Incorporation | Yurakucho CPA Office (Ginza, Tokyo, Japan)
Incorporation
Incorporate Your Business
Have you ever thought about incorporating your business? If you are doing real estate business and your properties are highly productive (or you simply have many properties) and making a lot of money, you need to think about this.
Why do you need to think about incorporation?
The reason comes from the difference between 'Individual tax rate' and 'Corporate tax rate'. If your properties generate a substantial profit, Corporate tax rate is lower than Individual tax, then you are able to save your taxes.
What is taxable income? Generally described as 'Gross income minus business expenses or deductions'.
Any disadvantages of incorporation?
Yes, there are some disadvantages of setting up a company.
For example, a company is a separate legal entity so it requires setting-up expenses to register. Generally, companies are more costly compared to individuals.
Another example is that a company requires a lot of paperwork such as Articles of Association and complicated Corporate tax returns (compared to Individual tax returns). In addition, you need to pay taxes even if your company incurs a loss.
Therefore, if you are thinking about incorporating your business, you also need to think about these disadvantages.
If you want to know more about incorporation
There is no problem if you are very familiar with the Japanese tax and accounting and know how to set up a company (also know the difference between a KK and GK, for example).
If you are doing some research on incorporating in Japan, we recommend you just ask us because that kind of research is time-consuming.