Process for Foreign Entrepreneurs Establishing a Business in Japan
Process for Foreign Entrepreneurs Establishing a Business in Japan
For a foreign national to establish a company in Japan and engage in executive or managerial activities,
the individual must hold a status of residence that legally permits business management,
as explained in Section 1 above.
Except for foreign nationals who already reside in Japan under unrestricted status-based visas
(such as Permanent Resident or Spouse of a Japanese National), as well as those currently residing overseas,
most individuals must obtain a Business Manager or equivalent managerial status of residence
before commencing business operations.
Set forth below is the standard step-by-step roadmap for foreign entrepreneurs preparing to
launch a business in Japan.
STEP 1: Business Planning and Market Strategy
First and foremost, the most critical step—just as for Japanese entrepreneurs—is to determine
what business you will operate. Any startup requires:
- Capital,
- Products or services, and
- Human resources to support ongoing operations.
Because this will be a business launched in a foreign legal, cultural, and commercial environment,
foreign founders are strongly advised to conduct even more careful and conservative planning than they might
in their home country.
STEP 2: Company Incorporation and Office Securing
Once the business plan is finalized, the next step is to incorporate the company.
In most cases, founders will choose either:
- Kabushiki Kaisha (KK), or
- Godo Kaisha (GK).
At this stage, incorporation planning must be conducted with full awareness of:
- Immigration laws and Ministry of Justice guidelines governing the Business Manager and Highly Skilled Professional statuses, and
- Industry-specific regulations applicable to the planned business.
Unlike Japanese nationals or foreign nationals with unrestricted status-based visas—who may register
a private residence as their head office—foreign nationals seeking a Business Manager Visa
must, as a rule, secure a separate dedicated business office distinct from their residence.
So long as the business office has already been secured, the typical timeline for incorporation is:
- 2–3 weeks for persons already residing in Japan, and
- 1–2 months for those residing overseas, due to the need for signature certificates,
notarization, and international courier delivery of original documents.
STEP 3: Acquisition of Required Business Licenses and Permits
If the business requires governmental approval, permits, or licenses,
these must be obtained before operations commence.
Examples include:
- Secondhand dealer license for exporting used vehicles, figures, or goods, and
- Food and beverage business license for operating restaurants, cafés, and similar establishments.
These licenses are obtained not in the personal name of the foreign founder,
but in the legal name of the newly established company.
STEP 4: Immigration Application for Business Manager Status
After incorporation and licensing preparations are complete, the foreign national files an application with the
competent Immigration Services Bureau for:
- Issuance of a Certificate of Eligibility (COE), or
- Permission to change status of residence.
Once approval is granted, the applicant may legally commence business operations in Japan.
The examination period varies widely depending on:
- The jurisdiction of the Immigration Services Bureau,
- The timing of the application,
- The applicant’s background and career history,
- The nature of the business, and
- The completeness and consistency of the business plan and supporting documentation.
In practice, review may be completed in as little as one month,
or may require six months or longer.
Flow of Foreign Entrepreneurship in Japan (Business Manager Visa Route)
| Step | Key Actions |
|---|---|
| STEP 1 | Business planning, funding analysis, product/service design |
| STEP 2 | Office securing and company incorporation (KK or GK) |
| STEP 3 | Acquisition of required business licenses and permits |
| STEP 4 | Business Manager Visa application (COE or change of status) |
| STEP 5 | Fundraising and capital procurement (if necessary) |
| STEP 6 | Visa renewal, compliance, and continuous operation |
Source: Compiled by Continental Immigration Administrative Scrivener Corporation
STEP 5: Fundraising and Capital Procurement
Depending on the business stage and operational needs, additional fundraising may become necessary.
In most cases, funding initially comes from:
- Loans from related parties, or
- Personal capital contributions.
Borrowing from financial institutions or accepting equity investment from outside investors is also possible,
but generally involves significantly higher screening thresholds.
Fundraising is therefore considered a highly case-specific strategic process.
STEP 6: Visa Renewal and Long-Term Immigration Compliance
Even after a managerial status of residence is granted, foreign entrepreneurs do not receive unlimited
and permanent authorization to engage in business activities.
They must continue to obtain periodic renewals of their status of residence.
In the case of the Business Manager Visa, immigration authorities typically examine:
- Financial performance and settlement of accounts,
- Executive compensation levels,
- The continued existence of a legitimate office, and
- Tax payment and social contribution compliance.
Such reviews occur at each renewal cycle—typically at one-year, three-year, or five-year intervals.
Foreign nationals holding status-based visas (such as Spouse of a Japanese National)
must also remain cautious. If the qualifying relationship ends—such as through divorce—the holder may lose eligibility
to renew that status. In such cases, a change to a Business Manager or equivalent status becomes mandatory.
If permission to change status is not granted, the business itself may be forced to cease operations.
Strategic Takeaways for Foreign Founders
- Immigration compliance is inseparable from corporate planning.
- Office securing and visa structuring must be synchronized from the earliest stage.
- Visa renewal risk directly affects business continuity.
- Status-based visas may lose validity due to changes in personal circumstances.
For foreign entrepreneurs, successful business formation in Japan is not a single legal event,
but a continuous immigration-compliance process that runs in parallel with corporate governance,
finance, and regulatory management.
Professional
Masakazu Murai Immigration consultant, financial advisor 18 years’ experience in Investment Banking at Mitsubishi UFJ Morgan Stanley. He had provided financial advisory more than 500 entrepreneurs and senior management.
Gyoseishoshi Immigration Lawyer
– Co head of the Tokyo Gyoseishoshi Association, Minato branch
CMA(Japanese financial analyst license)
CFP (Certified Financial Planner)
MBA in Entrepreneurship
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