How to start a Sole Proprietorship business


Sole Proprietorship

First of all, before starting a company of any kind, make sure your visa status permits it. It must be clear that foreign nationals in Japan must have a visa status that corresponds with their purpose of stay in Japan. Those who have a legal status as a permanent resident, long-term resident, a spouse or child of Japanese national, or a spouse or child of a permanent resident may start a business in Japan. The first type of company we will look at is the Kojin-Jigyo or Sole Proprietorship. This is the easiest and cheapest type of company to start. Kojin-Jigyo (Sole Proprietorship): A business owned and run by one individual and the business owner owns all profits, losses, assets, and debts of the business.

1. You can start immediately as there isn’t any registration procedure required. All you need to do is submit certain notifications to the tax office within 1 month after opening your business.

2. It is cheap to begin as you don’t have to pay any registration costs to the Legal Affairs Bureau.

3. The process of filing annual income taxes is simpler and you usually don’t need an accountant.

4. If you have less than five employees, you aren’t responsible for paying employees health insurance or pension. This can save you a lot of money as your employees pay for their own insurance and pension.

1. Your liability is unlimited. This means if something happens, it is possible to lose your personal assets and still owe debt that becomes garnished from your future wages.

2. After reaching a certain income level, the income tax rate for kojin-jigyo will be higher than corporate taxes.

3. Tax deduction claims are much more limited. This makes your income seem higher and can push you into a higher tax bracket.

4. It is more difficult to obtain credit or borrow money from financial institutions. This is especially true if you do not have any assets to use as collateral.

5. Social credibility is relatively low. Thus, landlords, vendors, customers, and clients may choose not to do business with you.
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