What are the ongoing expenses for maintaining self-employment status as a foreigner in Japan?

• Jul 14, 2024
• By OPEN WORLD

When maintaining your self-employment status as a foreigner living in Japan, it’s essential to understand the minimum ongoing expenses required. These costs include mandatory contributions, visa renewal fees, and professional services necessary for compliance. Here’s a breakdown of the key expenses to consider, along with approximate cost figures:

1. Health insurance premiums: As a self-employed individual, you must enroll in the National Health Insurance (NHI) program. The premiums are based on your previous year’s income and can range from ¥20,000 to ¥50,000 per month.
2. Pension contributions: You are also required to contribute to the National Pension system. The monthly contribution is fixed at ¥16,610 (as of 2021), regardless of your income.
3. Company accounting and tax filing services: Hiring a professional accountant to handle your company’s bookkeeping, tax filings, and compliance is crucial. These services can cost around ¥30,000 to ¥50,000 per month for a small business.
4. Visa renewal fees: The business manager visa renewal fee is ¥6,000, and it must be renewed every 1-5 years, depending on the length of your visa. Additionally, you may need to pay for the services of an administrative scrivener (gyoseishoshi) to assist with the renewal process, which can cost around ¥100,000 to ¥200,000.
5. Rent and utilities: The cost of rent varies depending on the location and size of your office or living space. Here are some approximate monthly rent prices for different cities:
   • Tokyo: ¥100,000 to ¥300,000 for a small apartment or office
   • Kyoto: ¥60,000 to ¥150,000 for a small apartment or office
   • Nagano Prefecture: ¥40,000 to ¥100,000 for a small apartment or office
6. Utilities, including electricity, gas, water, and internet, can cost an additional ¥10,000 to ¥30,000 per month.
7. Minimum wage for employees: If you plan to hire employees, you must pay them at least the minimum wage, which varies by prefecture. As of 2021, the minimum hourly wage is:
   • Tokyo: ¥1,013
   • Kyoto: ¥909
   • Nagano Prefecture: ¥877

To minimize costs and maintain your self-employed status, consider the following:

• Use online accounting software to streamline bookkeeping and reduce professional fees
• Plan ahead for visa renewals to avoid rush fees and last-minute expenses
• Consider living in a more affordable area, such as Nagano Prefecture, to lower your cost of living

At OPEN WORLD, we help clients understand and plan for the ongoing expenses of maintaining their self-employed status in Japan. Our team can assist you in developing a cost-effective strategy, connecting you with affordable professional services, and providing guidance to help you minimize expenses while remaining compliant with Japanese regulations.

By carefully managing these ongoing costs and seeking expert advice, you can sustainably maintain your self-employment status and achieve long-term success in Japan.