Incorporation Benefit Estimator

About this calculation

The incorporation estimate compares the tax on the same profit taken as a sole proprietor versus as director's salary from a company. Individuals pay progressive income tax (5–45%), resident tax and enterprise tax; incorporating lets the salary use the employment-income deduction, so savings grow with profit.

How it is calculated

Sole proprietor: profit − ¥480k basic deduction → income-tax table (5–45%, plus 2.1% surtax) + 10% resident tax + 5% enterprise tax (after ¥2.9M owner deduction).
Company: assume all profit is paid as director's salary; apply personal rates after the employment-income deduction (Art. 28) and add the ¥70k corporate minimum levy.
The difference is the estimated annual saving. Changes in social-insurance cost are not reflected.

Statutory basis (e-Gov)

所得税法第89条 — Progressive income-tax rates (5–45%) e-Gov last amended 2026-07-23
所得税法第28条 — Employment income deduction e-Gov last amended 2026-07-23
法人税法第66条 — Corporate tax rate (SME 15%) e-Gov last amended 2026-07-23

Frequently asked questions

At what profit level is incorporation worth considering?

There is no single threshold, but as a guide in this tool the saving from the employment-income deduction becomes significant above roughly ¥12M of annual profit. Social insurance and set-up/running costs must be weighed too.

What happens to social insurance after incorporating?

A company must enrol even a sole director in health and pension insurance, creating an employer cost. This estimate compares tax only and excludes that change.

What is the corporate tax rate?

For SMEs the first ¥8M of income is taxed at a reduced 15% (Corporation Tax Act Art. 66). Because this estimate pays all profit out as salary, corporate income is assumed to be zero.

Published by: 心享勢成株式会社（SEISEI INC.） · Last updated: 2026-09-12 · Tax year: 令和8年度（2026年度） · About the publisher

本ツールは一般的な税制情報に基づく概算シミュレーションです。個別の税額計算・申告・税務相談は提携税理士が承ります。算出結果は法的助言ではなく、参考値としてご利用ください。