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Justice Kitahama 4F |
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2-2-14 Dosho-machi, |
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Chuo-ku, Osaka-city, |
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541-0045 |
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How do I start my own business? |
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You have two options of starting your business. |
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Become a Sole Proprietor(Kojin jigyou nushi)
Instead of setting up a company, you can start your business as a Sole Proprietor.
All you need to submit are several forms to the tax authorities, the city office, and if found necessary, to the social insurance office. |
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Set up a Limited Company(Kabushiki gaisha)
You can also choose to be incorporated. A limited company(Kabushiki gaisha) is the most common choice among different types of companies. To set up a limited company, commercial registration (shogyo tohki) is necessary, which costs more than JPY200,000 and requires a lot of paperwork. In addition, forms should be submitted to the tax authorities, the city office, and possibly to the social insurance office. |
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Which is more beneficial, a Sole Proprietor or a Limited Company? |
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As discussed above, in the initial stage it costs more money and time to set up a company. It is much easier to start as a sole proprietor. |
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On the other hand, a company can enjoy more tax benefit. The tax benefit increases as sales volume increases. →Case Study |
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Moreover, the society generally places higher confidence in a company than in a sole proprietor. Prospective customers, business partners, banks and even the labor market prefer an incorporated business. Some consider a sole proprietor "less professional" or
"less serious" about business, which may hinder your business. |
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Sole Proprietor |
Limited Company |
| Initial costs / procedures |
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| Tax benefit |
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| Public confidence |
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Do I have to pay consumption tax? |
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If your annual sales volume is less than JPY10,000,000, you are exempt from paying consumption tax. When it reaches JPY10,000,000, you will need to pay on a yearly basis. |
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The amount varies depending on the type of business. For example: |
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The annual sales volume : JPY10,000,000
The consumption tax payable : between JPY50,000 and JPY250,000 * |
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(*depending on the type of business) |
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Naturally, the tax amount increases as sales volume increases. |
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How do I deal with social insurance? |
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There are three types of social insurance costs you need to consider: |
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Employment Insurance: |
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Whether you are a sole proprietor or run a limited company, it is required to pay employment insurance if you have an employee. The insurance cost, 1.55% of the amount of wages, is shared between employer (0.95%) and employee ( 0.60%). |
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Health Insurance: |
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All Limited Companies have to pay health insurance for both employers and employees.
Sole Proprietors hiring 5 employees or more have to pay health insurance for employees.
The insurance cost, which is around 9% of the amount of wages, is shared equally between employer and employee.
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National Pension |
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All Limited Companies have to pay national pension premium for employers and employees.Sole Proprietors hiring 5 employees or more have to pay national pension premium for employees.The premium, which is around 8% of the amount of wages, is shared equally between employer and employee. |
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