GUIDE · SOLE OR COMPANY
Sole proprietor or company?
個人事業か会社かKojin jigyo vs hojin
Many owners with permanent residence or a spouse visa start as sole proprietors. Others need a company from day one. Here is how the two compare.
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Start as sole
Notify
Opening notice to the tax office
Blue return
2 months
Apply within 2 months of starting
Social insurance
5+
Staff for sole proprietors; any company
Subsidies
Both
Most programs accept either
How they compare
| Sole proprietor | Company (KK / GK) | |
|---|---|---|
| Setup | File an opening notice with the tax office | Register at the Legal Affairs Bureau — see Company setup |
| Tax | Personal income tax on profits | Corporate tax on profits; salary to you is taxed separately |
| Social insurance | Required once you have 5 or more regular workers (most industries) | Required from day one, including you as a director |
| Liability | Unlimited — personal assets are at risk | Limited to your investment |
| Business Manager visa | Possible; the ¥30 million counts the total invested in the business | Paid-in capital of ¥30 million |
Starting as a sole proprietor
- Submit the opening notice (個人事業の開業・廃業等届出書) to your tax office — by the filing deadline for the year you start at the latest
- To file a blue return, apply within 2 months of starting (by March 15 if you start by January 15)
- Blue return filers get tax benefits such as larger deductions and carrying losses forward
When to incorporate
- Profits are growing and the corporate tax rate becomes lower than your personal rate
- Customers, banks or landlords prefer to deal with a company
- You need the Business Manager status through a company
- You want to limit personal liability
The right moment depends on your numbers — ask a tax accountant.
FAQ
Can a foreigner be a sole proprietor in Japan?
Yes, if your residence status allows you to run a business — for example permanent resident, spouse of a Japanese national, or Business Manager. You file an opening notice with the tax office.
When must I file the opening notice as a sole proprietor?
The tax office asks for it by the income tax filing deadline for the year you start at the latest. To use the blue return, apply within two months of starting.
Can sole proprietors get subsidies in Japan?
Yes. Most programs, such as the Sustainability Subsidy and the Digitalization & AI Subsidy, accept sole proprietors as well as companies.
Sources
- No.2090 Notifications when starting a business — National Tax Agency
- Blue return application (所得税の青色申告承認申請手続) — National Tax Agency
- Enrollment in Employees’ Pension and Health Insurance — Japan Pension Service
- Business Manager status — revised standards — Immigration Services Agency
This page is a plain-English summary, not legal advice. The official Japanese guidelines always take priority.
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USEFUL TOOLS
- Zeirishi.com — find a tax accountant (free enquiry) ↗Japanese-language service
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- Money Forward Cloud Company Setup — free sign-up ↗Japanese-language service
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