Company Types in Japan: Which Legal Entity Is Best for Foreign Businesses?

Choosing the right Japanese company type, whether KK, GK, branch office, or representative office, is one of the most important steps for any foreign business entering Japan. Get it wrong, and you could face delays, unexpected tax issues, or problems building local trust.

If you’re a foreign founder, CFO, or legal advisor, this guide is here to help. We’ll break down the main Japanese company types, explain how they differ from Western structures, and walk you through the key factors to consider when deciding how to incorporate in Japan. It all depends on which one fits your strategy, so let’s dive into the details to help you make an informed decision.

Contents:

• Japanese Company Types Explained (KK, GK, Branch & Rep Office)
• Decision-Making Framework: How to Choose the Right Structure
• Legal Guidance for International Counsel: Mastering Japanese Entity Choice
• Pick Your Structure, Then Launch

Japanese Company Types Explained (KK, GK, Branch & Rep Office)

Every company operating in Japan has to follow the rules laid out in the Companies Act (Kaishahō). But here’s the part many foreign founders miss: choosing the wrong Japanese company type doesn’t just mean more paperwork. It can trigger re-registration fees of up to ¥400,000 and push your launch back by at least four to six weeks.

If you’re entering the Japanese market, understanding your options isn’t just helpful, it’s essential. This is because the structure you choose will shape how fast you can launch, how much liability you carry and how you’re taxed from day one. 

• Kabushiki Kaisha (KK): Similar to a C-Corp or PLC, this structure offers high trust, limited liability, and comes with higher setup costs.
• Godo Kaisha (GK): Similar to an LLC or Ltd, it’s fast and cheap to set up, but may lack credibility in more traditional sectors.
• Branch Office: Like a foreign branch, it avoids incorporation but makes your parent company fully liable for everything done in Japan.
• Representative Office: Similar to a liaison office, it’s low-risk and easy to establish, but can’t generate revenue or sign contracts.
• Gomei Kaisha: The Japanese version of a general partnership, where all partners carry unlimited personal liability — rarely used today.

Goshi Kaisha: Like a limited partnership, it mixes general and limited partners but still exposes some to full liability.

Comparison of Japanese Company Types (KK, GK, Branch) for Foreign Businesses

Entity Type	Setup Speed	Min. Capital	Liability in Japan	Corporate Tax (Japan)	Governance Burden	Western Equivalent	US Tax Pass-Through?	Best For
Kabushiki Kaisha (KK)	2–4 weeks	¥1+ (typical: ¥1m)	Limited	Yes	Moderate – board optional	C-Corp (US), PLC (UK)	No	Fundraising, long-term growth, strong branding
Godo Kaisha (GK)	1–2 weeks	¥1+	Limited	Yes	Low – director only	LLC (US), Ltd (UK)	Yes	Startups, SaaS, internal ops, quick entry
Branch Office	1–2 weeks	N/A	Unlimited – foreign HQ liable	Yes (Japan income only)	Low	Foreign Branch	No	Operating in Japan without creating new entity
Representative Office	1 week or less	N/A	None (cannot sign contracts or trade)	No	Very low	Liaison Office	N/A	Market research, hiring staff pre-incorporation
Gomei Kaisha	2–4 weeks	N/A	Unlimited for all partners	Optional (pass-through)	High – all partners liable	General Partnership	Yes	Legacy cases, not common for foreign businesses
Goshi Kaisha	2–4 weeks	N/A	Mixed: some partners limited, some not	Optional (pass-through)	Moderate	Limited Partnership	Yes	Niche structures or internal family ventures

Need quick guidance? Talk with our Japan entity specialists, or read on to find out more about each company type.

Kabushiki Kaisha (KK) – The Joint Stock Company

If you need Japanese investors or access to serious banking relationships, a KK is the structure to choose. It’s the only company type in Japan that allows local share issuance—and it signals long-term commitment. Think of it like a US C-Corp or UK PLC.

• Setup takes around 4 to 6 weeks after your seal is approved
• Liability is limited to the capital you put in
• You’ll pay standard corporate tax, with withholding on dividends
• Annual filings and board meeting records are required under the Companies Act

Best suited to foreign businesses planning to raise funds, build credibility, and scale a lasting presence in Japan.

Key KK setup requirements:

• One director (no nationality requirement)
• Registered Japanese office address
• Articles of Incorporation and a registered company seal (inkan)
• Most firms use at least ¥1 million in initial capital to satisfy lenders
• Expect to pay filing and notary fees during incorporation

Common challenges include delays registering your seal, bank paperwork post-setup, and the misconception that being foreign-owned reduces your compliance burden.

Godo Kaisha (GK) – The Flexible LLC Alternative

If you need fast setup, simple structure, and US tax pass-through eligibility, a GK is likely your best fit. Often referred to as Japan’s version of an LLC, it avoids board formalities and lets foreign-owned subsidiaries in Japan launch quickly.

• Setup usually takes 2 to 3 weeks
• Liability is limited to the capital you invest
• Same corporate tax rate as a KK; US parent companies can often elect pass-through tax treatment
• Doesn’t allow share issuance and may be seen as less formal by banks and investors

Best suited to SaaS startups, internal operations, or fast entry where fundraising and public perception aren’t immediate concerns.

Key GK setup requirements:

• One member (individual or corporate)
• A Japanese business address
• A company seal (inkan) and basic registration filings
• No option to issue shares, which may limit credit access for larger loans

Some lenders may view GKs as less credible than KKs, especially for debt financing or institutional partnerships.

Branch Office: Operate in Japan Without Incorporation

If you need to run full operations in Japan but don’t want to form a new company, setting up a branch is a straightforward option. Since it’s treated as an extension of your parent company, there’s no need for Articles of Incorporation. You can hire staff, sign contracts, and begin trading in as little as two to three weeks.

• Liability is unlimited, the parent company is fully responsible for local obligations
• Corporate tax applies, but only to income earned in Japan
• No board structure needed, just appoint a local representative
• Generally accepted for sales and service delivery, but some banks may prefer working with a KK or GK

Best for global firms entering Japan to support sales or service clients under their existing brand.

Setup requirements and considerations:

• Must have a Japanese office address and a resident representative
• Register the branch with the Legal Affairs Bureau (filing fees apply)
• Be aware: there is no corporate veil—regulators can pursue the parent company directly for liabilities incurred in Japan

Representative Office: Low-Risk Market Entry in Japan

If you’re just exploring the market or coordinating suppliers, a Japanese representative office offers a simple way to establish a presence in Japan without triggering tax or compliance obligations. It allows you to rent office space and hire staff, but not conduct revenue-generating activity.

• Setup typically takes 3 to 5 business days
• No corporate tax, as long as you don’t generate income
• No legal liability structure—it operates under the foreign parent’s name
• Not allowed to sign contracts, invoice clients, or sell products locally

Best suited for early market research, hiring initial staff, or managing pre-launch logistics.

Key setup points:

• May require notification to the Bank of Japan under foreign exchange rules
• Needs a Japanese office address and local admin support (usually via payroll agent)
• Cannot be upgraded—if you plan to trade later, you’ll need to dissolve and incorporate as a KK or GK

Gomei & Goshi Kaisha in Japan — High-Liability Partnership Models

Most foreign investors never need Japan’s partnership models, but they still pop up from time to time. Here’s the 30-second rundown on Gomei Kaisha and Goshi Kaisha, the high-liability structures you’ll usually skip in favor of a KK or GK.

Model	Liability	Western Twin	When (if ever) to use
Gomei Kaisha	Unlimited for all partners	General Partnership	Legacy family firms sharing full risk
Goshi Kaisha	Mix: unlimited for general partners, capped for limited partners	Limited Partnership	Niche deals where one partner funds, others run

Why foreign companies avoid them: no corporate veil → personal or parent-company assets are exposed. Modern entrants nearly always pick KK or GK instead.

Decision-Making Framework: How to Choose the Right Structure

Choosing the right legal entity in Japan depends on what you’re trying to achieve. This framework breaks it down by key criteria—so you can move from general knowledge to a clear direction.

Your Situation	Best Fit	Why It Works
Exploring the market	Representative Office	No setup cost or tax exposure. Great for research and staffing without revenue.
Need fast setup and simple ops	Godo Kaisha (GK)	Low-cost, fast registration, minimal compliance. Ideal for internal use or SaaS.
Need high credibility or external funding	Kabushiki Kaisha (KK)	Recognized by banks and investors. Can issue shares. Supports long-term growth.
Want full operations without incorporation	Branch Office	Quick setup. Lets you operate fully. But parent company holds liability.
Structure with shared liability	Gomei/Goshi Kaisha	Rarely used by foreign firms. High liability risk. Suitable for niche cases only.
US-based with tax efficiency needs	Godo Kaisha (GK)	Check-the-box eligible. Allows pass-through taxation to US parent.

Example Profiles

• US SaaS startup: GK for speed, flexibility, and favorable US tax treatment
• German manufacturer: KK to support local partnerships, credibility, and long-term sales
• UK marketing agency: Branch Office to support local clients without full incorporation
• French consulting firm testing Japan: Representative Office for market validation
• Traditional Japanese partner setup: Goshi Kaisha (if shared liability is intentional)
  

Choosing the right structure starts with clarity on purpose. Once you define what success looks like in Japan—speed, control, cost, credibility—your legal path becomes a lot clearer.

Legal Guidance for International Counsel: Mastering Japanese Entity Choice

Every business structure in Japan is shaped by two key laws: the Companies Act (Kaishahō) and the Foreign Exchange and Foreign Trade Act (FEFTA). Aligning your client’s entity choice with their tax, liability, and exit goals turns basic filings into high-value strategic advice.

Five Questions to Answer Before You Incorporate

1. What’s the business scope? Is it market research, hiring, trading, or manufacturing?
2. How much risk is acceptable? Do they need a separate legal entity (KK/GK) or will a branch structure suffice?
3. How will they raise capital? Only a KK can issue shares locally.
4. Is U.S. tax treatment a concern? GKs allow check-the-box election for American parent companies.
5. How much governance is realistic? GKs require minimal oversight. KKs involve board procedures and filings.

Japan vs. Western Entity Norms: At a Glance

Key Area	Japan (KK / GK)	Western LLC or Corporation
Director structure	KK often needs a board; GK does not	Most LLCs allow solo management
Legal documents	Teikan (Articles of Incorporation)	Operating Agreements / Articles
Company seal	Inkan is mandatory	Rarely required

What to Watch As an Advisor

• Control vs. perception: KKs build local credibility, but GKs and Branch Offices move faster.
• Cross-border tax impact: Always consider FEFTA when structuring flows or HQ financing.
• Exit routes: Rep Offices can’t convert—you’ll need to dissolve and re-incorporate later if plans change.

Common Mistakes to Avoid

1. Choosing based on upfront cost, not long-term strategy
2. Underestimating the compliance burden of a KK (audits, board records)
3. Ignoring how local banks view GKs and branches—often as temporary or “lightweight”
4. Getting locked into a Rep Office that must be shut down and rebuilt if the business scales

Bottom line:

The right entity choice shapes liability, taxes, investor options, and speed to market. Map legal structures to business strategy before any paperwork is filed.

Pick Your Structure, Then Launch

Choosing the right Japanese company type isn’t paperwork, it’s the switch that controls your tax bill, liability shield, and how quickly Japanese banks say “yes.” Now that you’ve compared KK, GK, Branch, and Rep Office side-by-side, the next step is simple:

→ Get a free 30-minute entity strategy call with our Japan desk.

At weConnect, we’ve helped hundreds of global companies find the right setup for Japan, from first-time market entrants to multinational expansions. Whether you’re planning a lean team or a full-scale launch, we’ll help you get it right the first time.

Ready to lock the structure and start operating in Japan?

Book your call now: