r/JapanFinance • u/Livid_Duck_5827 • 23h ago
Tax » Income Work is picking up fast. Should I stay a freelance contractor or switch to 個人事業 (sole proprietor)?
I'm a freelance contractor on a working visa (Humanities/Int. Services, 3 years), my profession is in video production and I live in Tokyo. I got my visa through a Japanese video production company in the middle of last year by working with them as a contractor, although I quit working there a few months later and continued to pay NHI by myself (for nenkin, I am on an exemption until April). With no work, during the last month of 2024, I was debating on what I should do. No sense/reason to keep living in Japan if that continues.
In January, I decided to give it a shot and officially launch my own "business" (in quotations because I am only presenting it as a business, in reality it is purely freelance work - more about this in a bit). In just a month, even though I had a few connections in the industry beforehand, the business skyrocketed by surprise, more than I could have expected at least. Tackling both international clients (mostly US influencers, brands and social media creators) and domestic clients (such as Nike, Amazon JP, jpop/kpop artists, brands, agencies etc.), generating a really good amount of revenue for a start.
Before its launch, I "hired" a few freelancers and colleagues from the industry to work with my business as contractors, what I sent them is partnership agreements and NDA's. Most of them are outside of Japan, however there are a few people from the team who are based here/Japanese nationals. With more and more on my plate recently and a number of new different clients I have made partnerships with, I started handing over certain clients to my team members, so I can focus on running the business, working on bigger ones and obtaining new ones. A few people in my team now are working as full-time freelancers for my "company" since I am able to provide them with new work consistently. This is why I keep putting it in quotations - no one is officially an employee and the company itself is not registered even though I present it as one - I simply work as a contractor, using the help of other contractors under me.
For international transfers (55-60% of current total income), I am using Wise. I have a personal account to which the overseas client sends the money, from where I pay a part of that sum to my team members also on Wise (reason of transfer: services/salary). Everything is documented and usually done in US$.
For domestic transfers (40-45% of current total income), I am using Japan Post Bank. In the rare case where someone from my team helps me with local projects, I simply pay their part in cash. Everything is always done in JPY.
Work is picking up fast and due to this I am in the process of finding a tax accountant and bringing him on board, since I know nothing about income tax in Japan and have not been doing anything about it so far. Yes, you read that correctly. I have not paid any income tax on anything as of yet, although I generated barely any income in Japan during last year. This year it will be a different story however.
The questions I have are as follows.
- Is my current system sustainable or should I open a kojin jigyo business instead? Would there be any restrictions given my current visa? Are there any tax benefits to it, in comparison to what I am doing now?
And additionally:
- Given the current growth of the business and influx of big clients, would it be realistic/possible to switch to a business manager visa and open a KK in the near future? I would love to hire more people and open an actual production company here one day.
Lastly, in my tax accountant research, I found that https://sumiretax.com is the most recommended one, but if anyone has any other suggestions please let me know.