Quick Answer

For most foreign companies and individuals starting a business in Japan, KK (Kabushiki Kaisha) is the recommended choice. KK offers stronger credibility with Japanese banks, business partners, and job seekers — a critical advantage for companies without existing brand recognition in Japan. GK (Godo Kaisha) suits small-scale market entries or companies prioritizing cost and operational flexibility. The formation cost difference is approximately 150,000–200,000 yen (one-time). Tax treatment is identical for both entity types. Consult a professional to determine the best structure for your situation.

KK vs. GK: The Complete Comparison Guide for Foreigners

Which company type should you choose when starting a business in Japan?

You have decided to start a business in Japan. Now comes the first big decision: should you form a Kabushiki Kaisha (KK) or a Godo Kaisha (GK)? This guide breaks down the differences between the two entity types as simply as possible, for foreign business owners considering expansion into Japan and foreign nationals thinking about starting a company here.

Key Background

A Kabushiki Kaisha (KK / 株式会社) is Japan's most common corporate entity, equivalent to a Corporation in the US or UK, or a GmbH in Germany. All listed companies in Japan operate as KK.

A Godo Kaisha (GK / 合同会社) is Japan's equivalent of a US LLC, introduced under the 2006 Companies Act. Apple Japan, Google Japan, and Amazon Japan all operate as GK.

There are four main entity types available to foreigners in Japan:

1. Kabushiki Kaisha (KK) — Stock Company
   The most common business entity in Japan. Every listed company in Japan uses this structure. It is similar to a Corporation in the US/UK or a GmbH in Germany.

2. Godo Kaisha (GK) — Limited Liability Company
   A relatively new entity type introduced in 2006, modeled after the American LLC. Apple Japan, Google Japan, and Amazon Japan all use the GK structure.

3. Branch Office
   A registered extension of the foreign parent company in Japan. It has no independent legal personality.

4. Representative Office
   A liaison office limited to market research and information gathering. It cannot conduct business activities.

This guide focuses on KK and GK — the two entity types most commonly chosen by those who intend to actually do business in Japan.

What Are the Key Differences Between KK and GK in Japan?

How Much Does It Cost to Set Up a KK or GK in Japan?

When forming a company, certain fees must be paid to the Japanese government.

KK (Stock Company)

• Articles of Incorporation notarization fee: 30,000–50,000 yen

• Revenue stamp (for paper articles): 40,000 yen (0 yen if filed electronically)

• Registration and license tax: 150,000 yen or 0.7% of capital, whichever is higher

• Total: approximately 220,000–240,000 yen (with electronic filing)

GK (LLC)

• Articles of Incorporation notarization: not required (0 yen)

• Revenue stamp (for paper articles): 40,000 yen (0 yen if filed electronically)

• Registration and license tax: 60,000 yen or 0.7% of capital, whichever is higher

• Total: approximately 60,000–100,000 yen

The formation cost for a KK in Japan is approximately 220,000–240,000 yen (with electronic filing). For a GK, the cost is approximately 60,000–100,000 yen. The difference of approximately 150,000–200,000 yen is due to two factors: (1) KK requires Articles of Incorporation notarization (30,000–50,000 yen), and (2) KK's registration and license tax is higher (150,000 yen vs. 60,000 yen for GK).

How Long Does It Take to Incorporate in Japan?

Both KK and GK can be incorporated within one to two weeks in Japan. However, because KK requires notarization of the Articles of Incorporation, it may take a few extra days compared to GK. Including the time needed to prepare documents from overseas, the entire process typically takes two to four months.

Which Is More Credible in Japan — KK or GK?

This is the single biggest difference between KK and GK — and the primary reason most foreign companies choose KK.

In Japanese business culture, the name "Kabushiki Kaisha" itself carries credibility. Most Japanese people have little idea what a "Godo Kaisha" is, whereas "Kabushiki Kaisha" is universally recognized.

This credibility gap has a particularly significant impact in the following situations:

Opening a bank account:
Opening a corporate bank account in Japan as a foreign-owned company is not easy. Banks scrutinize the entity type, capital, business plan, and representative's residency status. KK tends to have an advantage in this process.

Signing contracts with business partners:
Some major Japanese companies include "must be a Kabushiki Kaisha" as a vendor selection criterion. Being a GK may disqualify you from certain bids or proposals.

Recruiting talent:
When hiring in Japan, job seekers look at the company name. "Kabushiki Kaisha XXX" and "Godo Kaisha XXX" leave very different impressions. For a foreign company without name recognition in Japan, KK provides a greater sense of trust.

That said, there are exceptions. Apple Japan, Google Japan, and Amazon Japan are all GK. If you already have a strong global brand, GK may work fine. But for companies still building recognition in Japan, KK is overwhelmingly more advantageous.

How Do KK and GK Differ in Management Flexibility?

A KK has legally mandated structures: an annual general meeting of shareholders, appointment of directors, and public disclosure of financial statements. Director terms are two years by default (extendable to ten years for private companies), and a registration update is required each time a term expires.

A GK has almost none of these obligations. No shareholder meetings, no financial disclosure. As long as the members agree in the Articles of Incorporation, they can set their own management rules with near-total freedom. There are no director term limits.

In other words, GK has lower operating costs and fewer formalities.

How Are Profits Distributed in KK vs. GK?

In a KK, profits are distributed according to shareholding ratios. A shareholder holding 51% of shares receives 51% of dividends. This cannot be changed.

In a GK, profit distribution ratios can be set independently of capital contribution ratios. For example, a member who contributed less capital but makes a significant management contribution can receive a larger share of profits.

Can a GK Raise Investment from Venture Capitalists in Japan?

No. If there is any possibility of raising capital from investors in the future, KK is the only choice.

KK can issue shares, making it easy to accept investment from venture capitalists (VCs) and angel investors. An IPO also requires the KK structure.

GK cannot issue shares, making it structurally difficult to receive VC investment. Fundraising options are limited to additional contributions from members or bank loans.

Comparison at a Glance

Key point: Taxes are exactly the same for KK and GK. There is no difference in corporate tax, consumption tax, social insurance, or any other tax treatment based on entity type.

Should a Foreign Company Choose KK or GK in Japan?

Choose KK if:

• You prioritize credibility with Japanese business partners and banks

• You plan to raise capital from investors or pursue an IPO in the future

• You intend to actively hire employees in Japan

• Your company does not yet have name recognition in Japan

• You expect to do business with major Japanese corporations

Choose GK if:

• You want to minimize formation costs

• You are entering Japan with a small-scale operation

• You prioritize management flexibility

• Your company already has strong global brand recognition

• You want to test the Japanese market before committing fully

  
  

When in Doubt, Go KK

Honestly, if you are on the fence, KK is the safer bet. Here are three reasons why.

First, converting from GK to KK later is possible, but the process is complex and expensive. Starting with KK eliminates this hassle entirely.

Second, taxes are identical for KK and GK. The formation cost difference is approximately 150,000–200,000 yen — a one-time expense. Considering the risks of struggling with bank account approval or partner trust, it is an investment that easily pays for itself.

Third, in Japanese business culture, the "Kabushiki Kaisha" designation functions as a kind of passport. For foreign companies without a track record in Japan, this passport's value is significant.

What Should You Know Before Incorporating in Japan?

Tip 1: Can the Representative Director Live Overseas?

Yes. Since a 2015 legal amendment, both KK and GK can be formed even if the representative director does not reside in Japan. In other words, you can incorporate without ever visiting Japan.

However, having a Japan-resident representative makes bank account opening significantly easier. If you plan to have staff on the ground, consider adding that person as one of the representative directors.

Tip 2: How Much Capital Do You Need to Set Up a Company in Japan?

Legally, you can incorporate with just 1 yen in capital. In practice, however, the following benchmarks are recommended:

• 1,000,000 yen or more: The minimum threshold to avoid disadvantages in bank account screening.

• 5,000,000 yen or more: Typically required for a foreign representative director to obtain a Business Manager visa.

• Less than 10,000,000 yen: May qualify for consumption tax exemption (note: subsidiaries of large corporate groups may be taxable from year one).

• 100,000,000 yen or less: Eligible for SME tax incentives, including reduced corporate tax rates.

  
  

Tip 3: Do You Need a Company Seal (Hanko) in Japan?

Yes. To incorporate in Japan, you need a company seal (hanko). It is standard practice to prepare three types: the official company seal registered with the Legal Affairs Bureau, a bank seal, and a square seal for everyday use. These can be ordered from seal shops in Japan or online, costing anywhere from a few thousand to tens of thousands of yen.

Frequently Asked Questions

Q. Can I convert from GK to KK later? Yes. However, the process is legally classified as a "reorganization," involving registration taxes, judicial scrivener fees, and other costs totaling several hundred thousand yen, plus several weeks of processing time. Starting with KK is more efficient.

Q. Are taxes different for KK and GK? No. Corporate tax, consumption tax, withholding income tax, social insurance contributions — all are identical. There is no tax difference based on entity type.

Q. In what currency can capital be paid in? Capital must be paid in Japanese yen. You can wire funds from overseas to a Japanese bank account, or open a temporary account in Japan for the payment. Since a corporate bank account cannot be opened before incorporation, it is common practice to pay capital into the personal Japanese bank account of one of the founders.

Q. If setting up a subsidiary of a foreign company, should I choose a subsidiary or a branch? We recommend a subsidiary (KK or GK). A branch is legally part of the foreign parent, meaning business risks in Japan directly affect the parent company. A subsidiary limits liability to the amount of investment and ensures management independence.

Q. Can one person form a KK? Yes. A KK can be formed with just one director and one shareholder (who can be the same person). A board of directors and auditors are optional.

Q. Is a GK the same as an LLC in Japan? GK (Godo Kaisha) is often described as Japan's equivalent of a US LLC, and the structural similarities are real — both offer limited liability and flexible profit distribution. However, there are important differences. A GK is governed by Japanese corporate law, not US state law. The tax treatment, registration process, and social perception in Japan are specific to the GK structure. Treat them as analogous, not identical.

Q. Can a German company set up a subsidiary in Japan as a GK? Yes. A German company can establish a wholly-owned subsidiary in Japan as either a KK or GK. However, for most German companies entering Japan, KK is recommended. Japanese banks, business partners, and potential local hires are more familiar with the KK structure, which supports smoother market entry. LOOK UP ACCOUNTING provides trilingual support in Japanese, German, and English for German companies entering Japan.

Q. How long does it take to set up a company in Japan as a foreigner? The registration process itself takes one to two weeks. However, including document preparation, notarization (for KK), and apostille procedures from overseas, the full process typically takes two to four months. Working with a professional familiar with foreign incorporations can significantly reduce delays.

Summary

When forming a company in Japan, the choice between KK and GK should be based on a comprehensive assessment of cost, credibility, flexibility, and future fundraising plans.

For foreign companies without established name recognition in Japan, KK is the best choice in most cases. The formation cost difference is approximately 150,000–200,000 yen (a one-time expense). Considering the credibility and business opportunities this investment provides, KK offers excellent value.

LOOK UP ACCOUNTING (LUA)

A multilingual accounting firm based in Tokyo. We provide services in Japanese, English, German, and Vietnamese. From entity selection and incorporation procedures to post-formation tax filing and payroll, we offer one-stop support for the entire Japan market entry process. We welcome individual consultations on questions like "Which is better for my company — KK or GK?" Feel free to contact us.

This article is based on Japanese laws as of April 2026. Please consult a professional for the latest updates.

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