Who is this article for?
• Those who have just established a corporation and want to understand the overall picture of accounting.
• Those who are planning to establish a corporation and want to understand the setup process in advance.
• Those who have been putting off their accounting and want to catch up.

Table of Contents
• 1. Mandatory Notifications After Incorporation (Within 2 months of establishment)
• 2. Opening a Corporate Bank Account and Organizing the Flow of Money
• 3. Selection and Initial Setup of Accounting Software — How to Choose Software Suited for the Startup Phase
• 4. Creating a Monthly Accounting Routine — The Key is a “System That Doesn’t Accumulate”
• 5. Understanding the Schedule for Fiscal Year-end and Tax Filing
• 6. Summary — First Year Accounting is All About “Building a System“

Introduction
“I’ve started my company, but where do I begin with the accounting?” We often receive such consultations from entrepreneurs who have just started their businesses.
In fact, if you put off accounting during the startup phase, various problems will occur. Bookkeeping accumulates, leading to major confusion at the time of the fiscal year-end. Deadlines for notifications to the tax office pass, making it impossible to receive the benefits of the blue return. Materials required for loan screenings cannot be prepared, causing you to miss the right timing.
These are “common occurrences” during the startup phase, but they can all be prevented if you set up the process properly at the beginning. Conversely, building an accounting system in the first year becomes the foundation for subsequent management.
In this article, we will organize and explain the accounting steps to be taken in the first year after incorporating into five chronological steps. We also introduce “common failures in practice” at each step, so please use them as a reference to avoid making the same mistakes.

1. Mandatory Notifications After Incorporation (Within 2 months of establishment)

Once you have established a corporation, first complete various notifications. Many notifications have filing deadlines, and in particular, if the “Application for Approval of Blue Return” is submitted past the deadline, you will not be able to file a blue return from the first period.

Destination	Notification Document	Filing Deadline
Tax Office	Corporate Existence Notification	Within 2 months of establishment
Tax Office	Application for Approval of Blue Return	Within 3 months of establishment or the last day of the business year, whichever is earlier
Tax Office	Notification of Opening a Payroll Office	Within 1 month of opening
Tax Office	Application for Special Provisions on the Due Date of Withholding Income Tax	Anytime (Applies from the month following the notification)
Tax Office	Application for Extension of the Filing Deadline	By the end of the business year
Tax Office	Application for Registration as a Qualified Invoice Issuer	As soon as possible in the case of a taxable enterprise
Prefecture/Municipality	Corporate Existence Notification	Deadlines set by each local government
Prefecture	Application for Extension of the Filing Deadline	Deadlines set by each local government
Pension Office	New Application for Health Insurance/Employees’ Pension Insurance	Within 5 days of establishment
Labor Standards Office/Hello Work	Labor Insurance Establishment Report, etc.	Within 10 days of hiring employees

The number of notification documents may seem large, but each one is not difficult. If you submit them all at once immediately after establishment, subsequent procedures will go smoothly.

Application for Blue Return is the Top Priority
Receiving approval for the blue return provides significant tax benefits, represented by the carryover of losses (for 10 years). Even if a deficit occurs in the early stages of business, it can be offset against surpluses from the next period onward, which is a great help in terms of cash flow. Make sure not to miss the deadline.

Common Failures in Practice
We have seen many cases where people thought, “I can relax now that the registration is finished,” put off the notifications, and realized they had passed the deadline for the blue return. For a company with a March year-end established in June, the application must be submitted by the end of the business year (end of March), so the practical deadline is just under 10 months from establishment. Even though it seems there is plenty of time, people sometimes forget due to being busy. It is best to handle them all at once immediately after establishment.

Furthermore, in the case of establishing a Japanese subsidiary of a foreign company, there are unique points such as required documents at the time of registration and English correspondence for notifications. Our office also supports foreign-affiliated companies, so please feel free to consult us if this applies to you.
If you would like to know more about the overall picture of notifications, please also see “List of Notifications for Establishing a Japanese Corporation — Organizing Filing Destinations, Deadlines, and Attached Documents” (to be released soon). Our office provides a checklist to manage these notifications in a list. Please feel free to contact us.

2. Opening a Corporate Bank Account and Organizing the Flow of Money

In parallel with the notifications, open a bank account in the name of the corporation. You might think, “Since sales are still low, is a personal account fine?” but if personal and corporate money are mixed, bookkeeping becomes extremely complicated. Considering the effort of re-sorting later, it is overwhelmingly more efficient to use a corporate account from the start.

The Most Important Thing in Startup Accounting — Keeping the “Flow of Money” Clean
What we want you to be most conscious of during the startup phase is “keeping the flow of money clean”. If the separation of accounts and management of deposits and withdrawals are in order, bookkeeping itself is not a problem even if it is slightly delayed. Conversely, if the flow of money is messy, it becomes extremely difficult to create accurate books later.
Specifically, please keep the following in mind:
• Route all business deposits and withdrawals through the corporate account — avoid mixing with personal accounts.
• Unify the payment method for expenses — concentrate on a corporate credit card or a dedicated business card.
• Decide on rules for out-of-pocket payments — decide on the settlement method and frequency when you pay personally.

Common Failures in Practice
There are many cases where “it took time to open a corporate account, so sales were received in a personal account for a while”. In this case, it is necessary to record this later in the corporate books as “Officer Loans,” and if the amount becomes large, the balance may not match. Move quickly to open an account.
The introduction of a corporate credit card is also recommended. If you concentrate expense payments on a card, the usage statement becomes the source data for bookkeeping as it is, making management significantly easier. If you are concerned about the screening for a corporate card, you may first prepare a single personal card dedicated to business expenses.
Regarding the use of corporate cards, please also see “Payments Using Corporate Credit Cards”.

3. Selection and Initial Setup of Accounting Software — How to Choose Software Suited for the Startup Phase

Once the flow of money is organized, the next step is the introduction of accounting software. Currently, cloud-based accounting software has become the mainstream. Since it allows for automatic integration with bank accounts and credit cards, the effort of manual entry can be significantly reduced.

Software Name	Characteristics	Recommended for…
freee	Operation is simple and intuitive. Smartphone app is also extensive.	Accounting beginners. Those who want to start without bookkeeping knowledge.
Money Forward Cloud	Integration with bank accounts and cards is powerful. Linking with other services like payroll and invoicing is convenient.	Those using multiple bank accounts and cards.
Yayoi Accounting Online	Cloud version of the historic Yayoi Accounting. The support system is generous.	Those who want generous support or want to cooperate with a tax accountant.

Whichever software you choose, the following tasks are necessary for initial setup:
• Organizing Chart of Accounts — Adjust the account system to suit your industry.
• Integration Settings for Bank Accounts/Credit Cards — Set up the automatic acquisition mechanism first.
• Inputting Opening Balances — Accurately register the capital and deposit balances at the time of establishment.

Criteria for “Doing it Yourself or Leaving it to a Tax Accountant”
Many people are unsure, but the point of judgment is “whether you can devote time to daily bookkeeping”. If you want to focus on your core business, one option is to ask a tax accountant, including bookkeeping services. It is not a choice between “leaving everything” or “doing everything yourself”; a realistic division of labor is “daily input by yourself, monthly checks and fiscal year-end by a tax accountant”.

Common Failures in Practice
Some people believe that “because I introduced cloud accounting and integrated bank accounts, accounting is already being done automatically”. However, automatic integration is only for “acquiring transaction data”. Human judgment is required for the task of classifying the acquired data into the correct accounts and confirming the content. Synchronizing alone does not complete the fiscal year-end.

4. Creating a Monthly Accounting Routine — The Key is a “System That Doesn’t Accumulate”

Once you have introduced accounting software, decide on a monthly accounting routine. “Not accumulating” is more important than anything else. If you reach the fiscal year-end without doing any bookkeeping for a year, you will have to process a large number of receipts and bank transactions all at once. You won’t remember what the expenditure was for, and receipts won’t be found. Not only will you be unable to perform an accurate fiscal year-end, but the costs of hiring a tax accountant will also skyrocket.

Timing	What to do
Beginning of Month	Record expenses for the previous month. Reconcile the bank balance with the books.
At Time of Invoicing	Issue sales invoices and keep copies.
At Time of Payment Confirmation	Confirm receipt of accounts receivable and perform reconciliation.
10th of Every Month	Payment of withholding income tax (Twice a year—July and January—in the case of the special provision).
As Needed	Organize receipts/vouchers, scan and save (Compliance with Electronic Book Storage Act).

Compliance with the Electronic Book Storage Act
Storage of evidence (receipts and vouchers) is also important. Under the Electronic Book Storage Act, it is mandatory to save documents received as electronic data as electronic data. Please save invoices received by email or PDF receipts as data rather than printing them on paper.

Common Failures in Practice
There are cases where “trying to do a year’s worth of bookkeeping right before the fiscal year-end, three months of credit card statements could not be found”. Credit card websites often have a viewing period for past statements, and they may become unavailable after time passes. If processed monthly, such troubles will not occur.

5. Understanding the Schedule for Fiscal Year-end and Tax Filing

Corporations must file final tax returns within 2 months after the end of the business year (or 3 months if an application for extension of the filing deadline has been submitted). It is important to count backward from the fiscal year-end month and understand in advance what to do and when.

Timing	What to do
3 Months Before Year-end	If you haven’t hired a tax accountant yet, please reach out at this timing. It may be difficult to respond right before the deadline.
1 Month Before Year-end	Organize materials for the fiscal year-end. Check for unprocessed expenses. Start preparations if there are inventory assets.
Fiscal Year-end Month	Inventory, calculation of depreciation, processing of accrued/prepaid accounts.
Within 2–3 Months After Year-end	Filing and payment of corporate tax, consumption tax, and local taxes.

“Organization Expenses” and “Opening Expenses” Often Forgotten in the 1st Period
Costs incurred before company establishment (articles of incorporation certification fees, registration taxes, seal creation costs, pre-establishment research costs, etc.) can be recorded as “Organization Expenses” under deferred assets. Additionally, costs incurred from establishment until the start of operations are processed similarly as “Opening Expenses”. Both can be amortized at any timing, and it is possible to record them as expenses all at once in a year when profit is generated. Be sure to keep receipts, including those from before establishment.

Common Failures in Practice
There are cases where someone thought, “The fiscal year-end is over, so I don’t have to think about taxes until next year,” and was surprised to receive a notice for estimated tax payments or interim filings. In the case of corporations as well, if the corporate tax amount of the previous period is above a certain level, an interim filing is required. Plan your cash flow after the fiscal year-end as well.

Summary — First Year Accounting is All About “Building a System”

We have organized the accounting steps to be taken in the first year into five steps:
1. Complete notifications immediately after establishment (especially the blue return application as top priority).
2. Open a corporate account and organize the flow of money (separation of personal and corporate is key).
3. Select accounting software and complete initial setup (including integration settings).
4. Establish a monthly accounting routine (create a “system that doesn’t accumulate”).
5. Understand the schedule for fiscal year-end and tax filing (don’t forget to record organization expenses)