If you are planning to form a corporation, there are several considerations.

First, you need to specifically simulate whether doing the business as a corporation will really save taxes compared to doing it as a sole proprietorship.
The burden of social insurance premiums, which will increase with incorporation, is also a major issue to consider.
Please read my previous post “ADVICE TO INCORPORATE” for more information on this subject.

One thing you need to keep in mind after deciding to incorporate is the difficulty of opening a corporate bank account.

Legal procedures such as registration of incorporation can be done relatively easily by asking a specialist such as a judicial scrivener, or by applying online yourself.

However, in Japan, financial institutions will not easily allow you to open a corporate bank account just because you have established a corporation.
Without a corporate account, you will not be able to include your corporate bank account on your invoices to your customers, which will damage the creditworthiness of your corporation, which is one of its advantages.
Without a corporate account, tax refunds may not be transferred or loans may not be approved.
Thus, the lack of a corporate account is very troublesome

Nowadays, banks are very cautious about opening corporate accounts due to government guidance because paper companies are often used for crime and money laundering.

They will be watching closely to see if your business is “legitimate” and if you have a good track record of running a business.
For example, the following reasons are considered disadvantageous for opening a corporate account.

(1) A corporation that has just been established
➡ Many banks require at least one year’s tax return record from you.

(2) The address of the corporation is a virtual office.

(3) The representative is a foreigner.
➡ If the corporation is represented by a foreigner, your corporation may be refused to open an account because the nature of the corporation’s business or transactions may be unclear or the corporation may be considered a high risk for money laundering or terrorist financing.

(4) No landline telephone

(5) Unknown nature of business

(6) Your capital is small.
➡ Under the law, you may establish a corporation with only one yen.
However, with a small amount of capital, the bank may wonder if you are serious about running a business or if your company is a paper company for criminal purposes.
A company with a small amount of capital will also be at a disadvantage when it comes to obtaining subsequent loans.
It is better to have at least 500,000 yen in capital, preferably 1,000,000 yen.

As you can see, opening a corporate account is a hurdle, but not all financial institutions are the same.
In general, megabanks such as Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation are tough to deal with, but it is relatively easy to open an account at an online bank.
However, online banks have a little problem in terms of creditworthiness to their customers.

Our recommendation is your local shinkin bank.
Some shinkin banks are open to opening corporate accounts for foreigners and are willing to extend loans if you have a good business track record.

This should be taken into consideration when opening a corporate account.

I am a tax accountant in Nagoya.
If you need help with accounting or taxation issues, please contact me.

Certified Tax accountant　 Motohiko Aoyama
e₋mail: bemyself8314@gmail.com