Hi everybody,
I would like to have some feedback from entrepreneurs. I am planning to create a side business. I am hesitating to do it as self-employment or to create a company. I am aware of the major difference (self responsibility is unlimited; Kabushiki Kaisha responsibility is limited to the amount injected in the company) but I would like to know which one you choose and why. What are the pro and cons in your consideration. It would be anyway a relative small structure because this is a side business but I heard that having its company is much better towards clients, banks, etc.
Right now my preference is self-employment since I do not have partners to create the company. I think you need to be at least 2 for a KK or GK. Another concern is how to draft the Articles of incorporation. This will mean mastering Japanese. I found some information on JETRO but would need to go through a specialist. If anyone has someone to recommend in Tokyo area that would be great.
One more: What is the your preference for KK or GK?
Thanks.
Self-employment or Kabushiki Gaisha or Godo Kaisha
Re: Self-employment or Kabushiki Gaisha or Godo Kaisha
Hello,
I am self-employed (Kojin Jigyou) and have been for a few years. I plan on creating a GK this year though.
Kojin-jigyou is the easiest and very cheap to run. All sales is counted as revenue and taxed basically like a salary. You pay health insurance and pension on the default national level, and you can put a lot of stuff as your expenses. I pay an accountant to do my taxes once a year, I send him my sales and everything I want to include as expenses, and he tells me when I go too far (he also tells me when I am missing common stuff I should put as expenses). I am doing purely engineer work and have a few sales companies who sell my services and products to their clients. So the people who pay me trust me from a long term relationship, while the clients are working with the distributors.
K.K. takes a lot of overhead, and is more suited to a start-up kind of company. I believe if you want to receive funding from a 3rd party, only a K.K. can do it. But it might be more complicated than that.
G.K. takes about 100,000¥ to setup (there are a few documents to create and file), and I found a Japanese speaking company that can create standard articles of incorporation and stuff like that.
The main issue with K.K. and G.K. is that you have to pay yourself the same salary every month, which you decide once a year. So unless you have regular revenues or some initial capital to put into your structure, the first year can be difficult.
However, if this is a side business for you, you could also pay yourself a very small salary, and only withdraw the profits once you close the business. Then it is counted as "taishokukin" which has incredible tax advantages.
For bank accounts, it's actually easier to create a "business name" private bank account (like "THE COMPANY SMITH JOHN", must include your full name) than a corporate account. But actually I am not sure if opening a corporate account is compulsory for an incorporated business.
I am self-employed (Kojin Jigyou) and have been for a few years. I plan on creating a GK this year though.
Kojin-jigyou is the easiest and very cheap to run. All sales is counted as revenue and taxed basically like a salary. You pay health insurance and pension on the default national level, and you can put a lot of stuff as your expenses. I pay an accountant to do my taxes once a year, I send him my sales and everything I want to include as expenses, and he tells me when I go too far (he also tells me when I am missing common stuff I should put as expenses). I am doing purely engineer work and have a few sales companies who sell my services and products to their clients. So the people who pay me trust me from a long term relationship, while the clients are working with the distributors.
K.K. takes a lot of overhead, and is more suited to a start-up kind of company. I believe if you want to receive funding from a 3rd party, only a K.K. can do it. But it might be more complicated than that.
G.K. takes about 100,000¥ to setup (there are a few documents to create and file), and I found a Japanese speaking company that can create standard articles of incorporation and stuff like that.
The main issue with K.K. and G.K. is that you have to pay yourself the same salary every month, which you decide once a year. So unless you have regular revenues or some initial capital to put into your structure, the first year can be difficult.
However, if this is a side business for you, you could also pay yourself a very small salary, and only withdraw the profits once you close the business. Then it is counted as "taishokukin" which has incredible tax advantages.
For bank accounts, it's actually easier to create a "business name" private bank account (like "THE COMPANY SMITH JOHN", must include your full name) than a corporate account. But actually I am not sure if opening a corporate account is compulsory for an incorporated business.
Re: Self-employment or Kabushiki Gaisha or Godo Kaisha
Thanks a lot for your reply. That is very interesting.
I have never heard about "business name" private bank account. I should investigate that further.
I have never heard about "business name" private bank account. I should investigate that further.