Bookkeeping basics once you start a business: the special blue-form return deduction (650,000 yen / 100,000 yen) and the record-keeping requirementsOnce you start a shop or a job, keep a record of your money
Once you start a sole proprietorship, recording each day's transactions in account books is the foundation of your tax return. The National Tax Agency explains that a person who has received approval to file blue-form returns and meets certain requirements can deduct up to 650,000 yen from income (550,000 yen or 100,000 yen depending on the requirements) as the special blue-form return deduction. The amount depends on how the books are kept (double-entry or simple bookkeeping) and how the return is filed (for example, through e-Tax). Following the Agency's guidance, this article sets out the bookkeeping basics worth checking right after you start.
Key points
- To file blue-form returns, you must in principle submit an application for approval to file blue-form returns to the tax office by a set deadline counted from the date you started the business (check the deadline in the National Tax Agency's guidance)
- One requirement for the 650,000 yen deduction is to keep double-entry books, attach a balance sheet and an income statement to a return filed by the deadline, and also either file through e-Tax or store electronic books that meet the stricter standard (National Tax Agency No. 2072)
- The 550,000 yen deduction is described as the deduction available when the 650,000 yen requirements are met except for filing through e-Tax or storing electronic books. People who use simple bookkeeping are eligible for the 100,000 yen deduction
- Books and documents are in principle kept for 7 years, counted from the day after March 15 of the year following the closing date (for books) or the date the document was prepared or received (some documents have a 5-year period)
- If bookkeeping is a burden, options include using accounting software or using bookkeeping guidance from a tax accountant or a chamber of commerce (described in the National Tax Agency's guidance)
What to do in practice
- Use the free tool "Preparing business start-up filing documents" to draft the notice of business start-up and the application for approval to file blue-form returns, and submit them to the tax office by the deadline
- Set up a system for recording transactions in date order (accounting software or account books) from the month you start
- Organize and keep receipts, invoices, copies of bank passbooks and other documents with the retention period in mind
When you start a shop or a job, it is important to record every day when money came in, how much, and how much went out. This record is called an account book. There is a system in which a person who keeps the books properly and completes the required procedures can subtract a certain amount from their income when calculating tax. The amount you can subtract changes depending on how you keep the records. If you are unsure, you can ask the tax office or a tax accountant.
- 1. NotifyNotify the start of the business and apply for blue-form return filing
- 2. RecordRecord each day's money in and out in the account book
- 3. FilePut the whole year together and file the final tax return
Points
- Record the money coming in and going out in an account book every day
- There is a system in which, if you complete the required procedures and keep the books properly, the amount you can subtract in the tax calculation becomes larger
- Keep receipts and invoices carefully for the set period
What the words mean
- Account book
- A notebook or data file that records money coming in and going out
- Blue-form return (aoiro shinkoku)
- A way of filing in which keeping proper books lets you receive favorable treatment in the tax calculation
- Deduction
- Subtracting a certain amount from the base amount used to calculate tax
- National Tax Agency: National Tax Agency, No. 2072 Special deduction for blue-form returns
- National Tax Agency: National Tax Agency, Blue-form returns: why not give them a try?
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.