Establishment of Company

Administrative Procedures after establishment of a Company

In our previous article, we explained how to set up a company in Japan. But even after the registration of establishment, there are still many administrative procedures you need to complete to start your business. Without the knowledge, your company may violate laws and regulations and get fined by authorities or lose some benefits you could obtain.

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Although I have not personally compared to those in other countries, the administrative procedures in Japan are complicated and strenuous. You need to submit many documents to multiple offices and almost all documents need to be sealed. Besides, for non-Japanese residents, it may be difficult to find translated information on each process.

So, in this article, I’ll try to outline the normal processes referencing appropriate website in order to reduce the burden of your research.

Although they are already overwhelming, there are many other procedures you may need to go through depending on your business, scale and other circumstances.

Procedures Related to Tax

Notification of Corporation Establishment (法人設立届)

Once you have established a company, you are required to submit Notification of Corporation Establishment (法人設立届)to the tax office that has jurisdiction over the location of the head office within two months.

For details about tax, please refer to the following page of National Tax Agency’s website:

https://www.nta.go.jp/english/Guidelines_pdf/0

1.pdf

You also need to submit almost identical documents to the prefectural tax office and municipal office. The form and deadline for submission for each prefectures and municipalities is different, so you need to contact each of them to confirm the process.

Application for Approval of Filing Blue Return(青色申告承認申請書)

Blue Return(青色申告) is a system that requires companies to record daily transactions and keep accounting books in accordance with the principles of regular bookkeeping and make a final tax return based on them.

There is White Return(白色申告) as a simpler filing method, but companies that choose Blue Return can have various tax benefits that cannot be received in the case of White Return.

A corporation wishing to apply for this Blue Return needs to submit Application Form for Approval of Filing Blue Return (青色申告承認申請書) to the tax office by the day before the start date of the fiscal year for which the Blue Return is to be applied (or in case of newly establishment of a company, within 3 months from the establishment).

For details, please refer to the following page of National Tax Agency’s website:

https://www.nta.go.jp/english/Guidelines_pdf/06.pdf

 

Notification of Establishment of a Salary-Paying Office(給与支払事務所の開設届出書)

When a company employs people, the company is required to set up a Salary-Paying office(給与支払事務所)and properly manage and pay withholding taxes.

For this purpose, when a company first hires an employee, it must submit a Notification of Establishment of a Salary-Paying Office(給与支払事務所の開設届出書) to the tax office within one month from the start of employment.

A Salary-Paying Office does not require any special equipment, it only needs to have certain documents such as wage ledger and withholding tax book. Therefore, In the case of small and medium-sized enterprises, a Salary-Paying Office is usually located in the same place as the head office.

For details, please refer to the following page of National Tax Agency’s website:

https://www.nta.go.jp/publication/pamph/gensen/shikata_r03/pdf/16.pdf

 

Notification related to Consumption Tax(消費税関係届出書)

If the taxable sales in the first half of the previous year or two years ago exceed 10 million yen, you will be a taxable business operator of consumption tax for that business year.
Therefore, if the business performance gradually improves and the taxable sales exceed 10 million yen in a certain year, the consumption tax must be paid from the next year or two years later, so in order to clarify that, It is required to submit a Notification on Taxable Enterprise Status for Consumption Tax(消費税課税事業者届出書).

Note: if you establish a company with a capital of 10 million yen or more, the company will be a taxable business operator from the beginning for at least two years after the establishment. In this case, Notification of Being Qualified for a Newly Established Corporation for Consumption Tax(消費税の新設法人に該当する旨の届出書) must be submitted.

For details, please refer to the website of National Tax Agency:

For Basic Knowledge
https://www.nta.go.jp/english/taxes/consumption_tax/01.htm

For Notification
https://www.nta.go.jp/english/taxes/consumption_tax/03.htm

Procedures related to Labor Laws

Labor Standards Enforcement Report(労働基準適用事業報告書)

If you hire even one employee, the corporation will be subject to the Labor Standards Law. So, you need to submit Labor Standards Enforcement Report(労働基準適用事業報告書) to the chief of the Labor Standards Inspection Office without delay from the start of employment.

For details, please refer to the following page of Ministry of Health, Labor and Welfare’s website(Japanese):

https://www.mhlw.go.jp/bunya/roudoukijun/roudoujouken01/

Notification of Agreement on Overtime and Work on Days off (時間外労働・休日労働に関する協定届)

If your company make your employees work in excess of statutory working hours (more than 8 hours per day or 40 hours per week) or on statutory holidays (1 day per week), Notification of Agreement on Overtime and Work on Days off (時間外労働・休日労働に関する協定届)must be submitted to the Chief of the relevant labor standard inspection office in advance.

For details, please refer to the following page of Ministry of Health, Labor and Welfare’s website(Japanese):

https://www.mhlw.go.jp/bunya/roudoukijun/roudoujouken01/

Rules of the Employment (就業規則)

If your company hires 10 or more regular employees, you need to make the Rules of the Employment (就業規則)and submit the copy to the local Labor Standard Inspection Office without delay.

For details, please refer to the following page of Ministry of Health, Labor and Welfare’s website(Japanese):

https://www.mhlw.go.jp/bunya/roudoukijun/roudoujouken01/

Procedures Related to Social Insurance

Notification of new coverage (雇用年金保険新規適用届)

Once you set up a company, you will be obliged to enroll in social insurance. So your company is required to submit a notification of new coverage (雇用年金保険新規適用届)to the relevant pension office within 5 days after the registration of establishment. However, if there is no executive remuneration or if it is extremely low, your company may not be able to enroll in the system.

For details, please refer to the following page of Japan Pension Service’s website:

https://www.nenkin.go.jp/service/pamphlet/kaigai/konen-kenpo.files/English.pdf

Enrollment in Social Insurance System(社会保険への加入)

If your company hires an employee (including an officer), it needs to enroll the person in social insurance. For this purpose, your company is required to submit a Notification of Acquisition of Eligibility as Insured Person(健康保険・厚生年金被保険者資格取得届) to the pension office that has jurisdiction over the location of your company within 5 days from the date of hiring the employee.

At the same time, if the employee has a dependent such as spouse, children, parents, your company needs to submit a Notification of Dependents (健康保険被扶養者(異動)届.

In addition, if the employee’s spouse is a dependent, Notification of Acquisition of Type 3 Insured Status(国民民年金第3号被保険者資格取得届) are also need to be submitted. Type 3 Insured Person is a person aged 20 to 60 who is spouse and and dependent of Type 2 Insured Person such as an employee of companies. Type 3 Insured Person doe not need to pay the premium by himself/herself during the period of being Type 3 Insured Person, and it will be reflected in the future pension amount as the premium paid period.

For details, please refer to the following page of Japan Pension Service’s website:

https://www.nenkin.go.jp/service/pamphlet/kaigai/kokunenseido.files/2English.pdf

Enrollment in Workers’ Accident Compensation Insurance & Employment Insurance(労災保険及び雇用保険への加入)

As with social insurance, when you hire an employee, you are, in principle, obliged to enroll the employee in Workers’ Accident Compensation Insurance and Employment Insurance within 10 days from the day after the start of employment. The procedure for joining labor insurance can be done at the Labor Standards Inspection Office(労働基準監督署) and the Public Employment Security Office(ハローワーク), which have jurisdiction over the location of the head office.

Note: Employment insurance may not cover short-term workers who do not meet certain conditions

For details, please refer to the following page of Tokyo Metropolitan Government’s website:

For Workers’ Accident Insurance

https://www.hataraku.metro.tokyo.lg.jp/sodan/siryo/29-10rousai.pdf

For Employment Insurance

https://www.hataraku.metro.tokyo.lg.jp/sodan/siryo/29-11koyouhoken.pdf

 

Thank you for reading this article

In my opinion, the repetitive paperwork can be significantly reduced if the center and local government properly manage and share the information. What the Digital Agency must do first is to overcome the sectionalism, not promotion of My Number Card. More simplified process can invite more startups and investment. In 2020, COVID-19 triggered the digitalization among companies. 2021 should be the government’s turn to change.

BY ATSURO TSUJINO(A LAWYER IN OSAKA)