On Tax and Accounting
The government of Japan has an unusual love for taxing its residents, especially the corporations. I imagine raising taxes is always justified as somebody’s got to pay down the 250% debt to GDP ratio.
There is a common misconception among government hacks that programs them to think “business = rich, and therefore we must tax the hell out of them”. This is unfortunately a problem for many start ups in Japan and also why many don’t take the leap to become entrepreneurs, but that is a story for another time.
The corporate tax rate is high, and you have no profits to show for the fiscal year, you still have to pay tax at a fixed amount (About 60,000 yen). Currently, the corporate tax rate stands at around 30%. It is difficult to state an exact rate, since rates are tiered, but the Jetro website has a good, up-to-date breakdown of how tax rates are calculated. In addition to that, a series of smaller local and ‘special’ corporate taxes are added on so the total will be somewhere in the ball park of 30-40%. Back in 2015, I knew some larger companies paying north of 40%-50%, which is quite ridiculous.
On Accounting for small business
In Japan, it is generally not common practice to do the accounting for your business on your own, which is quite different from the western world where there are plenty of accounting software and online tools available to help small business operators do their own accounting.
An accountant, which often times can be the lawyer that helped incorporate your company (you will find many that play both roles of accountant (Kaikei-shi 会計士) and incorporation lawyer (Gyoseisho-shi 行政書士)), will generally be an outsider to the company (not a full-time employee) and will quote you a plan based on the size of your business and amount of transactions you make per month. Plans will start at around ￥25,000/month and can go up very high, but consider a minimum of ￥25,000 added to your monthly operational cost when budgeting. You will generally meet with your accountant once a month to pass over receipts (Ryoushusho 領収書) that you pick up from purchases at stores, restaurants, etc., and they will take care of everything for you. There will also be an extra charge at the end of the fiscal year to complete your year-end accounting report.