Nagamine & Mishima Consulting

Accounting practice since 1989

Startup Support

services-startup

For startups doing business in Japan, the cost of misinterpreting the tax laws can be high: mistakes trigger stiff penalty fees and late payments accrue 14.6% interest. Japan’s consistent audit policy means that mistakes are likely to get noticed: according to Japan’s National Tax Agency, 1 out of 4 companies doing cross border transactions is audited each year.

It’s crucial to make good decisions as soon as you arrive. Taxation is greatly influenced by the type of structure you’re registered as; in addition, the types of transactions between you and your parent company will impact your tax rates.

Startup support that lets you focus on growth.

Since 1989,  the bilingual professionals at Nagamine Mishima Accounting Office (N&M) have helped startups in Japan minimize tax and avoid accounting pitfalls. We help you focus on growth instead. From initial planning and recruitment to navigating Japan’s complex registration and auditing policies, we help startups accelerate.

Click on any link below to learn more about our startup support services:

Planning your entry to Japan

  • Tax Consultation
  • Defining Business Structure

Business Setup

  • Articles of Incorporation
  • Company Registration
  • Tax Office Documents

 Recruiting

  • Employment Contracts
  • Employee  Handbook
  • Recruiting for Remote Locations
  • Workers Comp

Payroll

  • Monthly Payroll
  • Bonus Payroll
  • Social Insurance
  • Employment Insurance

Cash Management

  • Invoice Payment
  • Tax Payment
  • Bank of Japan Reporting
  • Preserving Bank Seal

Accounting

  • SAP
  • Oracle
  • Navision
  • Netsuite, and others

Tax Return

  • Corporate Tax Return
  • Consumption Tax Return
  • Housing Allowance
  • Property Tax Return
  • Annual Withholding Summary Reporting

Case Studies

Case Study: Choosing Appropriate Entity Structure

Challenge

Company receives conflicting advice about incorporation.

A U.S. company that was incorporating needed to select an entity structure.  Should it be Kabushikikaisha (known as KK)? Or should it be Goudoukaisha (known as GK)? Or is there an option of choosing a branch? This decision has long term consequences: it affects how it will be taxed while doing business in Japan.  In seeking guidance, the company received conflicting advice. The legal advisors thought that it should formed as a GK, while the Japanese representative director candidate requested to have a KK formed.

Our Approach

  • Providing a clear explanation behind the different recommendations.  We explained why the legal advisor proposed GK and why the representative director was pushing for KK.
  • Provided examples of how past clients dealt with the situation.
  • Reviewed the company’s goals and projected 3-5 year business plan to see which selection makes the most sense.

Results Achieved

  • Decision-making was assisted by scenarios of success and failure with cost consequences for each option.
  • Helped the company successfully analyze the setup cost differential for each entity structure.
  • Helped the company understand which entity structure made sense from setup cost, operational tax cost and business scheme perspective.

Case Study: Recruiting an Accountant in Japan

Challenge

English-speaking accountant needed for remote location.

A French subsidiary with offices 2 hours away from central Tokyo had a hard time recruiting a bilingual accountant. Though it had only 4 employees, the parent company wanted to use PeopleSoft for its operation in Japan. Some entries such as inventory control and intercompany transaction for the Japan operation was done in France. Therefore coordination with French parent company was essential. Since the interface of the ERP system was in English, recruitment was difficult.

Our Approach

  • Providing accounting service completely offsite.
  • Increasing efficiency and avoiding misunderstanding by mailing accounting material prior to conference calls.
  • Boosting quality control and speed in monthly bookkeeping by requiring  employees to assist in organizing accounting materials such as inventory counts and aging reports.

Results Achieved

  • Within 3 business days we completed monthly financial reporting.
  • Provided the company with staffing as well as manager level staff assistance for complex transactions.
  • Assisted the company with occasional conference calls conducted by senior personnel when required for tax circumstance confirmation.

Case Study: Social Insurance Office Inspection

Challenge

Passing inspection while keeping confidential information intact.
An American business operating in Okinawa was notified by the local insurance office that it would be inspected for its social insurance status and compensation status. The company had a single employee onsite, someone who was unable to represent the company.  In addition to not speaking Japanese, the employee was not authorized by the U.S. headquarters to access the confidential  information required to be disclosed during the inspection. 

Our Approach

  • Providing a full English translation of the inspection letter.
  • Advising which information to disclose.
  • Designing 2 possible plans for responding to the inspection request:
    • Plan A : Sole employee handles the situation with the assistance of a local translator. Prior to the inspection, our Accounting Office would advise the translator on how best to deal with the inspection. This plan would be more cost effective if the inspection was brief, but could end up being more costly with an extended inspection period.
    • Plan B: The Labor and Social Security Attorney of Nagamine Mishima Accounting Office flies to Okinawa from Tokyo and handles the inspection. This plan offered a sure result with a higher, but fixed, cost.

Results Achieved

The client chose Plan B and passed the social insurance inspection. We provided a comprehensive report, including advice for future inspections.

Case Study: Setting up a bank account in Japan

Challenge

No company representative available to set up a bank account.

A U.S. company with a representative office in Japan wanted to set up a subsidiary. However, the personnel of the existing representative office opted not to join the company, leaving them without a candidate to open up a bank account. The subsidiary’s incorporation could not be completed without the physical attendance of a subsidiary employee, personnel ID and official company documents.

Our Approach

  •  Providing a list of banks which would allow Nagamine Mishima Accounting Office to act as a proxy for opening up bank accounts.
  • Ordering a bank seal on behalf of the company, as required in the submission process.
  • Communicating with the selected bank to obtain the documents required to set up an account, completing the forms on company’s behalf and being interviewed by the bank.

Results Achieved

  • In less than 3 weeks, we successfully set up a bank account for the company.
  • Worked closely with U.S. headquarters to ensure the bank account provided payment support.
  • Reported all payments made from the Japanese client base.

Case Study: Housing Allowance in Japan

Challenge

Existing housing allowance was vulnerable to tax assessment.

An Italian company was in the process of closing their 1st fiscal year in Japan, a period that covered only a 2 month period. They had their internal accountant take complete the financial materials, unfortunately  without having N&M review it.  As preparation for tax return got underway, the N&M tax accountant pointed out that the housing allowance was vulnerable to tax assessment in case of future tax audit.

Our Approach

  • Providing the company with the overview of how housing allowance is treated under the tax code in Japan.
  • Reviewing all contracts for housing, rent and employment contract.
  • Providing insights regarding the tax liability for the company as well as individual employees.

Results Achieved

  • Helped the company avoid being adjusted for withholding income tax obligation.
  • Helped the company comply with tax code by adjusting the housing rent contract.
  • Identified other allowances which were subject to withholding income tax obligations.