With a per capita GDP of $40,193, Japan is the world’s third-largest economy, offering companies numerous opportunities to expand and diversify their verticals. Japan’s dedication to quality, innovation, and global perspective makes it a highly attractive location for corporate expansion, although moving to the country can present challenges due to its culture and customs.
International firms must adhere to Japan’s labor regulations, employment contracts, payroll, and benefits even after establishing a commercial presence in the country. To mitigate risks and challenges, partnering with a Japan EOR/PEO is recommended. INS Global provides EOR and PEO solutions to assist with managing multinational staff in Japan, including onboarding and payroll management, benefits, taxes, and other charges.
Why Employ a Japan PEO
The utilization of a Japan PEO can provide valuable assistance with employee onboarding, management, payroll processing, taxes, and other HR-related tasks. By sharing HR obligations under the co-employment model, the PEO reduces the burden of cumbersome HR tasks, freeing up more time for businesses to focus on growth.
A Japan PEO offers several advantages, including regulatory compliance by staying up to date with changing legislation and tax regimes. With the assistance of a PEO, firms can save time and expand their operations while the PEO manages their human resources. Additionally, a competent and reliable Japan PEO handles all HR-related documentation and guarantees accurate information and effective production.
The cost of a Japan PEO can vary depending on the pricing structure. At INS Global, our flat PEO pricing for full-time employees starts at $300 per employee per month, which includes international payroll, bilingual contracts, benefits administration, spending management, and leave management. However, the final cost may vary depending on the complexity of the employee’s jurisdiction and employment legislation.
INS Global’s Japan EOR services offer an easy and convenient solution for payroll and benefits administration for foreign employees. As a comprehensive and adaptable PEO platform, INS Global aims to make global HR management easier.
If you plan to hire and onboard staff in Japan, it’s important to keep in mind that the country’s employment laws are employee-centric and focused on individual rights protection. To avoid risks, consider partnering with a Japan EOR provider like INS to handle your hiring and management processes.
However, if you prefer to handle the employment process on your own, here are some guidelines to help you expand seamlessly into Japan.
Local corporation options in Japan
To do business with a Japanese entity, you have several options:
Limited liability company (Godo Kaisha): This type of company requires only one shareholder, but if that shareholder is a foreign national, the corporation must have at least one Japanese resident director.
Corporation with shares (Kabushiki Kaisha): This type of corporation is similar to a limited liability company and requires the same paid-up capital and at least one resident director.
Free zone business: A Japanese free zone company is typically an export-oriented manufacturer in Japan’s free trade zones.
Limited liability partnership: Owners of businesses located abroad can also register this type of partnership, but at least one partner must be a Japanese national.
Employment contracts in Japan
While the Japan Labor Standards Act doesn’t specify employment contract formats, it’s customary for Japanese businesses to provide written employment contracts that include information such as:
- Provisions and circumstances
- Expenses paid in yen
- Working time
- Disciplinary protocols
- Termination requirements
- Occupational rules
Fiscal administration in Japan
Japan has a progressive tax system, with tax rates increasing as income increases. Various types of tax, such as the local resident’s tax and the personal income tax, apply. The prefectural and municipal governments impose a 10% local inhabitant’s tax on a taxpayer’s previous year’s income.