How to choose your status to freelance in Japan?
To start your freelance activity in Japan, you have to choose one of the two legal status below :
- Individual freelance status (also called "Kojin jigyo" in Japanese)
- Society status
1. Le Kojin jigyo
This is a company ran by one individual person. There is no distinction between the owner and the business. So all the profits, losses, assets and liabilities impact both.
You can use a company name.
- Easy to obtain, no need to register before. Just need to declare your activity on the first month with a simple tax declaration. For more information, read our post "Which steps to take to launch your business in Japan".
- Reduced costs: no society tax, only income declaration.
- These companies are considered "less credible" by Japanese companies.
- You can’t open a company bank account, you have to use your personal account.
- The owner's liability is unlimited: he is personnaly responsible for everything that happens in his company.
- The management is more difficult when there are multiple partners.
- The tax rate is higher when the benefits exceed 10 million yen per year.
This is a legal entity where the owner must declare at the Legal Affairs office (homukyoku). There are different types of society : Kabushiki Kaisha (KK), Yugen Kaisha (YK), Godo Kaisha (GK), NPO, associations (Shadan hojin), fondations (Zaidan hojin), etc.
- These companies are considered more credible by Japanese companies.
- The owner's liability is limited.
- Management is easier when there are multiple partners.
- You can separate your professional and personal bank account.
- It requires a registration for its creation, modification and liquidation.
- The investment is heaviest in time and money.
- Tax return is more complex. You need the help of an accountant.
- You have to paid 2 types of taxes : society tax and income tax
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