run a subsidiary.
Applications submitted on or after October 16, 2025 are subject to the new rules. If you already hold a Business Manager visa, a three-year transitional period applies — your current visa can be renewed under the old criteria until October 16, 2028, after which the new standards generally apply. Source: Immigration Services Agency of Japan.
Old Requirements vs New Requirements
| Requirement | Before Oct 16, 2025 | After Oct 16, 2025 |
|---|---|---|
| Minimum capital | ¥5 million (~$33k) | ¥30 million (~$200k) |
| Alternative to capital | Hire 2 full-time employees | No longer sufficient alone — capital AND employees required |
| Full-time employee | Optional (alternative to capital) | Mandatory (in addition to capital) |
| Management experience | Not specified | Minimum 3 years of management experience, OR a master's, doctoral, or professional degree |
| Japanese language | Not required | JLPT N2 / CEFR B2 required for either the applicant OR a full-time employee |
| Business substance | Loosely checked | Actively assessed — nominal managers rejected |
| Transitional relief | N/A | 3-year grace for existing holders (until Oct 2028) |
What “¥30 Million Capital” Actually Means in Practice
The ¥30 million figure refers to paid-in capital. For a KK, this is the amount reflected on the corporate registry — the actual cash deposited into the company's account and documented at the time of registration. For a GK, it is the total members' capital contribution. This capital does not need to remain locked in a bank account permanently after incorporation; it can be deployed for business operations. However, you need to demonstrate the cash was genuinely contributed — not borrowed temporarily for the purpose of the application.
Additionally, the realistic minimum commitment is closer to ¥35–40 million when you account for the mandatory full-time employee requirement. A Japan-based full-time employee will cost approximately ¥4–7 million annually in total employment cost (salary + social insurance, for a qualified hire). This is a recurring cost commitment, not a one-time outlay. This employee must be a Japanese citizen, Permanent Resident, Special Permanent Resident, or hold a relationship-based visa (e.g. spouse visa). Foreign nationals on standard work visas do not count.
The Japanese Language Requirement: What It Means for Your Japan CEO
The 2025 reform added a Japanese language requirement set at JLPT N2 / CEFR B2 — but, importantly, it can be satisfied by either the applicant OR a full-time employee. A non-Japanese-speaking founder does not personally need to speak Japanese: if you hire a local full-time employee who meets the N2/B2 threshold, the requirement is met. Our hiring support covers sourcing this person. The threshold is assessed holistically alongside the rest of the application, so confirm the current enforcement standard with a licensed immigration attorney before filing, as official guidance continues to evolve.
Alternative: The Japan Startup Visa
For executives who cannot immediately meet the ¥30 million capital threshold, the Startup Visa (特定活動) provides a stepping-stone. Under this route, a foreign entrepreneur submits a business plan to a designated local government (Tokyo, Aichi, Yokohama, Kyoto, and others participate). If approved, the applicant receives a Special Activities residency status for up to one to two years, during which they can build business activity records before applying for the full Business Manager visa. This is designed for early-stage founders — it is less practical for a Series B company deploying a seasoned GM into an established subsidiary.
Business Manager Visa Timeline
- 1Incorporate the entity and deposit ¥30M capital
4–6 weeks for KK incorporation. Capital must be documented and reflected in the corporate registry.
- 2Apply for Certificate of Eligibility (CoE) at the Immigration Services Agency
Processing time: 1–3 months. This is the bottleneck. File with the full application package including a business plan formally reviewed and certified by a Japanese CPA, tax accountant, or SME consultant (mandatory under 2026 rules), alongside lease agreements and employment contracts, plus financial documentation.
- 3Convert CoE to a visa at the Japanese consulate in your home country
5–10 business days. Routine step once CoE is issued.
Planning estimate: 3–5 months from incorporation decision to executive on the ground in Japan. CoE processing times vary and can extend this — budget 6 months to avoid operational pressure.
Opening a Corporate Bank Account in Japan: The Hidden Bottleneck
Corporate banking is consistently the most underestimated obstacle in Japan subsidiary setup. Japanese banks impose strict KYC and AML procedures, and most megabanks (MUFG, SMBC, Mizuho) commonly require the representative director to be a Japan resident with valid residency status. Applications from newly incorporated foreign-owned entities face additional scrutiny. Rejection by one bank may mean that institution will not reconsider — reapplying elsewhere with a stronger application is the practical path forward. Plan 4–8 weeks for the banking process as a separate workstream from incorporation.
Why Japanese Bank Accounts Are Hard to Open
Following global financial compliance tightening since 2016, Japanese banks significantly raised their AML and KYC standards. The practical effect for new foreign subsidiaries: banks treat newly incorporated entities with foreign parent ownership and no Japanese-resident director as high-risk by default. The October 2025 Business Manager visa reforms made this harder — banks are now cross-checking that the company's capital, employment, and operational structure is coherent before opening accounts for entities with foreign representatives.
Which Banks Are Most Accessible for Foreign Companies?
| Bank Type | Examples | Foreigner-Friendly? | Notes |
|---|---|---|---|
| Megabanks | MUFG, SMBC, Mizuho | Hard | Preferred for established companies. Almost always require Japan-resident director. Long KYC timelines (4–8 weeks). |
| Regional banks | Shizuoka Bank, Fukuoka Bank | Moderate | Sometimes more flexible for small new entities. Less international wire infrastructure. |
| Shinkin / credit unions | Various local | Variable | Occasionally more approachable for small startups. Limited English support. |
| Japan Post Bank | ゆうちょ銀行 | Moderate | Historically more accessible. Domestic wire-focused. Less suited to international operations. |
| Digital / fintech alternatives | Wise Business, WorldFirst | Accessible | Not traditional banks. Cannot receive certain domestic payments or be used for payroll/pension enrollment. Useful as a bridge. |
What Documentation Do Japanese Banks Require?
All major banks require at minimum: the Certificate of Registered Matters, Articles of Incorporation, company seal registration certificate (印鑑登録証明書), corporate number (法人番号), beneficial ownership disclosure, and a detailed business plan in Japanese. Banks increasingly require a physical office (not just a virtual address) and will conduct an in-person interview with the representative director. Some request proof of the parent company's financial statements, its country of incorporation certificate, and a list of all major shareholders.
Virtual Offices and Bank Accounts
Virtual office addresses are legally valid for company incorporation. However, banks view them with suspicion. If your company's registered address is a shared coworking space or virtual office mail service, some banks will reject the application or request additional proof of operational substance. If your headcount plan is 1–3 people in the first year, using a serviced office with a dedicated desk (¥50,000–¥150,000/month in Tokyo) rather than a pure virtual address meaningfully improves banking success rates.
Japan Corporate Tax, Consumption Tax, and the Permanent Establishment Risk Every US Company Ignores
Japan's headline corporate tax rate is 23.2% nationally, but the effective combined rate — including local corporate tax, inhabitant tax, and enterprise tax — is approximately 30–33% for most foreign subsidiaries operating in Tokyo. The more immediately urgent question for US companies evaluating Japan is PE risk: if your employees, sales representatives, or contractors are already operating in Japan before you incorporate, you may have already created a taxable presence (permanent establishment) without knowing it. Japan's NTA takes PE risk seriously, and retroactive assessments are possible.
Japan's Corporate Tax Structure
| Tax Type | Rate | Notes |
|---|---|---|
| National corporate tax | 23.2% | Base rate for companies with capital > ¥100M or income > ¥8M |
| National local corporate tax | 10.3% of corporate tax | Effectively adds ~2.4% to total rate |
| Inhabitant tax (local) | ~17% of corporate tax | Varies by prefecture and municipality |
| Enterprise tax | Variable | Based on income, capital, and value-added for large companies |
| Effective combined rate | ~30–33% | Standard Tokyo estimate for a medium-sized foreign subsidiary |
| Consumption tax (JCT) | 10% | Applies once annual taxable sales exceed ¥10 million |
| Withholding tax on dividends | 5–20% | Depends on applicable tax treaty. US–Japan treaty: 5% if parent holds ≥10%; AU–Japan: 5% if ≥10% |
The Permanent Establishment (PE) Risk: What It Is and Why It Matters More Than You Think
Japan imposes corporate tax on foreign companies only if they have a "permanent establishment" in Japan. If no PE exists, only Japan-source passive income (royalties, interest, dividends) is taxable. If a PE is found to exist, all profits attributable to the Japan operations become taxable — potentially retroactively.
Under Japanese domestic tax law, three types of PE exist: branch PE (a fixed place of business), construction PE (relevant to infrastructure, not most tech companies), and agency PE. The agency PE category is the critical one for US B2B tech companies. If a Japan-based person — whether an employee, contractor, or even an independent sales agent — has authority to conclude contracts on your behalf, repeatedly exercises that authority, and does so in Japan, they may constitute an agency PE, triggering Japanese corporate tax liability for the parent company even before you incorporate.
You hire a Japan-based business development contractor to "build relationships" and generate pipeline before you incorporate your subsidiary. If that contractor is signing NDAs, negotiating commercial terms, or closing deals on your behalf, you may already have a PE under Japanese law. Japan's NTA follows OECD BEPS Action 7 definitions, which broadened the agency PE concept. The OECD 6-month threshold for a fixed place is a guideline — functional significance matters more than calendar time. Consult a Japan tax advisor before any Japan-based activity, not after.
Remote Workers and PE Risk
If any of your US-based employees are working from Japan — whether temporarily or as long-term digital nomads — and their functions are core to your business operations (not merely support or auxiliary), you may be creating a branch PE at their home or coworking address. The risk increases where the Japan-based role performs structural functions: sales, product management, technical architecture, or operations decisions. HR and administrative support, by contrast, are typically considered auxiliary under OECD commentary and less likely to create PE.
Transfer Pricing: The Compliance Obligation Most Early-Stage Companies Miss
Once your Japan KK or GK is incorporated and transacting with your US parent, you need a transfer pricing policy. This governs how services, IP licenses, management fees, and intercompany loans are priced between the parent and the Japan entity. Japan's NTA has active transfer pricing enforcement. Pricing that is not arm's-length — for example, charging your Japan subsidiary below-market for software licenses to reduce its taxable profit — will be challenged. For a Series B/C company, a basic transfer pricing study and documentation policy should be prepared before the Japan entity starts operating, not after the first audit notice arrives.
Japan Consumption Tax (JCT) for Foreign B2B Companies
Japan's consumption tax is 10% (8% for reduced-rate items like food). A Japan-incorporated subsidiary is automatically in the JCT system once taxable sales exceed ¥10 million in a fiscal year. For B2B SaaS or tech services sold to Japanese enterprise clients, your Japan subsidiary will collect and remit JCT on all invoices. Foreign companies without a Japan entity that sell digital services (software, online platforms, B2B SaaS) to Japanese customers are also subject to JCT under the "foreign digital service" rules — registration with the NTA is required. Japan's 2023 Qualified Invoice System (QIS) means your Japanese clients can only claim JCT input tax credits if you are a registered QIS issuer. If you are not registered, your product becomes more expensive for Japanese businesses on an after-tax basis. Registration as a QIS issuer should happen at or before your Japan go-live.
Hiring in Japan: Labor Law Basics Every Foreign Employer Must Understand
Japan's Labor Standards Act applies equally to all workers regardless of nationality. The most important thing US and Australian companies need to understand is that Japanese employment law strongly favors employees. Dismissal without objectively reasonable grounds is illegal and courts will side with employees in most contested terminations. This is not a risk to be managed — it is a constraint to be planned around. Hire deliberately, document everything in writing, and never promise employment conditions verbally that you are not prepared to honor formally.
Mandatory Social Insurance Contributions
| Insurance Type | Employer Rate | Employee Rate |
|---|---|---|
| Health insurance | ~5.0% of salary | ~5.0% |
| Employee pension (kosei nenkin) | 9.15% | 9.15% |
| Employment insurance | ~0.95% (general industry) | ~0.6% |
| Workers' accident insurance | Varies by industry (0.25–8.8%) | None (employer-funded) |
| Total employer burden (approximate) | ~15% of gross salary | ~15% |
Rates as of April 2025. Pension rate fixed at 18.3% total since 2017, split equally. Enrollment is mandatory for employees working 20+ hours/week. Note: Mandatory for local Japanese hires. Expatriates from countries with Totalization Agreements (including the US and Australia) deployed to Japan for under 5 years may be exempt from Japanese pension and health insurance under the Detached Worker rule.
The Dismissal Problem
Japan's Labour Contract Act requires that dismissal have "objectively reasonable grounds" and be "appropriate in light of socially accepted ideas." Case law has established a four-part test for economic dismissals (redundancy): the necessity to reduce headcount, exhaustion of alternatives (relocations, salary cuts, voluntary redundancy), fair selection criteria, and adequate consultation with employees. Underperformance against US-style OKRs is not sufficient grounds for dismissal under Japanese law.
This has two practical consequences for US tech companies: First, your Japan employment contracts must be drafted by a Japan-licensed attorney or labor law specialist — do not adapt US offer letter templates. Second, budget for potential severance in your financial model. Amicable separations often involve negotiated severance packages, which vary widely depending on circumstances. We strongly advise retaining a Japanese labor attorney (Bengoshi) to draft separation agreements and manage dispute risk.
What Employment Contracts Must Include
Under Article 15 of Japan's Labor Standards Act, employers must provide written notice of employment conditions including: contract term (fixed or indefinite), working location, job description, working hours and overtime policy, wages (including payment date and method), grounds for dismissal, and leave entitlements. A US-style offer letter that simply states salary and start date is legally insufficient in Japan. Starting the employment relationship without proper written conditions is an immediate compliance violation.
Sales Localization: What US B2B Tech Companies Consistently Get Wrong About Japan
Japan's B2B technology market is the third largest in the world and among the most loyal once trust is established. The structural challenge is that the buying process is fundamentally different: it is consensus-driven (nemawashi culture), risk-averse, relationship-first, and slow by Western standards. A US company that enters Japan expecting a 30-day sales cycle will be disappointed; the same company that allocates 12–18 months to build trust before expecting significant revenue will find a market that pays premium prices and churns at half the US rate.
The Localization Minimum Viable Product
According to CSA Research's long-running "Can't Read, Won't Buy" study — the most widely cited independent research on global localization behavior — 90% of Japanese buyers prefer purchasing products with information in their own language, the highest rate in Asia-Pacific and well above the global average of 76%. The same research found that 66% of B2B technology buyers globally are willing to pay a premium for a localized product (CSA Research, Can't Read Won't Buy — B2B). This is not merely about translation. The localization checklist for a B2B SaaS product entering Japan includes: Japanese-language UI (not Google-translated — genuinely localized), Japanese customer support (preferably local office hours, not 24/7 offshore), Japanese-language contracts and invoices, pricing in yen with consumption tax displayed separately (required under the 2023 QIS rules), address fields that match Japanese postal format, and a Japanese website with Japan-specific case studies.
Companies that launch in Japan with English-only products and "English support available" messaging are signaling that Japan is not a strategic priority. Their Japanese counterparts notice this immediately.
Direct Sales vs Distributor/Reseller
Many US companies default to a Japan distributor relationship at market entry — it feels lower risk and requires less capital. The reality is more nuanced. A strong, well-aligned Japanese reseller can compress your go-to-market timeline by 1–2 years because they bring existing client relationships you cannot replicate quickly. However, distributors control the customer relationship, and transitioning from a distributor model to direct sales is painful, expensive, and often impossible without losing the accounts entirely — because Japanese enterprise clients form loyalty to the sales relationship, not the vendor brand, and redistributing account ownership requires their explicit buy-in. Use a reseller if: you have no Japanese-speaking commercial capability, you are in a sector where relationships are everything (healthcare, government, manufacturing), and you have 18–24 months of runway before you need Japan revenue. Plan the transition to direct from day one if long-term Japan is strategic.
The Timeline Reality
For a B2B enterprise SaaS company entering Japan from the US, realistic revenue benchmarks are: pilot signed within 6–9 months of first credible sales activity; first paying customer at month 9–15; meaningful revenue contribution (representing 5–10% of ARR) at month 18–30. Companies that have a Japanese-speaking enterprise sales hire, an established local case study, and a localized product compress this materially. Companies relying on English-only sales and US-based account management from Tokyo tend toward the outer end of these ranges or fail to close at all.
Costs and Timeline: Numbers a CFO Can Actually Work With
One-Time Incorporation Costs (planning ranges — actual costs vary by counsel, translation, and structure)
| Item | KK | GK |
|---|---|---|
| Government registration tax | ¥150,000 min | ¥60,000 |
| Notary fee (Articles) | ¥30,000–¥50,000 | ¥0 |
| Articles of Incorporation stamp | ¥40,000 (paper) / ¥0 (electronic) | ¥40,000 (paper) / ¥0 |
| Corporate seal (hanko) set | ¥10,000–¥30,000 | ¥10,000–¥30,000 |
| Translation / document prep | ¥100,000–¥300,000 | ¥80,000–¥200,000 |
| Professional fees (incorporation agent) | ¥150,000–¥400,000 | ¥100,000–¥300,000 |
| Total (excluding capital) | ¥480,000–¥970,000 | ¥290,000–¥630,000 |
At ¥150/USD: KK total ≈ $3,200–$6,500. GK total ≈ $1,900–$4,200. Excludes paid-in capital, office deposit, banking fees, visa application agent fees, the mandatory business plan certification fee (CPA/SME consultant), and the ongoing payroll burden for the mandatory local full-time employee (approx. ¥4–7M annually).
Ongoing Annual Compliance Costs
| Item | Annual Estimate | Notes |
|---|---|---|
| Registered office / virtual address | ¥180,000–¥540,000 | ¥15k–¥45k/month |
| Accounting & bookkeeping | ¥600,000–¥2,000,000 | Bilingual CPA required |
| Tax filing (corporate, local, consumption) | ¥400,000–¥1,200,000 | NTA + prefecture + city |
| Annual statutory audit (KK, if required) | ¥0–¥3,000,000+ | Required if capital ≥ ¥500M or revenue ≥ ¥1B |
| Per capita inhabitant tax (minimum) | ¥70,000+ | Even if zero revenue |
| Estimated annual compliance total | ¥1,250,000–¥4,740,000 | ~$8,300–$31,600 |
End-to-End Timeline Summary
| Phase | Timeline | Key milestone |
|---|---|---|
| Decision to start incorporation | Week 0 | Legal counsel engaged, entity type decided |
| Document prep & notarization | Weeks 1–3 | Articles of Incorporation ready |
| Capital deposit & Legal Affairs Bureau filing | Weeks 3–5 | Registration tax paid |
| Certificate of Registered Matters issued | Weeks 5–7 | Company legally exists |
| Tax office registration | Weeks 7–9 | Corporate number obtained |
| Bank account opening | Weeks 7–15 | Highly variable — the critical bottleneck |
| Business Manager visa CoE application | Month 2–3 | Post-incorporation |
| CoE issued | Month 3–5 | 1–3 month processing |
| Executive arrives in Japan | Month 4–6 | Visa converted at consulate |
| First local hire onboarded | Month 5–8 | Recruitment + 1–3 month notice periods typical in Japan. |
EOR vs Subsidiary: When to Use an Employer of Record Instead
An Employer of Record (EOR) is a third-party company that legally employs workers in Japan on your behalf, handling payroll, social insurance, and labor law compliance — without you needing a Japanese entity. EORs are appropriate when you want to test Japan with 1–3 hires before committing to full incorporation, need to hire within weeks rather than months, or are unsure whether Japan will generate sufficient revenue to justify the ongoing compliance cost of a subsidiary. As a rule of thumb, the crossover point where a subsidiary becomes cheaper than an EOR is around 4–6 employees at a 3-year horizon — though this varies significantly based on salary levels, EOR service fees, and your expected Japan tenure.
| Dimension | EOR | KK/GK Subsidiary |
|---|---|---|
| Setup time | 1–2 weeks | 3–5 months (with visa) |
| Setup cost | Minimal | ¥480k–¥970k + capital |
| Monthly cost per employee | $500–$1,500 EOR fee | Lower at scale |
| Business Manager visa | Not possible via EOR | Supported |
| Enterprise credibility | Low — clients see foreign entity | High — Japanese entity |
| Banking & contracts in Japan | Not available | Full capability |
| PE risk management | Does not resolve PE risk | Clarifies tax position |
| Break-even vs EOR | — | ~4–6 employees, 3-year view |
| Best for | Market testing, first 1–3 hires, speed | Strategic commitment, sales, visa, brand |
Frequently Asked Questions
Twenty common questions answered directly — each in plain language, verified against current Japanese law and Immigration Services Agency guidance as of June 2026.
01How long does it take to set up a company in Japan?
02Can a foreign company own 100% of a Japanese subsidiary?
03What is the minimum capital to incorporate in Japan?
04What changed about the Business Manager visa in October 2025?
05Do I need a Japanese resident director to incorporate in Japan?
06What is the corporate tax rate in Japan?
07What is Japan PE risk and how does it affect US companies?
08Can I use an EOR in Japan instead of incorporating a subsidiary?
09How hard is it to open a corporate bank account in Japan?
10Can I fire an employee in Japan?
11Does my Japan subsidiary need a transfer pricing policy?
12What is Japan's Qualified Invoice System (QIS) and does it affect foreign companies?
13Is KK or GK better for a US B2B tech company entering Japan?
14Does my Japan CEO need to speak Japanese for the Business Manager visa?
15How much does it cost to run a Japan subsidiary annually?
16Do I need to localize my product to sell in Japan?
17Can a US LLC be the parent entity of a Japanese KK?
18What is the Japan Startup Visa and who is it for?
19How long does B2B enterprise sales take in Japan vs the US?
20Should I use a Japan market entry consultant or a Big 4 firm?
Ready to Evaluate Japan Seriously?
Smart Contents has spent 11 years operating in Tokyo — not advising from abroad. We've worked with 50+ companies on the pieces that actually determine whether Japan succeeds: the right hire, the right location, the right structure, the right incentives. That experience is now packaged as end-to-end market entry support for US and Australian B2B tech companies at Series B to C stage.
No sales pitch. We'll tell you honestly whether Japan makes sense for your stage and give you a clear picture of what it actually costs and takes.
This guide is for informational purposes only and does not constitute legal or tax advice. Regulations change; verify all figures with qualified Japanese legal and tax counsel before making business decisions. All yen/dollar conversions are approximate at ¥150/USD.