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Making Japanese Accounting Book

How to make an accounting book in Japan

In the case you operate your company in Japan, your company needs to submit tax filing every year. If you hire a tax accountant, amount of his fee may be 150,000 – 500,000 yen every year.
Amount of her fee will differ depending on the number of journalization.

(In the case you are operating your business as a sole proprietor, you can find some information in this page. “”Making accounting books for income tax deduction “”)

So you may hope to make accounting book and submit tax filing without hiring tax accountant.

Because you may be able to save some money (300,000 yen * 10 years = 3 million yen).

And as a president of a company, it will be better to know about accounting (会計).

In that case you will read through this page.

Corporation tax etc. 

Interim Payment


Payment of corporation tax and accounting book

Journal entry for sole proprietorship in Japan (another page)

Company establishment and journal entries

Corporation tax etc.(法人税等=Hojinzei tou)

In the case your company has made a profit by its business, it needs to pay corporation tax(法人税), corporation resident tax(法人住民税=Hojin Juminzei), Business tax(事業税=Jigyozei) .

Corporation tax etc.(法人税等) includes these three kinds of taxation.

In the case your company pays property tax, stamp duty, they are also taxation.

However it is included in taxes and dues (租税公課=Sozei Koka).
Amount of 租税公課 does not differ depending on taxable income of your company unlike Corporation tax etc.

Assumed that it is year of December 2021 now.

Fiscal year of your company : from January 1st to end of December.

Amount of corporation tax of previous year : 400,000 yen.
(Meaning your company paid corporation tax of 400,000 yen in February 2021).

Amount of corporation tax for this year : 500,000 yen.

Your company needs to pay corporation tax (500,000 yen) for this year in February 2022.

Interim Payment = 中間納付

Accounting book of Japan

Your company needs to pay about 200,000 yen in July as interim payment(中間納付).

You do not know exact amount of this year’s corporation tax until end of 2021.

However your company needs to pay about half of corporation tax etc. in the middle of fiscal year.

Your company estimate amount of corporation tax etc. according to amount of last year’s corporation tax (400,000 yen).

So it needs to pay about 200,000 yen (2 / 400,000 yen) from end of June to end of August 2021.

Journalization (仕訳=Shiwake) of Interim Payment

When your company pays this 200,000 yen (interim payment), it is journalized as provisional corporation tax etc. (仮払法人税等).

It is allocated to Asset in balance sheet.
Because if your company goes into the red as of end of fiscal year, your company has a right to receive refund of it.

Journalization is a process to make a balance sheet.

Accounting book of Japan and balance sheet

Your company paid Interim Payment by cash.

In this case, journalization is as below.

Provisional corporate tax etc. 200000 yen / Cash 200000 yen

Payment of Corporation tax etc. and accounting book

After end of December 2021, your company will settle accounts, fix accounting book.

When your company settles accounts as of end of December 2021, you can know amount of corporation tax (assumed 500,000 yen).

In this case journalization should be as below.

 Corporation tax etc. 500,000 yen  / Provisional corporation tax etc. 200,000 yen
                                                               / Payable Corporation tax etc. (未払法人税等) 300,000 yen 

This Payable corporation tax is named Nozei Jutokin (納税充当金=のうぜいじゅうとうきん) in tax filing process. 
This term is very important and you will see it in tax filing papers many time.
Tax filing paper for corporation tax is comprised of pages named 別表=Beppyo.

Then in February 2022 (Next fiscal year), your company pays remaining corporation tax etc. of 300,000 yen from bank account, journalization should be as below.

Payable Corporation tax etc. (未払法人税等) 300,000 yen  /  Bank deposit 300,000 yen 

Company establishment and journal entries 

If you are going to establish a company in Japan, you will deposit the money that you will use as the company’s Capital(資本金) in a bank account in Japan.

You cannot open a bank account under the company name before you establish the company. (It is not easy to open a bank account under the company name even after you establish the company.)

Therefore, you will deposit the company’s Capital(資本金) (let’s assume 10 yen) in your personal account. Then, you will take a copy of your passbook and establish a stock company.

The journal entries for this case are as follows:

Deposits(預け金) 10 yen / Capital(資本金) 10 yen

This means that the company has deposited money with you. It is like the company is lending 10 yen to you. Therefore, it is an asset item (debit=資産).

If you do not have “Deposits(預け金)” in your accounting software, you will substitute another asset item (such as prepaid expenses=仮払金).

You used the 3 yen from the 10 yen to pay for the company establishment expenses.

Establishment expenses 3 yen / Deposits(預け金) 3 yen

You withdrew the remaining 7 yen in cash.

Cash(現金) 7 yen / Deposits(預け金) 7 yen

You should clear the Deposits(預け金) and prepaid expenses from your ledger by the time the company closes its accounts.
Because these are temporary items.

That’s all.💦