The process of a foreigner starting a business and obtaining a status of residence ‘Management.’

I’m Takashi Akeyama, a representative of the Niseko VISA & Immigration Support Centre. As the only administrative office in Hokkaido specializing in VISA & Immigration and tourism, we help foreigners living in Hokkaido, mainly in Niseko, Otaru and Sapporo areas, to apply new or extend VISA, to change the status, such as working visas and spouse visas etc..

Some foreigners not only work for a company, but also set up their own business as an independent entrepreneur. In such cases, it is necessary to change their status of residence to ‘Management’. However, this status is not necessarily granted to any company or business. If you do not meet the requirements for the status of residence ‘Management’ at the stage of establishing the company, your application for change of status will be rejected. Even if the company is established, if the company cannot meet the requirements of the status of residence ‘Management’, you will not be able to manage the company and conduct business. Therefore, when a foreigner starts a business, the ‘establishment of a company’ and the status of residence ‘Management’ are inseparably linked. It is necessary to ensure that the requirements are met before establishing a company so that the status of residence ‘Management’ can be obtained from the outset.

In this article, I will explain that the process of setting up a company and obtaining the status of residence ‘Management’ for foreigners.

Introduction: Company establishment first or status of residence first?

When a foreigner starts a business, which comes first: establishing a company or obtaining a status of residence? The Immigration office’s approach to granting status of residence is that ‘company establishment’ comes first. Only when the company is ready to start business, the status of residence ‘Management’ granted. If the status of residence is granted before the company is established, the establishment of the company may be stopped in the middle of the process. It may be appropriate to establish a company first in order to ensure that the management/administrative activities are carried out properly. However, if the company is established but the status of residence ‘Management’ is not obtained, all the money invested in setting up the company and preparing to open the business may be wasted, so this sequence of steps must be carried out very carefully.

Establishing a company　会社設立

The establishment of a company to obtain the status of residence “Management ” is only briefly outlined in this article to give an overview of the whole process. Detailed explanations of each item will be provided in another article.

Decide on the office or shop, and the location (address) of the head office.　会社所在地の決定

The principles for obtaining a status of residence ‘Management’ are

 -To have an office or shop in a separate location from the home.

 -If you have a shop business, ensure that you have a separate office space.

Some people prefer to have an office in their home at first to save on costs. However, this is only allowed in special cases, such as a two-story house or a perfectly separate entrance and exit for the residential and commercial space. In addition, status of residence ‘Management’ is for business management and administration, so it does not presuppose on-site work or simple tasks in a shop. It is based on the idea that you cannot do management and administration work unless you have an independent place to do office work. It is difficult to obtain status of residence ‘Management’ if, like a restaurant owner-chef, you assume cooking as your main task and do little management or administration work.

Contract for office/store　店舗や事務所の契約

Once you have found an office or shop property that meets the requirements of the status of residence, you can sign a lease contract. The important contents of the contract are,

  -The purpose of use of the building must be “office”.

　-The name of the contractor must be in the name of the company.

The contractor’s name must be in the name of the company. The company is renting the property in order to conduct its business in the office or shop. Therefore, the purpose of use of the real estate must be “office or shop”, not “house/residence”. If the purpose of using the property is “residence”, or if the property is rented in the president’s personal name, it is not possible to obtain the status of residence ‘Management’.

Preparation and notarization of articles of association　定款作成と認証

The articles of association are drawn up as the rules of the company. It outlines the fundamental rules of the company, such as the business purpose, amount of capital, number of shares, number of directors and who will be the directors. The completed articles of association are taken to a notary public for certification.

Preparing and paying in capital　資本金の準備と払込

The capital for a company with the status of residence ‘Management’ is usually at least 5 million yen. You must be able to explain clearly how you raised the 5 million yen. If the money was transferred from the home country, a bank statement should be provided; if the money was borrowed from the parents, a loan agreement should be concluded to provide evidence of how the money was raised.

Registration at the Legal Affairs Bureau　法務局での登記

The company’s incorporation is registered at the Legal Affairs Bureau where the company is located. This is the exclusive business of a judicial scrivener, so this procedure must be carried out by a judicial scrivener. Alternatively, if you are able to do it yourself, you can bring the articles of association you have prepared to the Legal Affairs Bureau and pay a registration fee to have the procedure carried out. This process has been completed, the incorporation of the company is complete.

Preparation of offices and shops, refurbishment work and installation of equipment 事務所や店舗の準備、改装工事や備品設置

If it is an office, install office desks, computers and other equipment necessary for business, and carry out telephone and internet installation. For restaurants and other establishments, install kitchen equipment, purchase cooking utensils and tableware, bring in seating chairs and tables, etc., to prepare for the start of business.

Notification to government offices and obtaining business licenses and permits. 役所への届け出・営業許認可の取得

Notify the tax office or social insurance office and complete tax and social insurance procedures. If your business requires a permit, apply for a business license at the city hall or public health center. Apply for and obtain the necessary permits and authorizations for each type of business, such as an antique dealer’s permit for a recycle shop, a building contractor’s permit for a real estate agency business, and a restaurant business permit for a restaurant. By the time you apply for the status of residence ‘Management’, the business permit and notification must be completed.

Recruitment of employees 従業員の確保

When the business first opens, it may be possible for the president to carry out all operations alone. However, as the business management visa is for management and administration, the president is not allowed to do on-site work or simple tasks himself. Therefore, it is necessary to employ an employee to take charge. For example, a practitioner for a massage parlor, a cook or waiter for a restaurant, etc., are hired as necessary employees for the business.

Preparing a business plan 事業計画の作成

A business plan is an essential part of the application for the status of residence ‘Management’. What kind of business or services will you provide? Who are the target customers? How will you attract customers? What will you buy and sell for how much? Who are your suppliers? Monthly cash flow and income and expenditure plan for the next three years.

Application for the status of residence “Management”.

Once all the preparations up to this point have been completed and the business is ready to start, an application for the status of residence “Management” is made to the Immigration Office.

If you are already in Japan, you will apply for permission to change from your current status of residence. For those who will be coming to Japan in the future, they will apply for application for a Certificate of Eligibility. In both cases, you will need to submit the necessary documents as described on the Immigration office’s website, as well as any additional documents required to prove the authenticity of your business. The method and key points of this application will be detailed in another column.

In conclusion

In order to start a business and establish a company in Japan, the status of residence ‘Management’ is required. To obtain this, the company to be managed must be established in accordance with the requirements of the status of residence. In addition, you cannot apply for the status of residence until the company has been established and all business preparations have been completed. Therefore, if you want to obtain the status of residence ‘Management’, you need to consider the visa requirements from the first stage of establishing the company.

The Niseko VISA & Immigration Support Centre help and support foreign nationals who are trying to overcome language, cultural and custom barriers and live as a member of Japanese society. If you have any questions or enquiries about this article, or about the establishment of the company and status of residence ‘Management’, please feel free to contact us by phone or via the ‘Free Consultation Form’ on our website.