The reality of establishing a corporation overseas

The application procedures for establishing an overseas corporation are complicated and require different languages, so it takes more time and effort than establishing a corporation in Japan. Overseas corporation registration is generally handled by a professional such as a judicial scrivener, certified public accountant, or tax accountant.

Hurdles for individuals setting up an overseas corporation

Corporate registration requires complex legal knowledge and understanding of systems.
Especially for first-time users, it can be time-consuming and costly.

What is corporate registration agency?

Registration agents are services provided by registration professionals such as certified public accountants, judicial scriveners, tax accountants, etc. By requesting a registration agent, you can establish a corporation smoothly without spending a lot of time or money.

Advantages and disadvantages of establishing an overseas company

There are three ways to do business overseas: the local corporation method, in which a subsidiary is established; the overseas branch method, in which no local corporate procedures are required; and the local partner method, in which business is conducted solely through a contract with a partner.
The advantages and disadvantages of establishing an overseas company are detailed below.

Benefits of establishing an overseas company

One of the benefits of establishing an overseas corporation is that it allows you to expand your market. Japan's population is on the decline, and by expanding overseas you can gain more customers.
Also, depending on the product or service, there may be a blue ocean in the market, where there are no competitors.

The second benefit is that, depending on the country, you can keep labor costs and rental fees low. Although costs may increase as the local country's economy develops, for now you can keep costs low.

The third benefit is that it makes business in the local currency smoother. If you have an overseas corporation and do business with a local bank, you can reduce risk and conduct transactions in the local currency faster and without fees than if you were to convert Japanese yen into a foreign currency and then trade.

Disadvantages of establishing an overseas company

One of the disadvantages of establishing an overseas corporation is country risk. There is a risk that risks that would not occur in Japan may sometimes occur in the local country.

For example, there is the coronavirus pandemic in China, which can sometimes have a devastating impact on overseas entities.
In addition, Japan is one of the countries with the best public safety record, and when traveling abroad, there is a risk of being caught up in riots or terrorism due to worsening security conditions in some countries.

Secondly, accounting and tax procedures for overseas corporations are different from those in Japan. In countries that have not adopted IFRS, the accounting rules of those countries will be applied, which will incur additional costs.

The third disadvantage is that they cannot receive support from Japan's public financial institutions.
For example, the Japan Finance Corporation, a Japanese public financial institution, offers a wide range of loans to small and medium-sized enterprises and to support startups, but overseas corporations are unable to receive such loans.

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This time, we have brought you the information on "How to establish a corporation overseas? How to do so and the advantages and disadvantages."

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