Freelance & business

File a notification of business opening (開業届) with your local tax office within about a month of starting — it is free and short. At the same time, file the blue-return application (青色申告承認申請書) to unlock the up-to-¥650,000 deduction. You keep your existing visa status if it permits the work; some visa types need permission for self-employment, so check your residence status first.

The blue return is a filing status that rewards proper bookkeeping. With double-entry books filed electronically, you can deduct up to ¥650,000 from your income, carry losses forward for three years, and deduct family salaries. The trade-off is more disciplined recordkeeping — which cloud accounting software largely automates. For most freelancers with steady income, the tax saving clearly outweighs the effort.

It depends on your clients. Registering gives you a T-number so business clients can claim consumption-tax input credits on what they pay you — but it also makes you a consumption-tax payer, adding cost and paperwork. If your clients are consumers or tax-exempt small businesses, registering may add cost for no benefit. If your clients are companies that demand qualified invoices, not registering can cost you work. Weigh your client base; a transitional credit for buyers from unregistered suppliers is stepping down over time.

A common rule of thumb is to reserve 20–35% of profit for income tax, resident tax, national pension, and national health insurance combined — higher as your income rises, because income tax is progressive. Remember resident tax and health-insurance premiums are billed based on the prior year, so your bills lag your income. Set the reserve aside in a separate account each month rather than facing it all at filing time.

As a sole proprietor you generally enroll in National Health Insurance (国民健康保険) and the National Pension (国民年金), and you pay both yourself — there is no employer split. National Pension is a flat monthly amount; National Health Insurance premiums are income-based and billed by your municipality. You can add optional coverage (e.g. the national pension fund, iDeCo, or income-protection insurance) to close gaps. Budget these into your tax reserve.

A sole proprietor pays national income tax (progressive) and local resident tax (~10%), both on business profit after expenses and deductions, plus National Pension and National Health Insurance premiums that you fund yourself. If your taxable sales pass ¥10 million — or you register for the invoice system — consumption tax is added. Resident tax and health-insurance premiums are based on the prior year, so bills lag income. Confirm current rates and deductions each year, as recent reforms have moved the basic deduction and thresholds.

By default you are an exempt business until taxable sales in the base period (for an individual, the year two years earlier) exceed ¥10 million; a specified-period test on the prior year’s first half can also trigger it. However, registering for the invoice system to issue a T-number makes you a taxable business even below ¥10 million. Taxable businesses can often reduce the calculation using simplified taxation or the temporary 20% special measure, both of which are date-sensitive and being revised through 2026–2029 — confirm your year with the NTA or a 税理士.

freee, Money Forward Cloud, and Yayoi all import bank and card data, keep double-entry books, and produce blue-return forms and e-Tax data. freee is guided and beginner-friendly; Money Forward Cloud is more flexible with broad integrations; Yayoi is the long-established option with the widest tax-accountant familiarity. All three interfaces are Japanese-only, so budget for some Japanese or a helper. Compare current plans at the tier level and try a trial rather than choosing on brand or headline price.

Self-employed savers can stack deductible schemes. Small-business mutual aid (小規模企業共済) allows ¥1,000–70,000/month (up to ¥840,000/year), fully deductible, paid out when you close or retire the business. iDeCo lets the self-employed contribute up to ¥68,000/month, a ceiling shared with the National Pension Fund. The extra pension (付加年金) cheaply raises the state pension. All reduce this year’s taxable income while building your own safety net; lump-sum payout timing rules interact, so plan large withdrawals with a professional.

For certain fees paid to individuals — writing, design, translation, lectures, and some professional services — the paying company must withhold income tax at source (about 10.21%) and remit it for you, so the deposit arrives smaller than the invoice. This is a prepayment, not a loss: when you file, you total the tax already withheld from each client’s payment record and credit it against what you owe, which often produces a refund. Track withholding per client so you claim all of it and don’t effectively pay twice.

Possibly, even under the often-cited ¥200,000 line. That figure is a national income-tax filing-obligation rule for certain employees settled by year-end adjustment — not a tax-free allowance — and a separate resident-tax declaration to your municipality can still be required. Whether the income is business income (which unlocks the blue return and loss offset) or miscellaneous income depends mainly on running the activity like a business and keeping proper books. If you intend it to be a real business, file the opening notification and keep double-entry records from the start.

Any cost genuinely incurred to earn your business income — supplies, software subscriptions, professional fees, client travel, and communication — is deductible if you keep the receipt and can show the business purpose. Costs that serve both life and work (home rent and utilities, phone, car) are split by a reasonable, documented ratio (家事按分), such as floor area or usage time. Cheap tools are expensed at once, but bigger equipment is depreciated over its useful life; small-asset thresholds and useful-life tables are set by the NTA and change, so confirm current figures.

There is no single magic number; incorporate when stable, higher profit makes the corporate-tax advantage outweigh the added fixed costs, and usually when a non-tax reason also applies — hiring, raising money, bigger contracts, consumption-tax timing, or clients that will only bill a company. A company adds incorporation fees, annual local taxes even in a loss year, mandatory employees’ social insurance, more complex accounting, and typically a tax accountant. Model your own tax and social-insurance outcome as a proprietor versus a company with a 税理士 before deciding.

A godo-kaisha (GK) is cheaper and simpler to form and run — no articles-notarization fee and a lower registration tax — with the same limited liability, so many solo founders start there. A kabushiki-kaisha (KK) costs more but has the strongest public recognition and can issue shares to raise capital, which matters if you expect investment or enterprise clients that prefer a KK. You can convert a GK to a KK later. Fees, capital, and governance rules are statutory and change, so confirm current requirements before filing.

Normally wages to family are not deductible, but blue-return filers can deduct a salary to a family member who works exclusively in the business (青色事業専従者) if they file the required notification in advance and the amount is reasonable for the work. The salary becomes the family member’s taxable income, and the “works exclusively in the business” condition is real — a token salary to someone with a separate full-time job will not stand. Keep it defensible with a timely notice, market-consistent pay, actual payment, and records, as overstated family salaries are an audit target.

Yes. Subsidies (補助金) from the SME Agency and ministries target goals like equipment, IT adoption, or business sustainability; they are competitive, capped, require a co-payment, and usually reimburse after you spend. Grants (助成金), often from the labor ministry, are rule-based and frequently tied to hiring or working conditions. Search official portals such as jGrants and the SME Agency, and note local government and chamber-of-commerce programs. Most pay in arrears, so budget the cash-flow gap and keep every quote, invoice, and payment record; misused funds can have to be returned.

It depends on your residence status. Permanent residents and certain spouse/long-term statuses generally allow broad self-employment; activity-based work visas authorize specific employment and may not cover independent freelancing or running your own company without a change or permission; students and dependents work only within their permitted-activity limits. Running a company usually points to the Business Manager (経営・管理) status, which expects a real office, a business plan, and a capital/scale requirement that is under review. Filing a tax opening notification does not grant immigration permission — confirm your status with the Immigration Services Agency or a qualified professional first.