A manual for starting a sole proprietorship: what to decide, which documents to file, and the flow after you startWhat procedures do you need when you start a shop or a job on your own?
A sole proprietorship can be started simply by filing a notice of business start-up with the tax office. However, some procedures are better completed early, such as the application for approval to file blue-form returns, notifications when hiring people, and preparing account books. Under "If you are starting a business", the National Tax Agency lists the necessary notification forms, and each document has its own deadline. Following the Agency's guidance, this page sets out what to decide before you start, the documents to file, and the general flow after you start. The documents you need vary with individual circumstances, so please make the final check with the tax office or a professional.
- 1. DecideDecide the nature of the business, trade name, place of tax payment and start date
- 2. Start-up noticeFile the notice of business start-up with the tax office for your place of tax payment within one month of starting
- 3. Blue-form returnIf you want blue-form returns, file the application for approval by the deadline
- 4. HiringWhen you pay salaries, file the notice of opening of a salary-paying office and the application for the special due-date rule
- 5. BookkeepingKeep books and file a final tax return the following year
Key points
- The notice of opening or closing of a business by an individual (the notice of business start-up) is filed with the tax office for your place of tax payment within one month of the day you started the business (National Tax Agency A1-5)
- To file blue-form returns, the application for approval to file blue-form income tax returns is in principle filed by March 15 of the year you start the business (within two months of the start date if you started on or after January 16) (National Tax Agency A1-8)
- When you hire people and pay salaries, file the notice of opening of an office that pays salaries. If you filled in the salary section of the notice of business start-up when filing it, a separate filing is said to be unnecessary
- If the number of people receiving salary is regularly fewer than 10, filing an application for approval of the special due-date rule for withholding income tax lets you consolidate payments into two a year
- The notification forms can be filed on paper or through e-Tax. The forms and filling-in instructions are on the National Tax Agency's website
What to do in practice
- Decide the nature of the business, the start date, the trade name and the place of tax payment (home address or business premises)
- Use the free tool "Preparing business start-up filing documents" to prepare the notice of business start-up and, if needed, the application for approval to file blue-form returns and the salary-related documents, and file them with the tax office by the deadline
- Prepare to keep books (double-entry bookkeeping for blue-form returns), and start a business bank account and a record of money in and out
You can start a "sole proprietorship", running a shop or a job in your own name, by handing a paper called a notice of business start-up to the tax office, one of the government offices. There are also the application for "blue-form returns", which makes the tax system easier to use, and notifications for when you hire people. Each has a deadline, so it is reassuring to check early. If you are unsure, asking the tax office or a professional is the surest way.
- ○Applies: I decided what the business is and when it starts
- ○Applies: I found out which tax office to go to (where I live)
- ○Applies: I checked whether to use blue-form returns, and the deadline
- ×Does not apply: I do not need to do any procedures (careful: there are deadlines for filing)
Points
- When you start work, hand a paper called a notice of business start-up to the tax office within one month
- If you want to use "blue-form returns", which make taxes a little more favorable, hand in the application paper by the deadline
- If you hire people and pay them wages, there are notifications for that too
What the words mean
- Notice of business start-up
- A paper that tells the tax office you have started a business as an individual
- Blue-form return (aoiro shinkoku)
- A system in which keeping proper books lets you receive favorable treatment in the tax calculation
- Place of tax payment
- The address that serves as the standard for deciding which tax office handles your tax procedures
- National Tax Agency: National Tax Agency, If you are starting a business (guide to procedures)
- National Tax Agency: National Tax Agency, A1-5 Procedures for notifying the start or closure of a sole proprietorship
- National Tax Agency: National Tax Agency, A1-8 Procedure for approval to file blue-form income tax returns
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.