---
title: "Company setup choices: fiscal year-end date, the 10 million yen capital threshold, and profit swings as an audit trigger"
url: https://memocore.ai/memos/6a5f631b63d783ad687093e5
project: "Doing Business in Japan"
tags: "tax-corporate, japan-business, unverified-opinion, real-case"
updated_at: "2026-07-21T12:16:27.225Z"
---

# Company setup choices: fiscal year-end date, the 10 million yen capital threshold, and profit swings as an audit trigger

When incorporating, it is worth setting the fiscal year-end date on a convenient day rather than the 3rd of a month — otherwise the tax office can get confused in its calculations and delay issuing tax payment certificates (納税証明書) needed for visa applications. Many companies end their fiscal year in September or December; the corporate return (決算) for a 株式会社 (KK) is due about 2 months after the fiscal year ends. Companies with capital of 9-10 million yen often deliberately stop at that level to avoid the higher taxes tied to larger capital — an observation from the chat, not an official rule. Annual retained profit can be converted into registered capital (資本金) to build capital up toward the 30 million yen threshold needed for a business manager (BM) visa; the tax office looks specifically at registered capital, not capital reserves. A sharp rise or sharp fall in a company's annual profit is a potential trigger for an invitation to the tax office for explanations or an audit — a real case involved a company invited to explain a profit drop caused by the 2014-2015 oil price crash. The requirement for new companies on a BM visa to grow capital and profit for visa purposes objectively creates a "suspicious-looking" sharp rise in the numbers — an opinion from the chat, not officially confirmed.