As a legal services firm that among other things specializes in company incorporation, the professionals at Shinonome have a wealth of experience in assisting both domestic and non-domestic individuals establish businesses in Japan. One recent expat client was John Daschbach, founder and president of JD Media Co Ltd, a business specializing in multimedia production and information design. We asked John to talk a little about his experiences with setting up his company and acquiring the necessary visa to carry on business in Japan.
Q. You have considerable business experience in the U.S. How did you find incorporating in Japan compared with the U.S?
Incorporating in Japan was definitely more complicated. There are more steps to the process, but also, I was incorporating while simultaneously applying for a Business Manager/Investor Visa. So, the two processes had to be carefully coordinated and that’s really what made it complicated. Also, my Japanese is still very basic (although I am studying hard!) So I knew it was essential for me to hire a firm with experienced Japanese lawyers who could navigate the incorporation process for me, but also with staff who had the necessary English language skills to communicate with me and to translate various documents — so I could understand what they were doing on my behalf, what I was signing, etc.
Q. You also worked with Shinonome to acquire a Business Manager/Investor Visa. Do you have any comments for other applicants of this type of visa as to what to expect in the process?
Again, the process for me involved simultaneously incorporating and applying for the visa, so that’s what I can speak to (as opposed the process of applying for a Business Manager/Investor visa in order to come here to run an existing business, for example).
When applying for a visa and incorporating simultaneously, I think it’s important to make sure you have the necessary funds available before you begin. Shinonome was able to give me a very accurate picture of what to expect the total cost to be. Not just their fees (for both incorporation and visa legal services), but all of the various taxes and government fees, and most importantly, the amount of initial capital you must invest in the company. It’s not cheap. This relatively large amount of initial capital investment (at the time, it was 5 million yen) is not a standard incorporation requirement in Japan but it’s an essential part of incorporating while also applying for the Business Manager/Investor visa as Immigration will expect to see at least that much committed.
Also, there are some procedures that might seem like Catch-22s unless you’re prepared for them. For example, immigration will want to see that your company has a commercial office lease. But the lease has to be in the company’s name — so you need to already be a corporation in order to sign the commercial lease. So we incorporated first at my residential address, then signed the lease, then filed a change of address for the company under the new corporate address. This was an added and somewhat bureaucratic cost, but Shinonome had prepared me for it, so it was just already in the budget.
This commercial lease is an important cost to consider. We found that pretty much all of the commercial landlords expected a minimum of two years commitment. And you have to sign and pay the initial costs (rent, deposit, key fee, etc.) before you even apply for the visa, which there is no guarantee you will get. You have to be comfortable with a certain amount of financial risk in this whole process.
Because of such risks, Shinonome made sure that their immigration lawyer had reviewed and approved my draft business plan (probably the most important document accompanying the visa application) before letting their incorporation lawyers commence the incorporation process. Of course, there’s no guarantee you’ll get the visa but they’re not going to let you spend the money to incorporate unless their visa lawyer has a fairly high degree of confidence about your visa prospects. You’re going to have to convince Immigration that this is a business that is likely to make money, and first you have to convince the lawyers. So I’d say it’s important to have a solid draft of your business plan from the outset.
Q. Do you have any words of advice for other expats thinking about setting up a business in Japan?
It should be pretty obvious from what I’ve said so far, but I think what is most essential is to hire experienced lawyers. And if your Japanese is limited, particularly reading kanji, work with a firm who can communicate with you in your native language. You’ll probably pay a premium for that, but it’ll be worth it in the long run.
Also, even if you’re working with a good law firm, it also helps immensely to have a Japanese citizen who you trust (a lot) to partner with. Ideally, they should be an actual legal partner in the company. I was fortunate enough to have such a partner. I think having a Japanese citizen on record as an official member of the company it made it much easier to open bank accounts and sign leases, etc.
For more details about Shinonome, click here.