Many small business owners and entrepreneurs want to know how to sell in Japan. Well to sell in Japan, you need to have a company. So how should you incorporate your business in Japan? Company registration isn't as difficult as one may think. To know what type of company to establish in Japan is to know what types of entities are available and understand the differences between them.

The types available are branch office, representative office, a subsidiary (KK or LLC) or LLP. Unlimited partnerships (Gomei-Kaisha) and limited partnerships (Goshi-Kaisha) are also possible but they are not as favorable as the liability of the equity participants are unlimited under Japan's Corporate Law.

This article will focus on choosing between a KK (joint-stock company) or LLC because they have become the more common forms due to a government rule change in 2006 that allows owners to establish an LLC or KK with an initial capital of just one yen.

So what is the best way to establish a company in Japan? In order to answer this question you have to ask yourself whether or not your company image will play a big role in driving sales. For example, if the business you want to establish is a restaurant then you’d want to incorporate as an LLC. Because the fact of the matter is, customers’ decision to patronize one restaurant over another is based on the food quality, price, cleanliness, service, etc. They couldn’t care less whether your restaurant is an LLC or KK. So why pay more for a KK when you don't have to?

Now, on the other hand, if your business deals with selling products/services online then you’d want to incorporate as a KK. Trustworthiness and credibility are important factors to anyone doing high money value transactions or business over the internet. This is more so for Japanese consumers. They’ve always associated businesses incorporated as KK as being financially sound and not a fly-by night operation. This is because it used to be that you would need several hundreds of thousands of yen in capital to incorporate a business in Japan.

Even though this is no longer the case, there is still a little bias in favor of KK among the eyes of the Japanese. Cost (notary and registration tax charges and legal service fees) is also another key factor in deciding what type of entity to incorporate. Will explain next time on how to incorporate on the cheap.

Jetro is great place to get info on doing business in Japan. They provide free consultation, temporary office space, etc to people who want to set up a company, branch or representative office in Japan. However, these services are intended for overseas investors. They aren’t as helpful for people living in Japan who want to start a business. Nonetheless, they have a terrific library full of Japanese/English books on Japan’s statistics and economic data as well as industry and market info.

For more information on how to incorporate a business in Japan, please feel free to contact us. We have partnerships with bilingual (English/Japanese) legal services that can complete a company registration within 2-3 weeks. We would be happy to put you in touch with them.

This article is meant for informational purpose only and not to be construed as legal advice on incorporating a company in Japan.