Case 19
<Question>
I plan to start a business as a sole proprietor. If the business is successful in the future, I will set up a corporation. Can you advise as to tax and accounting matters?
<Answer>
The following application forms have to be filed to the national tax office and the local tax office (Ward office etc).
National Tax Forms
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Notice of starting a business as a sole proprietor
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Within one month after the date of the incident.
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Application for approval of filling blue-form tax return
(1) General rule
By May 15 of the year
(2) If the commencement of the business is on and after January 16
Within two months after the date of the incident
Local Tax Forms
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Notice of starting a business as a sole proprietor
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Within fifteen days after the date of the incident (It depends on local tax offices)
Regarding accounting matters, the first of all separating private money to money on business is very important, so opening a bank account on business is necessary. If not, it is difficult to take advantage of the deduction for blue form tax return.
If appropriate accounting records are maintained, the deduction for blue form tax return is applied. There are two type of the deduction though, if you keep the accounting records based upon double bookkeeping, JPY 650,000 of the deduction is available. Instead of double bookkeeping, adopting simplified bookkeeping is available for JPY 100,000 of the deduction. There is no strict definition of the simplified bookkeeping though, it is important to grasp every revenue and expenditure by each transaction and daily basis.
The tax office requires the following financial statements for each deduction
(1) JPY 650,000 of the deduction
Balance sheet, Profit & loss statement, Detailed statement of revenues and expense
(2) JPY 100,000 of the deduction
Profit & loss statement, Detailed statement of revenues and expenses
As long as the balance sheet is required for JPY 650,000 of the deduction, separating private money to money on business is not avoidable.
By Certified Public Accountant, Koji Takahashi,
Tokyo & Yokohama
