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Image 2/64 for "How I started my company in Japan"

Thu 2015/04/02 21:58 JST 3287121 Views

But before we take a look at the new office, I wanted to cover what my workspace looked like over the years and the history of how it became what it is today.

This photo is taken at home on the 3rd floor back in 2006 - a home which I bought on my Amazon salary and affiliate earnings. I had left Amazon and was working for Microsoft at the time.

This room is where I did a lot of coding for the build up to starting my company.

While working for Amazon and Microsoft, comrades would introduce folks who wanted me to build websites for them. Even though I was working with the web, I didn't think there was money to be made from making websites for others. I was also content with my current job which kept me busy so wasn't interested in the requests. So I threw back a "OK if you really want a website then its going to cost you blah million yen."

To my surprise, the first company who requested a website said "yes please." I was not about to say no to a few million yen (1 million = roughly 10,000 USD at the time) so programming until the early hours of the morning was the norm for the next few months where I was also able to beef up the PHP programming skills - thank you Google Sensei.
I banked a few million yen in the bank for a single website which was just shy of my annual salary of my first job in Japan. More requests started to come in which was proving to be a bit more for me to handle without it affecting my full time job.

With the help of Google Sensei again, I then started to seek developers in overseas countries and ended up with development teams in India, Romania and the US.
I would work remotely with them over phone, email and IM. I required half of the payment from my clients to be paid upfront which I used to pay my developers. I would then meet clients after work to understand their business needs which I then fed back to my developers.
It was my first experience managing my own remote staff where I had memorable moments like the developer who just dropped everything and disappeared ^^;

With all the extra income, I would have been crazy to declare just my earnings with the annual tax return - I needed to declare my expenses too as I was effectively running a company on the side so I founded my first business entity which was a sole proprietorship.

A sole proprietorship enables one to declare not only their earnings but also their expenses too. For example, If I use 25% of my home as an office, I can declare 25% of my rent/mortgage. I use my Internet connection for 90% of my work so I declare 90% of the cost as an expense.
By declaring your expenses, the amount of tax you pay is reduced as you only pay tax on the profits.

If you make 1000 USD a year and don't declare your expenses then you will pay tax on that 1000 USD. If you declare your expenses as being 800 USD and assume that your total income was 1000 USD, then you only pay tax on the difference which is 200 USD.

Anyway, by this time I knew that I wanted to have my own company later in life and gave myself a goal of setting up a company by the age of 35. The sole proprietorship was the beginning of everything and it was to be our future. I called it "Mirai" [未来] which means "Future."

I wrote up something simple about starting a sole proprietorship in Japan in the Japan Proprietorship post. Most countries have the same system and anybody should be able to start one - costs nothing to register and anybody making money on the side would be crazy not to have one - unless you like being taxed.
It is important to understand that this is not a form of tax evasion but a legitimate way to declare your expenses which you need to generate earnings. As far as I know there is no age limit to setting up a sole proprietorship.

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