[Entrepreneur's Diary] Vol.3 - Startup Expenses

The "Entrepreneur's Diary" is a record of the process leading to the independent establishment of a Creative Director working at an agency in Tokyo. It introduces the process, insights, failures, and other content.

How much does it cost to start a business?

Amidst the busy days, assigned to pitches or dealing with demanding clients on other projects, weekends seemed to slip away without anything being accomplished. To make the best use of time, I started by calculating the actual cost of starting a business. It roughly includes "startup capital," "operational funds," and "living expenses." First, I researched the "incorporation expenses" within the "startup capital."

Incorporation Expenses

A quick online search provides a figure of around 254,000 yen for incorporating a company. I estimated that having around 300,000 yen should be sufficient. Researching this myself provided an approximate timeline, the incorporation process, and points where cost-cutting is possible. The diagram shows a rough estimation.

Approximately 2 months needed for incorporation

Although it can be done in a month if rushed, the necessary arrangements for incorporation, apart from preparations, usually take about two months.

1. Decide the company name, initiators, and head office address. Prepare the capital.

2. Create seals (representative director's seal, company seal, bank seal).

3. Create the articles of incorporation.

4. Have the head office location authenticated at the notary office.

5. Open a new bank account. Deposit the capital. Conduct payment survey.

6. Apply for registration (within 2 weeks after payment).

Roughly, this process takes about two months. Concurrently, there are numerous other tasks, such as planning other financial aspects, creating a website, making business cards, and creating sales tools. I hope to document both the challenges and the enjoyment of this journey in my notes.

Cost-Cutting Points

As the major expenses are payments to administrative agencies, there are limited points to reduce costs, but I found three:

1. Seal Creation (representative director's seal, company seal, bank seal).

2. Stamp Duty for the Articles of Incorporation.

3. Utilizing online incorporation service providers.

Regarding point 1, the estimated table shows a cost of 10,000 yen, but creating the necessary seals for incorporating a company involves three: representative director's seal, company seal, and bank seal. Comparing quotes from online seal stores, the cost ranged from over 40,000 yen to the lowest of 3,780 yen. While seals are long-term assets and carry symbolic meaning, personally, I believe spending around 5,000 yen should suffice. The essential aspect of a seal is the impression it leaves, and there's no need for ornate cases with materials like ivory, buffalo horn, or titanium, which are often costly and ethically questionable. I believe the money saved from this difference could be better invested in creating business cards.

As for point 2, by creating a digital articles of incorporation and applying, a system is in place where the stamp duty cost of 40,000 yen can be waived. This leads to point 3:

Online incorporation service providers, such as Freee or MoneyForward, were the most efficient and cost-effective in my research. I was skeptical whether there could be anything cheaper than doing it myself or entrusting it to a legal specialist, but thanks to digital systems like the one for creating digital articles of incorporation and online application processes, they cut waste and proved to be the cheapest and fastest option at this point. Incidentally, the lowest cost was offered by Freee.

This time, I calculated the expenses until the incorporation of a company and found that it's cheaper and more reliable to have a service provider handle it. However, even with this service provider, I plan to gather real user feedback using SNS and online research to avoid potential pitfalls and risks. By leveraging time as an ally, I want to consider cost-effective and reliable methods. Next, I'll report and calculate the separate items of "operational expenses" and "administrative expenses" for the "startup capital."