What are the initial costs of starting a business, and how much does it cost?【Low-cost methods are also explained】

• Update:2023/12/4

To start a business, you first need to set up the necessary environment for starting a business, which involves a variety of costs. How much does it cost to start a business?

If you don’t know the costs of starting a business in advance, your business plan could go awry. Here we will explain the initial costs of starting a business and how to reduce the initial costs. If you are planning to start a business, please refer to this page to reduce unnecessary expenses.

Contractual costs of leasing office space

The serviced office contract will incur the following costs.

Basic cost

Brokerage fee

The maximum amount charged is one month’s monthly rent, but some real estate agencies offer half or no brokerage fees.

Security Deposit

Approximately 6-12 months is the standard market rate. If nothing happens, you may be refunded when you move out.

Key money

Unlike a deposit or security deposit, it is not refundable. The standard market rate is one to two months of rent.

Advance rent

In properties where rent is paid in advance, the next month’s rent is charged as the initial cost. If you rent from the middle of the month, the rent is often prorated on a daily basis, etc. Some properties offer the first month free of charge.

The amount charged will vary depending on the type of office space used, but the following are the minimum initial costs for a 300,000 yen rent office lease.

【Approximate initial cost of leasing office space】
　　Total…2,700,000 yen
　　Advance rent…300,000 yen
　　Brokerage fee…300,000 yen
　　Deposit/Guarantee (6 months)…1,800,000 yen
　　Key money (1 month)…300,000 yen

Shared offices and serviced offices offer a lower initial cost than rented offices, as initial contracts can be signed for tens of thousands of yen to over 100,000 yen. With virtual offices, you can sign up for as little as 5,000 yen.

Advertising and promotion expenses

Advertising and promotion expenses are necessary expenditures to make your company’s services known.

Business equipment

Business card

The market price is about 1,000 yen for 100 sheets. The more sheets ordered, the cheaper the price tends to be. Prices also vary depending on the type of design, paper material, and other factors.

Creation of brochures

It is a booklet that summarizes the company’s services in an easy-to-understand manner, and is available in paper and electronic formats. If you outsource the entire process, including designing and directing the creation of the manuscript, the cost can be close to 1 million yen. If materials such as manuscripts and photographs can be prepared in-house, costs can be reduced.

Web media for public relations

Home Page Creation

If you are outsourcing a full-fledged website of about 15 pages, expect to pay 500,000 yen or more. For companies that use templates to cut down on the man-hours required to create a website, it may be possible to create a website for as little as 100,000 yen. If you use a free website creation service and prepare the content in-house, the cost is zero, but it takes a lot of work.

Domain Name Acquisition

A domain is like an address on the Internet. The price varies depending on the type of domain, such as “.com”, “.biz”, “.co.jp”, and so on. A cheap domain name costs a few hundred yen per year, while an expensive one costs several tens of thousands of yen.

Server Management

The server required to publish a website is generally a rental server (hosting server), unless the company is large in scale. Depending on the contracted plan (capacity), the monthly cost is about 1,000 to 2,000 yen.

Advertising and Promotion

Web Advertisement

This is the cost of placing a Web ad, such as a listing ad, banner ad, or affiliate ad. Rates vary depending on the advertising format and medium.

DM (direct mail)

The shipping price of DM varies depending on the type, such as postcard type, sealed envelope type, catalog type, etc. Postcards and sealed letters can be sent for about 70-100 yen per piece, while catalogs cost about 400 yen per piece.

Other costs range from TV commercials, billboards, and other advertising methods.

Equipment-related expenses

Procurement of equipment necessary to conduct business also incurs costs.

Office Equipment

• Desk
• Chairs
• Lockers
• Partitions
• Book shelves, etc. ……

Office Equipment

• Telephone
• FAX machines
• Personal computer
• Printers
• Copy machines, etc. ……

Office supplies

• Seals
• Stationery
• Files
• Printer ink, etc. ……

The cost of equipment can vary greatly depending on the product you choose, such as new, used, or manufacturer. If you are using a shared office, serviced office, or virtual office, this will be a negligible cost.

Accounting and tax-related expenses

Money in and money out must be managed. The cost depends on how it is managed.

In-house management

• Accounting software (5,000 yen to several tens of thousands of yen)
• Spreadsheet software (free of charge – about 35,000 yen)
• Ledgers, etc. ……

Outsourcing

• Tax accountant fees (30,000 yen or more)
• Accountant’s fees (over $12,000), etc. ……

Company Incorporation Fees

The cost of establishing a company differs between a joint stock company and a limited liability company. For a sole proprietorship, there is no special fee since all you need to do is to submit a business start-up notification.

Corporation

Capital stock

1 yen or more

Legal fee

Electronic Articles of Incorporation
50,000 yen fee for certification of articles of incorporation
300 yen or more for a certified copy of the articles of incorporation
Registration and license tax 150,000 yen
*Total of about 200,000 yen

Paper Articles of Incorporation
50,000 yen for certification of articles of incorporation
40,000 yen for revenue stamps
2,000 yen for a certified copy of the articles of incorporation
150,000 yen for registration and license tax
*Total: about 240,000 yen

Other Expenses

Electronic Articles of Incorporation
Cost of creating an official company seal
Cost of a certificate of seal impression, etc. ……

Limited company

Capital stock

1 yen or more

Legal fee

Electronic Articles of Incorporation
Electronic Articles of Incorporation Total 60,000 yen (registration and license tax only)

Paper Articles of Incorporation
Registration and license tax 60,000 yen
Revenue stamp fee 40,000 yen
*Total 100,000 yen

Other Expenses
Fees for preparing a personal seal
Electronic Articles of Incorporation
Cost of seal certificate, etc. ……

Sole proprietor

Notification of opening of business only (no special fees required)

How can I reduce the initial cost of starting a business?

Because of the possibility of unplanned expenses when starting a business, it is a good idea to keep initial costs down. Ideas for controlling initial expenses include.

Reduction of fixed costs

In the early stages of starting a business, office rent is the fixed cost that should be reduced the most. Instead of renting a regular office with high initial and maintenance costs, it is better to choose a serviced office, a shared office, or a home-based business that is less expensive.

In the case of rental or shared office space, utilities and communication costs are sometimes included in the fee, making it easier to keep track of expenses.

Save on advertising and promotion costs

For example, it is far cheaper to create a website in-house than to outsource it. Nowadays, there are many free services that can create high quality websites, so it is easy to create a website without special knowledge or skills.

Do-it-yourself company formation

Similar to advertising and publicity costs, requesting a judicial scrivener or similar to establish a company will cost several tens of thousands of yen to more than 100,000 yen in fees. It is possible to perform the procedures yourself, so if you want to keep costs down, do it yourself.

Choose a sole proprietorship or limited liability company

Starting with a sole proprietorship or limited liability company with little opening capital will reduce initial costs. It is not too late to convert to a joint stock company after the business has begun to take off.

Summary

We have presented an itemized list of the costs associated with starting a business. In the early stages of starting a business, it is important to find ways to keep costs low. In particular, you want to reduce fixed costs such as rent as much as possible to have more cash left over. We recommend choosing serviced or shared office space, which can be rented at a lower cost than regular serviced office space.