Can I register a corporation at a serviced office address? What are the advantages and precautions?

• Update:2023/11/14

Some sole proprietors who are working while using a serviced office may think that they would like to expand the scale of their business and establish a corporation in the future. Incorporation will increase your creditworthiness, which will broaden the range of your business partners and contribute greatly to the growth of your business.

So, the question is, “Can I register a corporation in a serviced office?” This article will introduce you to the advantages and cautions of registering your company in a serviced office. In this article, we will introduce the advantages and cautions of registering your company in a serviced office.

Can I register a corporation at a serviced office address?

When establishing a company, you must register the corporation with the Legal Affairs Bureau. At that time, the address of the company must also be determined.

As it turns out, you can use the address of a serviced office for registration. There is no problem because the law does not prohibit the use of a serviced office as the address for registration.

However, in very rare cases, some serviced office management companies state that registration is not possible. If you are considering using a serviced office to register your corporation, we recommend that you call or e-mail to confirm.

Advantages of registering a corporation

What are the advantages of registering a corporation in the first place? Here are three of the main advantages.

1. Effective for tax reduction!

While income tax is imposed on profits made by individuals, corporate tax is imposed on profits made by companies. Income tax is progressive, meaning that the larger the profit, the higher the tax rate, whereas corporate tax is a fixed rate on profits. Therefore, if you expect your profits to increase in the future and your business is expected to grow, you should definitely register your company as a corporation. If you are subject to corporate tax, you can expect tax savings.

2. increased public confidence

Registering a corporation enhances your social credibility. When signing contracts with business partners or conducting business, a corporation can provide a greater sense of security than a sole proprietorship. It also makes it easier to obtain loans from financial institutions, which is quite advantageous in terms of fundraising.

3. Increased expense range

Some items that cannot be expensed as a sole proprietor can be expensed as a corporation. For example, life insurance for the company’s management can be expensed, as can compensation paid to family members as directors. This can be very helpful in saving taxes.

Points to keep in mind when registering a corporation

While there are many advantages to registering a corporation in this way, there are also a few things to keep in mind. So what precautions should you take when registering at a serviced office address?

1. Caution in opening an account

In most cases, it is possible to open an account at a serviced office, although each bank has different screening criteria. However, please note that in recent years, it has become more difficult to open an account at a financial institution itself, due in part to stricter police guidance to prevent misuse for fraudulent purposes.

Basically, large serviced offices tend to make it easier to open an account, while minor and small offices are more likely to be unable to do so. If you are looking for a serviced office, it is important to take this into consideration.

2. The management company may go out of business

Many serviced office operators are start-ups, and it is not uncommon for those operators to go out of business. When this happens, you will need to relocate, but depending on where you relocate, you may have to pay 30,000 to 60,000 yen in taxes, which can be a big burden. When choosing a rental office, check the business status of the management company and sign a contract with a trustworthy company.

Summary

It is possible to register a corporation at the address of a serviced office. Registering a corporation has many advantages, such as improving your credibility as well as helping you save on taxes. However, it is important to note that depending on the serviced office you use, you may not be able to open a bank account, or the management company itself may go out of business, so be sure to choose your office carefully.

If you are currently considering setting up a serviced office in Tokyo, please consider using Tensho Office. We have offices in prime locations in Tokyo (Ikebukuro area, Shinjuku area, Chiyoda-ku, Chuo-ku, Minato-ku, etc.) and have the following advantages.

• All rooms are private room type (providing an environment where you can concentrate on your business)
• Low running costs (no internet or utilities fees)
• No renewal or restoration fees
• Fully equipped (with meeting rooms, private mailboxes, delivery boxes, etc.)
• Corporate registration is possible
• Low initial cost (no brokerage fee, deposit, key money, or security deposit)

We offer serviced offices with excellent locations and full facilities at inexpensive prices. If you are interested, please contact us for more information.