This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.
When a sole proprietor sets up a micro corporation (a one-person godo kaisha, the Japanese LLC), social insurance, mutual aid and pension all switch over at once. There is a lot to do, but the order is simple. Do the shortest deadline first. The pension office is five days, the ward office fourteen days, the metropolitan tax office fifteen days, and the tax office one to three months. Compare a sole proprietor with ¥4,000,000 of business income against a micro corporation paying a director's remuneration of ¥50,000 a month, and social insurance premiums fall from ¥1,060,000 a year to ¥278,000 a year (our own estimate, FY2026, Tokyo). There are three traps, however. The iDeCo ceiling drops from ¥68,000 a month to ¥23,000. Small Enterprise Mutual Aid (小規模企業共済) contributions can only be deducted from your own income, never from the company's. And if you do not apply to carry over the Small Enterprise Mutual Aid within one year, you end up with a cancellation payout worth less than what you paid in. This article sets out a deadline calendar counted from the registration date, and the paperwork you file - and do not file - for each scheme, all from primary sources.
The short answer: a deadline calendar counted from the registration date
Call the day the incorporation is registered the "registration date". In order of urgency, here is what happens. If you are running both (keeping the sole proprietorship alongside the company), skip the rows marked "incorporation only".
| Deadline | What to do | Where | Who |
|---|---|---|---|
| 5 days from registration | Social insurance: new applicable workplace notification (新規適用届), your own notification of acquisition of insured status, and the dependent (change) notification for your spouse | Pension office | Everyone |
| 14 days from enrolment | Notification to leave National Health Insurance (for everyone in the household; return the eligibility certificate) | Municipality | Everyone |
| 15 days from registration | Notification of incorporation/establishment (in Tokyo) | Metropolitan tax office | Everyone |
| 10 days from closing the business | Declaration of discontinuance for enterprise tax (in Tokyo) | Metropolitan tax office | Incorporation only |
| 1 month from registration | Notification of establishment of a salary-paying office | Tax office | Everyone |
| 2 months from registration | Notification of incorporation | Tax office | Everyone |
| 3 months from registration | Application for approval of blue-form filing (or the day before the end of the first fiscal year, whichever is earlier), setting the director's remuneration, and taking over the Business Safety Mutual Aid (経営セーフティ共済) contract | Tax office / internal / SMRJ | Everyone (mutual aid: members) |
| Without delay | iDeCo category change, National Pension Fund loss-of-eligibility notification, consumption tax notification of discontinuance | Financial institution / the Fund / tax office | If applicable |
| 1 year from the incorporation | Small Enterprise Mutual Aid carry-over for the same person (Form Sho 141, 様式小141) | SMRJ | Incorporation only |
| 15 March the following year | Final tax return for the year you closed, notification of discontinuance, notification of withdrawal from blue-form filing | Tax office | Incorporation only |
Each section below gives the source for its deadline. There is no "withdrawal from the National Pension" in the table. Once the company files the notification of acquisition of insured status, the Japan Pension Service changes your category, so you file nothing yourself[Japan Pension Service, joining the National Pension].
Step 1: from National Pension and National Health Insurance to Employees' Pension and health insurance (5 days and 14 days)
A corporation is compulsorily covered by social insurance even with a single representative[Japan Pension Service, covered workplaces and the insured]. The National Pension and National Health Insurance you had as a sole proprietor are replaced by the Employees' Pension and health insurance.
Three forms to the pension office (within 5 days)
- New applicable workplace notification (新規適用届). This registers the company as a workplace covered by social insurance. Attach the certified copy of the commercial register (an original issued within 90 days) and a copy of the corporate number notification[Japan Pension Service, new coverage procedure].
- Notification of acquisition of insured status (被保険者資格取得届). This registers you as an insured person. Your National Pension category then becomes Category 2 automatically.
- Dependent (change) notification and Category 3 insured person notification. If your spouse's annual income is under ¥1,300,000, they go on your health insurance as a dependent and become a Category 3 insured person under the National Pension. Their premiums become zero[Japan Pension Service, dependent (change) notification].
All three are due "within five days of the event". You can file electronically, by post or at the counter.
Notification to leave National Health Insurance at the municipality (within 14 days)
Within 14 days of joining social insurance, file to leave National Health Insurance for everyone in your household. Take the document showing your new coverage and the National Health Insurance eligibility certificate[Shinjuku Ward, National Health Insurance filings]. If you see a doctor on the old National Health Insurance card without having filed, you will have to repay the medical costs to the ward later[Shinjuku Ward, acquiring and losing eligibility].
As a rule you do not pay twice
Health insurance premiums start with the month in which you acquire insured status[Japan Pension Service, joining or leaving mid-month]. National Health Insurance premiums are charged only for months in which you still hold National Health Insurance at month end[Setagaya Ward, notes on premiums]. Move to social insurance within the same month and there is no National Health Insurance premium for that month. National Pension contributions you prepaid are, as a rule, refunded automatically to the same account if you paid by direct debit[Japan Pension Service, refund of prepaid contributions].
A ¥50,000 director's remuneration is not what your premiums are calculated on
Social insurance premiums are set by the "standard monthly remuneration". Its floor is ¥58,000 for health insurance and ¥88,000 for the Employees' Pension[JHIA, FY2026 premium table for Tokyo]. Set your director's remuneration at ¥50,000 a month and your premiums are still calculated on those floors.
Director's remuneration ¥50,000 a month, age 40s, Tokyo (April 2026 onwards; our own estimate)
| Item | Rate | Your share / month | Company share / month |
|---|---|---|---|
| Health insurance + long-term care insurance (¥58,000) | 11.47% | ¥3,326 | ¥3,326 |
| Child and childcare support levy (¥58,000) | 0.23% | ¥67 | ¥67 |
| Employees' Pension (¥88,000) | 18.3% | ¥8,052 | ¥8,052 |
| Child and childcare contribution (¥88,000) | 0.36% | ¥0 | ¥317 |
| Total | ¥11,445 | ¥11,762 |
Employer and employee together, that is ¥23,207 a month, or ¥278,482 a year. Adding your spouse as a dependent costs nothing extra.
| Comparison (couple in their 40s, Tokyo, FY2026) | Per year |
|---|---|
| Staying a sole proprietor (business income ¥4,000,000): National Health Insurance ¥634,203 + National Pension for two ¥430,080 | ¥1,064,283 |
| Micro corporation (director's remuneration ¥50,000 a month): employer and employee combined | ¥278,482 |
| Difference | ¥785,801 |
National Health Insurance is calculated on Shinjuku Ward's FY2026 rates (medical 7.51%, support 2.80%, long-term care 2.43%, child and childcare support 0.27%; per-capita levies of ¥47,600, ¥17,600, ¥17,800 and ¥1,873)[Shinjuku Ward, FY2026 National Health Insurance rates], rounded without the ward's fractional adjustments. The National Pension is ¥17,920 a month[Japan Pension Service, National Pension contributions]. JHIA rates are 9.85% for health insurance, 1.62% for long-term care, 0.23% for the support levy and 0.36% for the contribution[JHIA, FY2026 premium rates]. Your future Employees' Pension is calculated on a standard monthly remuneration of ¥88,000, so the addition is very small. For a fuller explanation of how this works, see micro corporations and social insurance premiums.
Zero remuneration will not work. MHLW issued a notice in 2026
In a notice dated 18 March 2026, the Ministry of Health, Labour and Welfare (MHLW) set out in writing that a director's insured status turns on whether there is ongoing work involved in running the business, and whether ongoing remuneration is received in return for it. It also says that where there is no substance, insured status is to be withdrawn[MHLW, Hoho-hatsu 0318 No.1 and Nenkankan-hatsu 0318 No.1]. A partial amendment on 14 September made the test more concrete still[MHLW, Hoho-hatsu 0914 No.1 and Nenkankan-hatsu 0914 No.1]. The direct target is the "become a director of someone else's company and pay a membership fee" style of enrolment agency, but even in your own company, zero remuneration means you are not "a person receiving remuneration". No primary source states an amount that is safe.
Step 2: without the carry-over within one year, the Small Enterprise Mutual Aid pays back less than you put in (incorporation only)
Close the sole proprietorship and become a director of the company, and your Small Enterprise Mutual Aid contract meets an event called "incorporation". Do nothing at this point and you lose money.
Apply for the carry-over for the same person
File the "application to carry over months of contributions, combined with a new application (Form Sho 141, 様式小141)" and you sign a fresh contract without taking the payout, carrying your months of contributions across. The deadline is one year from the event[SMRJ, carrying over months of contributions]. Have the form checked by the entrusted organisation or agent, then send it to SMRJ.
Do nothing and settle the contract
The representative member of a one-person godo kaisha counts as a "small-scale enterprise operator who is a director", so settling gives you a "cancellation benefit". That is 80-120% of total contributions, and it falls below what you paid in if you have contributed for fewer than 240 months[SMRJ, Small Enterprise Mutual Aid guide].
Executive members of a godo kaisha are eligible to join. The condition is that you are registered as a director[SMRJ, eligibility]. If your articles of association name executive members, register yourself as one.
Contributions are not a company expense. They come off your own income only
Even after incorporating, Small Enterprise Mutual Aid contributions are your own income deduction (the small enterprise mutual aid premium deduction). They cannot go into the company's deductible expenses or your necessary expenses[NTA, No.1135]. Set your director's remuneration at ¥50,000 a month (¥600,000 a year) and you cannot absorb the ceiling of ¥70,000 a month (¥840,000 a year). Squeeze the remuneration to cut social insurance premiums and this tax saving disappears. Contributions can be reduced to anywhere from ¥1,000 to ¥70,000 a month in ¥500 steps[SMRJ, changing the monthly contribution]. For the scheme as a whole, see what the Small Enterprise Mutual Aid is.
If you keep the sole proprietorship and run both, no event occurs, so there is nothing to file. Someone who is both a sole proprietor and a director joins in whichever capacity they are "mainly engaged in"[SMRJ, holding both roles].
Step 3: iDeCo, the National Pension Fund and the additional pension
| Scheme | What happens | What to file |
|---|---|---|
| iDeCo | You can keep it. The ceiling drops, though (see the table below) | Notification of change of registered member information (for Category 2 insured persons), to your plan administrator[iDeCo official, changing jobs or leaving work] |
| National Pension Fund | Eligibility is lost the moment you become Category 2. Contributions are not returned; they are paid out later as pension[National Pension Fund Association, FAQ] | Loss-of-eligibility notification (form code 0701), to the fund you belong to[National Pension Fund, loss-of-eligibility notification] |
| Additional pension | You are no longer Category 1, so you can no longer pay it[Japan Pension Service, additional contributions] | No primary source states whether a filing is needed. Check with the pension office |
The iDeCo ceiling falls from ¥68,000 to ¥23,000 a month, then returns to ¥62,000 in December
| Category | Until November 2026 | From December 2026 |
|---|---|---|
| Category 1 (sole proprietor) | ¥68,000 a month | ¥75,000 a month |
| Category 2, no corporate pension (director of a micro corporation) | ¥23,000 a month | ¥62,000 a month |
The ceiling rises from December 2026[MHLW, iDeCo reform from December 2026]. For someone who incorporates in April 2026, the year's ceiling is ¥619,000 if they stay a sole proprietor and ¥246,000 after incorporating, a gap of ¥373,000 (our own estimate). iDeCo contributions work the same way as the Small Enterprise Mutual Aid: they come off your own income only. On a director's remuneration of ¥50,000 a month you cannot use up the ¥62,000 a month available from December. The details of the reform are in the December 2026 iDeCo reform.
File nothing and your contributions stop being debited. Since December 2024, the employer's certificate is no longer required when you become a Category 2 insured person[iDeCo official, procedural notices].
Step 4: the Business Safety Mutual Aid must be taken over within 3 months
The Business Safety Mutual Aid (経営セーフティ共済, the mutual relief system for preventing SME bankruptcies) lets you transfer an individual contract to the company. Within three months of the day the event arises (the incorporation date), file the "application for contract succession (Form Chu 501, 様式㊥501)" through a registered handling institution. Past three months you need a written explanation, past 18 months it goes to review, and past two years it cannot be taken over at all[SMRJ, contract succession on a full transfer of business].
Step 5: filings to close the sole proprietorship (incorporation only)
| Document | Deadline | Where |
|---|---|---|
| Notification of opening or closing a sole proprietorship | By the filing deadline for that year's tax return (per NTA guidance)[NTA, opening and closing notifications] | Tax office |
| Notification of withdrawal from blue-form filing for income tax | By the filing deadline for the year you withdraw[NTA, withdrawing from blue-form filing] | Tax office |
| Notification of closure of a salary-paying office (if you had employees) | Within 1 month[NTA, opening, moving or closing a salary-paying office] | Tax office |
| Notification of discontinuance (if you were a consumption tax filer) | Without delay[NTA, notification of discontinuance] | Tax office |
| Declaration of commencement or discontinuance (enterprise tax) | Within 10 days of closing (Tokyo)[Tokyo Bureau of Taxation, closing a business] | Metropolitan tax office |
On the deadline for the notification of discontinuance, the Income Tax Act says "within one month", while the NTA's procedural guidance says "by the filing deadline for the tax return". Either way it bears on the tax return for the year you closed, so filing early costs you nothing.
Two things people forget in the tax return for the year they closed
- The estimated enterprise tax deduction. For the year you closed, you can put the estimated enterprise tax into necessary expenses before it is actually assessed the following year[NTA, Income Tax Basic Circular 37-7].
- The remainder of lump-sum depreciable assets. These cannot be passed to the company. The undepreciated balance is a necessary expense in full in the year you closed[NTA, Q&A on lump-sum depreciable assets on incorporation].
Move assets to the company at market value
Hand a car or a machine to the company for nothing, or for less than half of market value, and you are treated as having transferred it at market value[NTA, No.6321]. Consumption tax liability is judged separately for the individual and the company. For the individual's part of the year you incorporate, you remain a taxable filer if sales two years earlier exceeded ¥10,000,000[NTA, Q&A on taxable sales on incorporation]. The invoice registration number is also separate for the individual and the company.
Step 6: the first filings on the company side
| Document | Deadline | Where |
|---|---|---|
| Notification of incorporation/establishment (Tokyo) | Within 15 days of incorporation. Inside the 23 wards, no separate ward filing is needed[Tokyo Bureau of Taxation, how to complete the notification] | Metropolitan tax office |
| Notification of incorporation | Within 2 months of the registration date[NTA, notification of establishment of a domestic ordinary corporation] | Tax office |
| Notification of establishment of a salary-paying office | Within 1 month | Tax office |
| Application for approval of blue-form filing | By the day before the earlier of three months after incorporation and the last day of the first fiscal year[NTA, application for approval of blue-form returns] | Tax office |
| Application for the special rule on the due date for withholding income tax | No deadline. Salary paid from the month after you file is remitted twice a year[NTA, the special rule on due dates] | Tax office |
| Application to register as a qualified invoice issuer | File by the last day of the first fiscal year and you are treated as registered from the start of that year[NTA, invoice Q&A, special rule on registration timing for new corporations] | Invoice registration centre |
A director's remuneration must be "regular fixed-amount salary" (定期同額給与). Set it within three months of the start of the accounting period, and you cannot move it for a year[NTA, No.5211]. Waiting to see the premiums before deciding is too late, so fix the amount before you register. How to decide is covered in the optimal director's remuneration.
A newly formed corporation with capital under ¥10,000,000 is, as a rule, exempt from consumption tax in its first and second fiscal years. Register for invoices, however, and the exemption goes[NTA, No.6503]. Unless you hire employees, there is nothing to file for labour insurance (workers' accident compensation and employment insurance).
Running both: learn which forms you do not file
If you keep the sole proprietorship and hold the company as well, social insurance is set by the director's remuneration alone. A sole proprietor's workplace is not a covered workplace while it has fewer than five employees[Japan Pension Service, covered workplaces and the insured]. There is less paperwork than with a full incorporation.
What you do not file when running both
- Notification of discontinuance and withdrawal from blue-form filing for the sole proprietorship
- Declaration of discontinuance for enterprise tax
- Notification of discontinuance for consumption tax
- Small Enterprise Mutual Aid carry-over for the same person (the contract continues in your capacity as a sole proprietor)
- Business Safety Mutual Aid contract succession (it stays an individual contract)
The three forms to the pension office, the filing to leave National Health Insurance, the company-side filings, the iDeCo category change and the National Pension Fund loss-of-eligibility notification are all the same as with a full incorporation.
On how splitting the same business between an individual and a company is viewed for tax purposes, the NTA's procedural guidance and Q&A say nothing directly. This article does not cover it.
Three things to get right on sequence and design
- The pension office's five days start the day after registration. You need the original certified copy of the register, so obtain it as soon as the registration is complete. The metropolitan tax office's 15 days also falls before the tax office's two months.
- Set the director's remuneration by looking at both the premiums and the deduction room. At ¥50,000 a month, social insurance costs ¥278,000 a year, but the Small Enterprise Mutual Aid and iDeCo deductions come off your own income only. If you want both, put the extra premiums from a higher remuneration next to the tax the deductions save, and decide from there.
- The two mutual aid deadlines are different. One year for the Small Enterprise Mutual Aid, three months for the Business Safety Mutual Aid. Miss either and there is no way back.
Frequently asked questions
Can I set the director's remuneration at zero and stay out of social insurance?
No. A corporation is compulsorily covered even with a single representative, and a director who receives remuneration is an insured person. Conversely, at zero remuneration you are not "a person receiving remuneration", so you cannot become an insured person and you stay on the National Pension and National Health Insurance. MHLW's March 2026 notice states that the test is the substance of your involvement in running the business and ongoing remuneration received in return.
Do I need to file to withdraw from the National Pension?
No. Once the company files the notification of acquisition of insured status, the Japan Pension Service moves you from Category 1 to Category 2. National Pension contributions you prepaid are, as a rule, refunded automatically to the same account if you paid by direct debit. National Health Insurance is the only one you must file yourself, at the municipality, within 14 days.
If I run both and keep the sole proprietorship, do I still need to do anything about the Small Enterprise Mutual Aid?
No. No closure or incorporation event arises, so the contract continues in your capacity as a sole proprietor. The Business Safety Mutual Aid also stays an individual contract. Only if you incorporate and close the sole proprietorship do you need the Small Enterprise Mutual Aid carry-over within one year and the Business Safety Mutual Aid succession within three months.
What happens to my personal tax return for the year I incorporate?
You combine the business income up to the closing date with the director's remuneration from the company (employment income) and file by 15 March the following year. For the year you close, the estimated enterprise tax can go into necessary expenses, and the undepreciated balance of lump-sum depreciable assets is an expense in full that year. If sales two years earlier exceeded ¥10,000,000, you must also file consumption tax for the period up to the closing date.
Reference links (sources)
- Japan Pension Service, new coverage procedure (within 5 days; attachments)
- Japan Pension Service, dependent (change) notification (spouse as Category 3; ¥1,300,000)
- MHLW, treatment of insured status for sole proprietors who are directors of corporations (18 March 2026)
- JHIA, FY2026 premium table (Tokyo branch) (the floor of standard monthly remuneration; rates)
- Shinjuku Ward, FY2026 National Health Insurance rates
- SMRJ, Small Enterprise Mutual Aid guide (April 2026 revision) (mutual aid events; carry-over for the same person)
- SMRJ, Business Safety Mutual Aid contract succession (within 3 months)
- MHLW, the iDeCo reform from December 2026 (¥23,000 to ¥62,000)
- National Pension Fund Association, FAQ (loss of eligibility on becoming Category 2)
- NTA, opening and closing notifications for a sole proprietorship
- NTA, notification of establishment of a domestic ordinary corporation (within 2 months)
- Tokyo Bureau of Taxation, starting and closing a business (15 days; 10 days)
