In the launch phase of a Japan office there is often no room for a dedicated accounting person, and how much accounting to hand to outside providers becomes a question. Starting without deciding the scope tends to leave responsibility unclear.
- The company wants to hand accounting to an outside provider first, without a dedicated accountant
- It is unclear what can be outsourced, such as bookkeeping, payroll, and tax filings
- Exchanges with the provider have grown and the internal burden has actually increased
- The information needed for headquarters reporting is not coming from the provider
This article explains how much accounting work a foreign company can outsource when launching a Japan office.
Why Consider Outsourcing in the Launch Phase
In the launch phase transaction volume is small, and hiring a dedicated person may not justify the cost. At the same time, Japan has its own accounting, tax, and social insurance procedures, and handling them all internally becomes a burden.
Outsourcing lets a company use the expertise it needs, in the amount it needs. It does not solve everything, however, and matters requiring internal judgment remain.
Tasks Easy to Outsource and Tasks to Keep In-House
It helps to divide accounting into routine processing and work that involves judgment.
| Category | Examples |
|---|---|
| Easy to outsource | Bookkeeping, payroll, procedures such as social insurance and withholding tax, and preparing tax returns |
| Kept in-house | Approving transactions, deciding whether to make payments, and checking the content of invoices issued |
| Done jointly | Reviewing the monthly trial balance, preparing reports for headquarters, and managing budget against actual results |
| Consult outside experts | Transactions requiring tax judgment and decisions on accounting policy |
Make the Scope and Responsibility Clear
In the contract with the provider, make clear the scope of work, delivery dates, and the materials the company must provide. If the scope is vague, gaps and misunderstandings arise.
As the business grows, review the scope of outsourcing. It is worth regularly considering whether to bring part of it in-house as transaction volume grows.
Summary
- In the launch phase, outsourcing lets a company use the expertise it needs, in the amount it needs
- Routine work such as bookkeeping, payroll, and tax filings is easy to outsource
- Keep work requiring internal judgment, such as approving transactions, in-house
- Make the scope and responsibility clear, and review them as the business grows
Contact
JBN supports foreign companies with their Japan office, from accounting and tax practice through to building the structure.
To discuss setting up your accounting function, please contact us.