7. How to open a corporate bank account for a startup business in Japan
When setting up your business in Japan, it is beneficial for you to have a corporate bank account. Unfortunately, opening a corporate account is not easy, as there are some complicated processes involved. This article intends to make the processes easier by explaining the steps involved in opening a corporate bank account.
1. Advantages of Opening a Corporate Bank Account
2. How Long Does it Take to Open a Corporate Bank Account?
3. The Process of Opening a Corporate Bank Account
4. Attention! Reasons Why Applications are Denied
Advantages of Opening a Corporate Bank Account
It is beneficial to open a corporate bank account for entrepreneurs starting their business in Japan because a corporate bank account will help in setting up your business. Opening a corporate bank account is strongly recommended because of the following advantages:
1. Availability of a corporate credit card
You can use a corporate credit card, and not your personal credit card when carrying out business transactions.
2. Easier accounting operation
The financial records of the business are clear, and it makes it easier to see the expenses that need to be reduced by keeping track of the flow of funds and the balance on hand.
3. Trusted by clients and customers
Having a corporate account earns the trust of your business partners and increases your social credibility. If a bank account in the name of the representative is used for business transactions, you may be treated as a sole proprietor, which has less social credibility than a corporation.
How Long Does it Take to Open a Corporate Bank Account?
Unlike a private bank account that can be generally opened in a day, a corporate bank account takes longer because of the processes involved. Firstly, there are some documents used in opening a corporate account that you need to apply for. One example is a copy of the corporate registration, which takes about one to two weeks to obtain after application. It will then take about one to two weeks more for all the required documents to be approved by the Legal Affairs Bureau. Therefore at least a month is needed in opening a corporate bank account.
The Process of Opening a Corporate Bank Account
Here are the processes involved in opening a corporate bank account.
1. Open a personal bank account
When setting up a business in Japan as a foreigner, you will need a personal bank account. This account will be checked later on by the Legal Affairs Bureau to confirm whether the money in the account is equivalent to the required capital. Since this is before your company is established, the name on the bank account will be that of the founder or representative director who intends to establish the company.
It is not difficult to open a personal bank account. Check out our previous article “Procedures for Coming to Japan with a Startup VISA:
Obtaining a Phone Number, a Name Seal and a Personal Bank Account”, where we explained the procedure for opening a personal bank account.
2. Transfer the capital into your personal bank account
After opening a personal bank account, you have to transfer your capital into your personal bank account. This capital shows the price of the property to be invested at the time of establishment. When the amount of capital is too small, you may be refused the opening of a corporate account due to creditworthiness.
3. Receive a statement of deposit and prepare a balance certificate
After transferring the capital, you can obtain a statement that shows the deposit made from the bank, as well as your balance certificate to show how much money you have in the bank account. These two documents are required for the registration of your business.
4. Choose a bank for opening a corporate bank account
Most people typically use the same bank used for their personal account for their corporate account. The choice to use the same bank or change the bank is yours. It is essential to add that there are several banks in Japan. Thus, you should carefully check if your bank choice meets the criteria you need to run your business before making your decision. Things like bank proximity from your office, the bank charges, ATM transfer limits, availability of online banking services, and cost of the service usage are the few things you should consider.
It is also worth noting that banks like Shinsei Bank, Mizuho Bank, Mitsubishi UFJ (MUFG) Bank, and SMBC Trust Bank almost always have English-speaking staff in large branches.
Generally, it is considered that it is hard to open a corporate bank account in major banks, even for a Japanese. Therefore, local banks will be a preferable option. Additionally, Japan has internet banking that allows you to open a corporate bank account over the internet. These banks are said to be relatively easier to open an account than opening at a physical bank.
5. Submit the required documents to the bank
The following documents are required in opening a corporate account:
• A copy of the certificate of corporate register or a certificate showing the complete records of your company to-date which can be obtained from the Legal Affairs Bureau• Certification of official registration of the corporate signature• Corporate bank seal certified within the last three months obtained from the Legal Affairs Bureau• Your certificate of incorporation• A corporate signature stamp registered with the regional Legal Affairs Bureau• A corporate signature stamp that would be used for bank transactions.This would be a Hanko designed for your business. You are allowed to use the signature stamp registered in the Legal Affairs Bureau as the signature stamp used in the bank transactions. However, most businesses have separated these signature stamps because of the problem it creates when the registered corporate signature stamp is lost.• The resident card of the representative director
Sometimes, additional documents may be required. Note that all the documents have to be original copies. They would be meticulous about consistency in all documents. So, if you have a partner, try to use the same personal information across all documents.
6. Interview with the bank
After the document submission, there would be an interview with the bank representatives. You would be asked questions such as the kind of business you are operating, your clientele, and your prospective business income. If your business is already running, showing them things like your websites, business cards, and your customer receipts would be a good idea. This will give the bank representatives better insight into your business. Some bank representatives may also come to see your office space.
A tip for the interview is to dress formally; a suit would be best as it is the norm in all Japanese formal settings.
After the interview, it takes about two weeks for the bank to go through the documents and get back to you.
Attention! Reasons Why Applications are Denied
In truth, it is very difficult for foreigners to open a corporate bank account in Japan, and it is one of the biggest barriers in starting a new business in Japan. There are three major reasons why applications are denied;
• The amount of capital is small
Under the current Japanese Companies Act, it is possible to set up a company with a capital of 1 Japanese yen. However, when considering management sustainability, you might be refused the opening of a corporate account due to creditworthiness if the amount of capital is too small.
• There is no actual office
Recently the number of crimes using corporate accounts such as wire fraud has been increasing. Therefore the bank will examine whether the business is really carried out at the address written on the copy of the register. If you have a virtual office, you might not fail the screening just because it is a virtual office, but the probability of passing the screening will be low.
• Inappropriate business purpose
The business purpose is the content of the business that the company mainly conducts, and it must be stated in the articles of incorporation. If there are a lot of business objectives or inconsistent objectives listed on the document, it may be difficult to understand from the outside what kind of business the company is doing, making the business look unreliable.
In conclusion, it is not easy for foreigners to open a corporate bank account in Japan because of the numerous documents required. However, there are some advantages to having a corporate bank account for the running of your business. Thus, we recommend you to consider if you need to opening one, based on the advantages we have explained in this article.
Stay tuned for further articles on foreign entrepreneurship in Japan! This series, “How to Start a Business in Japan,” includes:
• How to Start a Business in Japan: An Overview• All You Need to Know about the Startup VISA• Procedures for Coming to Japan with a Startup VISA: Renting a House and Resident Registration• Procedures for Coming to Japan with a Startup VISA: Obtaining a Phone Number, a Name Seal and a Personal Bank Account• A Guide to obtaining a Business Manager VISA• Procedures for Incorporating a Business and Renting an Office
Future articles would be discussing
• Application for labor insurance• Making a Business Plan• Procedure for setting up a business in Kobe