When starting a business in Japan, there are two legal concepts: a sole proprietorship and a corporation.
This article explains how to stat a sole proprietorship in Japan, focusing on the initial applications and notifications.
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Necessary Applications and Notifications.
You are required to report the opening of an individual business to the tax office. Below are the necessary documents:
Notification of Start of Sole Proprietorship
This is the notification required when starting a sole proprietorship. The deadline for submission is within one month of starting the business.
Official Refference
https://www.nta.go.jp/taxes/tetsuzuki/shinsei/annai/shinkoku/annai/04.htm
Application for Blue Form Tax Return Filing Status
This is the most important document for a sole proprietorship. Obtaining blue form tax return status allows you to enjoy several tax benefits. The filing deadlines are as follows:
- For businesses started between January 1st and January 15th: By March 15th
- For businesses started between January 16th and December 31st: Within two months of starting the business
The tax benefits you can enjoy are as follows:
- Deductible special expenses of JPY 650,000 （This functions like deemed expenses.）
- Deductible expenses of the salaries paid to family members exclusively engaged in the business
- Deduction for bad debt allowance
- Carryforward of net losses for three years.
Official Reference
https://www.nta.go.jp/english/taxes/individual/12010.htm
https://www.nta.go.jp/taxes/tetsuzuki/shinsei/annai/shinkoku/annai/09.htm
Please note that maintaining proper accounting records using double-entry bookkeeping is a requirement to obtain the tax above benefits.
Other Documents
The following documents are not mandatory but must be submitted if applicable.
- Notification of Blue Tax Business Specific Family Salaries
- Notification of Establishment of Payroll Offices
- Application for Approval of Special Provisions for Payment Deadlines of Withholding Income Tax
- Application for a Qualified Invoice Issuer
Our Services
- Tax advisory services, spot tax consultations, support for starting individual businesses and company establishment, and support for startup financing, among others.
- We can handle taxes related to overseas transactions, international taxation, and English support.
- Service areas: Primarily in Nerima Ward, Shibuya Ward, Toshima Ward, Suginami Ward, Nakano Ward, Shinjuku Ward, and Setagaya Ward, as well as the 23 wards of Tokyo,
Nishitokyo City, Mitaka City, Musashino City, and other areas outside the 23 wards of Tokyo, including Kanagawa Prefecture, Saitama Prefecture, and Chiba Prefecture.
Nagano Prefecture (due to being my hometown).
*We can also provide nationwide support using online tools.”
- The content of the blog on this site is written based on various laws and regulations at the time of writing, so the information provided may not necessarily be the most up-to-date.
- The content is presented under limited conditions, and some specialized topics have been avoided to make the articles more accessible to the general public. While we strive to enhance accuracy, the blog administrators will not be held responsible for any damages or disadvantages that may arise from the use of the information provided in the blog (including information provided by third parties).
- When making decisions regarding your own tax issues, please make sure to consult with your tax advisor and make your own judgments at your own responsibility.