Here’s how to expand into Japan without legal problems ruining your company

With many countries ranking Japan the best partner in the region, maybe your business is looking to expand into the country. After doing some preliminary research on allies and employees the time will come to get boots on the ground.

There’s just one small problem – without completing the right administrative processes, it could be illegal for you to operate your business there.

In this edition of our definitive guide for expanding into the Japanese market, we’re going to take a look at the decisions you’ll have to make in order to get your company registered and your Japan team legally working in the country.

The easier hard thing – registering your company

Before you can go about securing visas, the company itself needs to exist first. Two types of legal entities that can secure visas for foreigners are godo kaisha (abbreviated as “GK”) and kabushiki kaisha (abbreviated as “KK”). The former is similar to a standard corporation while the latter is the equivalent of a limited liability company. An excellent breakdown of the two, with an easy to understand comparison chart can be found here. Nishimura & Asahi, widely known as a top-tier law firm in Tokyo, wrote the explanation.

“Simply due to the process involved, setting up a KK takes much longer than setting up a corporation in a place like Delaware or California. A comfortable time frame is around 4 weeks on the short end and 6 weeks on the long end. It’s hard to imagine someone getting it done in less than five to seven business days, even with a great Japanese lawyer and full client cooperation,” says Reid Monroe-Sheridan, an American lawyer based in Tokyo.

The time is needed to submit a variety of forms to the Legal Affairs Bureau and have them process and (hopefully) approve the application. Enlisting a local lawyer, “judicial scrivener” (basically, a licensed Japanese paralegal) or consultant specializing in Japanese market entry is highly advisable for accelerating the process and avoiding unnecessary mistakes. He or she can also help procure your company’s official seal.

The first order of business that must be handled before the registration process can begin is giving your company an address. “For the address – you can, prior to even signing, verbally agree to enter into a lease with the landlord of the business premise, and use that address to register the company (i.e., it is unlikely that anyone will check with the landlord to verify). Even if you change your mind, it’s easy enough to change the registered address of the company later, albeit for a small cost. Or, you can have the promoter (an initial shareholder in a kabushiki kaisha) enter into a lease contract with the landlord, on behalf of the company (again no one will verify). So basically, it’s the least of your worries, amazingly enough,” says Aki Itoh, an attorney at Tozai Sogo Law Office.

As noted above, there are significant differences between KK and GK, so businesses expanding into Japan will need to decide what makes the most sense in light of their needs.

Each company is going to have its own revenue, tax, and human resource considerations. All of these can factor heavily into the registration decision making process. Be sure to have a thorough review of all your options and rely on your advisors (and those allies you found earlier) to make the best decision for your company.

Now, let’s flash-forward a few weeks. The registration is taken care of and it’s time to get your visa.

Whatever you do, make sure your lawyer has a more sophisticated method of giving advice.

Short-term visas and visa runs – are you feeling lucky?