Setting up a company in Japan is surprisingly accessible, even for small teams or solo founders. Contrary to common belief, Japan does not impose high minimum capital requirements for registering a business.
But while the legal threshold may be low, the real-world expectations for capital injection are more nuanced. In this guide, we break down what capital means in the Japanese context, how much is required, how it affects perception and the implications for taxes, visas and credibility.
Check out our full incorporating in Japan guide for more resources.
Legal Minimum Capital Requirements in Japan
Let’s start with the core question:
How much capital is legally required to register a company in Japan?
- Godo Kaisha (GK): Minimum capital = ¥1
- Kabushiki Kaisha (KK): Minimum capital = ¥1
Yes, that’s correct. Under the Companies Act of Japan, you can legally establish either a GK or KK with just one Japanese yen in capital. There are no minimum shareholder equity rules for most businesses unless you operate in a regulated sector (e.g. finance, insurance, or construction).
Important Distinction: Legal vs Practical Minimum
While the legal bar is low, companies with extremely low capital may face significant practical hurdles:
- Bank account setup may be rejected
- Visas for foreign founders may be denied
- Customers, landlords and partners may view the company as unserious or risky
What Is “Capital” in the Japanese Context?
Capital (資本金 / shihonkin) refers to the amount of money a company receives from its founder(s) and declares as part of its incorporation filing. It appears on your official registration and defines the initial equity of the business.
Capital Is Not the Same as Investment or Working Funds
Your company can have additional funding through:
- Loans
- Venture capital
- Founder loans
But only capital officially declared and deposited before incorporation counts as shihonkin.
Capital Requirements for GK vs KK: Key Differences
While the legal minimum is the same for both company types, expectations differ.
GK (Godo Kaisha):
- Often used by startups and small businesses
- More flexibility in governance
- Low capital not usually a deal-breaker
Typical GK capital: ¥500,000 to ¥3,000,000
KK (Kabushiki Kaisha):
- Considered more formal and investor-friendly
- Associated with scale, stability and professionalism
- Investors, banks and landlords expect higher capital
Typical KK capital: ¥5,000,000+
Many foreign-owned KKs start with ¥10,000,000 for optics and visa support.
How Capital Affects Founder Visas
For non-Japanese nationals, capital plays a direct role in the visa application process, especially the Business Manager Visa.
Immigration Bureau Expectations:
- ¥5,000,000+ in capital is a commonly accepted benchmark
- Less than that may result in rejection, unless there are strong alternative proofs (e.g. contracts, revenue forecasts, staff)
Without the visa, a foreigner cannot legally manage or reside in Japan as the company’s director. This makes capital one of the gateways to legal presence.
Capital and Corporate Perception
In Japan, your registered capital is a public record. It appears on:
- Your corporate registration certificate (登記簿謄本)
- In contracts with clients or suppliers
- In procurement applications and public tenders
Why This Matters:
- Clients may judge stability based on capital
- Vendors may require minimum capital thresholds for partnerships
- Landlords may deny office leases to companies with very low capital
Banks may reject account applications or credit lines
There’s a cultural expectation in Japan that serious businesses reflect seriousness in their founding capital. Even if you only spend a fraction of your seed funding, symbolic capital often matters as much as functional capital.
Tax Considerations Based on Capital
Capital affects more than perception, it directly impacts taxation.
Companies with Capital Under ¥10M:
- May be exempt from consumption tax (VAT) for the first 2 years
- Lower annual business tax rate
- Eligible for simplified bookkeeping and reporting obligations
Companies with Capital Over ¥10M:
- Automatically liable for consumption tax from year one
- Higher tax reporting complexity
- Ineligible for some SME tax breaks
Strategic Tip:
Many founders deliberately set capital at just under ¥10M (e.g., ¥9.9M) to balance credibility with tax optimization.
How to Fund and Declare Capital
Capital must be deposited into a founder’s personal bank account prior to incorporation. Once the company is formed, the deposit is verified through:
- Bank transaction slips (振込明細書)
- Capital contribution report
- Photocopies of account statements
After Incorporation:
The company opens its own bank account and transfers the funds from the founder’s account.
You cannot retroactively declare funding as capital after registration. Capital must be recorded at incorporation.
Can You Increase or Decrease Capital Later?
Yes, capital increases and decreases are legally allowed but require procedural steps.
To Increase Capital:
- Board/shareholder resolution
- Possible issue of new shares (KK)
- Notification to the Legal Affairs Bureau
- Amend Articles of Incorporation (if needed)
To Reduce Capital:
- Requires special resolution
- Must notify creditors and allow objection period
- File amended registration
Both changes require official fees and filings.
Capital Requirements for Regulated Businesses
Certain industries do have minimum capital requirements by law. Examples:
| Sector | Required Minimum Capital |
| Financial Institutions | ¥50M+ |
| Construction | ¥5M–¥20M (depending on class) |
| Staffing/Recruitment | ¥5M+ |
| Real Estate Brokerage | ¥5M+ |
If you’re entering a regulated market, check with a local legal advisor before setting your capital.
What If You Want to Bootstrap?
For small-scale or lean entrepreneurs, it’s entirely possible to bootstrap a Japanese entity with:
- GK structure
- ¥500,000–¥1,000,000 in capital
- Virtual office lease
- Personal director visa (if already residing in Japan)
However, make sure:
- Your revenue model is credible
- Your bank accepts your setup
- You have bilingual legal support
Going lean is doable, just ensure your foundation is legally airtight.
Key Documents for Declaring Capital
During incorporation, you’ll need:
- Articles of Incorporation (Teikan)
- Statement of Capital Contribution
- Bank transfer slips or screenshots
- Application forms (all in Japanese)
- Personal ID and registered seal (inkan)
Your capital amount must be declared clearly and matches your deposit documentation.
WeConnect Insights: What Our Clients Do
From our experience at WeConnect, here’s what successful founders typically choose:
| Entity Type | Common Capital Range | Reasoning |
| GK | ¥500K – ¥3M | Lean setup, fewer investors, simple ops |
| KK | ¥5M – ¥10M+ | Investor trust, bank setup, visa needs |
We’ve helped dozens of foreign founders navigate incorporation in Japan, capital planning is always one of the first key discussions.
Conclusion: What Should Your Capital Be?
Incorporating in Japan with ¥1 is legally allowed, but rarely advisable. Founders should treat capital as both a compliance tool and a credibility signal. The ideal capital depends on your business model, visa status, tax planning and public perception.
As a rule of thumb:
- GK: Start lean, stay compliant
- KK: Budget for optics, growth and structure
At WeConnect, we don’t just file documents, we guide founders through the full legal, tax and strategic process of setting up in Japan.Whether you’re building a one-person GK or a full KK with investor backing, we’ll help you hit the right balance between cost-efficiency and legal strength. Reach out today for free, expert guidance.