Resident Status Required to Start up a Business in Japan

The resident status required to start up a business as a manager or an administrator is “Business Management.” 

A typical case is when a foreigner comes to Japan and establishes a company by himself/herself and becomes the CEO. Or when a foreigner is invited to a company already operating in Japan as an administrator, the residence status will be business management.

When you are invited to Japan as an administrator, the immigration bureau will examine the business scale, the volume of work, and the number of employees necessary to have an administrator. If your business scale is not so large, you should consider “Technical/Humanistic/International Services” or “Intra-company Transfer” resident status.

In addition to management or administration’s main activity, the activities of an employee as a subordinate activity are included in the resident status for business management (source: Examination Guidelines). For example, even if a Chinese restaurant owner with a resident status of “Business management” engages in cooking as a part of the management, it is not considered an activity outside the residence status as long as it remains a subordinate activity.

Two types  for the business management status

There are two types for the business management status.

One is (A) the Regular business management visa, and the other is  (B) the 6 months business management visa, which is an exception for business management status using the program to increase foreign entrepreneurs.

There are two requirements in both cases (A) and (B):

(1) you have a company in Japan with a capital of 5 million yen or more, or employ at least two people full-time

(2) you have an office for your company.

In the (A) case, you need to meet the above two requirements when you apply for a business management visa. This means you need to set up a company and have an office before applying for a business management visa.

In the (B) case, you do not need to meet the two requirements when you apply for a special business management visa. After obtaining the special business management visa, you will start to establish a company, rent an office within six months. Then you are to apply for renewal of the business management resident status. In applying for renewal of the visa, you need to meet the two requirements, having a company with 5 million capital, and having an office.

 

(A)Regular procedure

(B) Exceptional procedure

Requirements

Required to set up a company and obtain an office before applying for business management resident status.

After obtaining special business management resident status, set up a company, and get an office.

Someone in Japan who help your business start-up

Necessary

Not necessary

(A) Regular business management visa

This is the basic method. But there are some important practical drawbacks to this method.

Difficulties with bank accounts

When establishing a company, the foreign national must transfer his/her money of at least 5 million yen to his/her own Japanese bank account. However, if the foreign national has been in Japan for less than three months, the Japanese bank will not usually provide a bank account for him/her.

If you cannot open a bank account, you will not be able to establish a company, and you will not be able to obtain a business management visa.

When a foreign national cannot open a bank account, they would ask a business partner or someone trusted living in Japan who has a bank account in Japan to be a co-founder. They can pay the capital contribution into that co-founder’s account.  The transfer will serve as evidence of the capital.  After registering the company, the foreign national then purchases all the shares from the co-founder or run the company together.

In regular business management visa procedure, it isn’t easy to establish a company unless they have a relative or business partner who has a bank account in Japan.

Difficulty in securing office space

In regular business management visa procedure, the foreign national needs to secure an office in Japan and starts paying the rent before applying for the resident status. Although the applicant will not conduct business until the residence status’s approval, they will still have to pay the monthly rent. Further, if the residence status’s approval is not granted, they will have paid the rent in vain, which will hurt both financially and emotionally.

From the above, I think which procedure (A) or (B) is better for you depends on whether you have a business partner in Japan or not.

If you have business partners or relatives in Japan, then (A) is probably the best choice.

If you do not have a business partner in Japan, you will need to establish a company and secure an office on your own, which is a special case (B).