Frequently Asked Questions
Frequently Asked Questions
Financial Accounting & Reporting
Q1. Will you do direct input into our ERP? We are on NetSuite.
A1. Yes, we can input directly into your ERP system. However, due to issues with consumption taxes, it is often more cost efficient if we initially book in our system.
In our standard outsourcing model, we would start with your chart of accounts, and use our web-based bilingual accounting application (‘WebAccountingManager (WAM)’) to book the transactions for your Japanese entity (“Company”). If you prefer to look at the transactions directly in your ERP system, we have several interfaces, including one for NetSuite, Dynamics which would allow the user to upload all the transaction-by-transaction information into your ERP system.
Q2. How do we get your reports?
A2. We would first book the transactions in WAM, which would be compliant with Japanese tax laws. Based on the pre-agreed reporting cycle, our in-charge will inform you when the books are closed. Balance sheet account reconciliations will either be emailed to you or stored on a portal within WAM for your review and consolidation procedures.
Q3. What monthly statements do you provide?
A3. Once we close the monthly books, we will inform you so you can access the latest reports (TB, GL, departmental PL, etc.) in WAM. We can either provide monthly balance sheet account reconciliations in English using our standard format or use yours.
Q4. Can you book entries based on US GAAP?
A4. Unless the company is in a specialized or regulated industry, yes, in general, we can book based on US GAAP. We retain more than a dozen professionals who have passed all parts of the U.S. Certified Public Accountants examination.
Q5. Can you provide a quote for your outsourcing services?
A5. Please go to our online [‘Outsourcing Fees Calculator’], answer the questions and you will get a fee estimate for our recurring services. The entire process will take about ten minutes to complete.
Q6.The ability to communicate in English is important to us. Are your professionals proficient in English?
A6. We offer education allowances and annual TOEIC exams in-house so our professionals have incentive to maintain a certain level of English. With a majority of our staff achieving TOEIC scores exceeding 900 points, they can communicate by email directly with you in English. For situations where English conversation is required, other members of the client services team may join in on the call or meeting.
Q7. Can I discard my paper invoices and receipts?
A7. <Paper Invoices and receipts>
① invoices can be accepted/logged under the government specified ‘time stamp’format [and cannot be further modified]; ② each document can be ‘searched” by using various parameters (e.g. date, amount, vendor name); ③ comply with deadlines as to the last day such documents can be converted to pdf ④ implementation of relevant internal controls ⑤ others. Although some relaxation of these rules is anticipated in the future, currently it is difficult to move completely away from paper.
<Invoices issued in pdf format>
When vendors issue invoices in pdf format, either one of the following conditions must be satisfied if the company wants to avoid saving paper invoices: ① invoices can be accepted/logged under the government specified ‘time stamp’format and cannot be further modified; ② implementing internal regulations/procedures for the handling digital invoices, or ③ an accounting system which can prevent data modifications.
If the conditions listed above cannot be satisfied, paper based invoices or receipts will still need to be kept in storage for at least seven years to comply with Japanese tax law requirements (maximum ten years to comply with Japan Company Law)
Payroll and Statutory Benefits
Q1. Can you describe the onboarding process?
A1. HR Administrators (‘HRA’) would have access to our EPS (Employee Profile System). The HRA would access the system, input basic employee information (excluding salary information), including an office email address, and then issue a link to the new employee. The new employee would click on the link and enter personal information. After the HRA confirms the information, a message will be sent to the OCA for processing. Certain personal information such as My Number information, can be verified by us if the employee can stop by our office. Salary information will be received through an excel template.
Q2. Will timesheets be pulled from our ERP system?
A2. We would have the client complete the Monthly Gross Pay spreadsheets in our standard model. For a fee, we can pull the timesheets from the ERP system and compute gross pay based on company policy, which are in accordance with Japanese Labor Laws and practices.
Q3. How do we communicate payroll changes?
A3. Salary information and special deductions – through the Monthly Gross Pay spreadsheet.
Personal information – through our EPS system. There is a link that would be sent to the employee for any personal information changes.
Q4. Do you do payments of salaries and various payroll taxes?
A4. Yes, if we are engaged to provide cash management services.
Q5. Do you do payroll deductions and process for statutory benefits?
A5. Yes, through joint efforts with OC & Associates HR Co., we process for all statutorily required benefits as part of our standard package. Our standard package also includes income tax year-end adjustment procedures. Health cards will be arranged for employees and their qualified dependents. Inhabitance tax deductions will be made.
Q6. What reporting do you provide regarding payroll?
A6. On a monthly basis, we can provide a payroll ledger in English or Japanese, this can be segregated by department. For a fee, we can create monthly employment cost sheets as well as draft recommended journal entries. The payslips can be on paper or web-based.
Q7. Do you have a system where we can see information on the employees?
A7. We have a web-based English application called EPS (Employee Profile System). Normally we would use this to collect personal information on the employee and his/her dependents and commuting allowance information.
Q8. How can we be updated on the latest developments occurring in Japan?
A8. Every October, we invite our clients to our Office Manager Seminar, which includes updates on the developments from the tax, payroll and statutory benefits perspectives. The seminars are held in Japanese in our main conference room. We also issue semi-annual newsletters in Japanese and English which can be accessed internally through our EPS system and our website.
→ latest newsletter
Q9. Do you provide advice on employee terminations?
A9. To a certain extent, OC & Associates HR Co. can advise. If there are disputes with the employee, we suggest the Company retain a law firm (which we can recommend).
Q10. Are you accredited?
A10. Yes, every five years, we ask an audit firm to provide us with an ISAE 3402 Type 1 report.
Q11. Do you follow data protection regulations?
Q12. Do you offer your annual office manager seminars in English? If so, is there a way we can view the seminar as a webinar?
A12. Unfortunately, the annual seminar is only presented in Japanese. This is because a significant majority of the participants are native Japanese speakers. Many of the contents of the seminar are also explained in our fall newsletters, which are also written in English and are posted on our [website].
Q1. Can you maintain our bank account?
A1. Yes, we can open a bank account under your Japanese entity’s name with MUFG and manage it. We can also set up SWIFT MT940 services so you can also view the transactions as they occur on a daily basis on your bank portal.
Q2. How do you get AP invoices? Are they mailed to you directly?
A2. In our standard model, we ask that all vendor invoices be approved by the country manager (or designated person) on the surface of the invoice and then mailed to us on a once a month basis. If requested, we can summarize all the open invoices into English for second approval by the parent company. This summary will also serve as a means to request additional funds if the Company lacks funds.
Q3. Will you reconcile the bank accounts?
A3. Yes, We will reconcile the bank account(s) with our GL (i.e. WAM) system. Such reconciliations, if any, will be included in our balance sheet account reconciliations.
Q1. Do we need to engage you for accounting services if we want tax services?
A1. If the accounting records are being maintained in Japan on a Japanese consumption tax compliant system, it is possible for us to prepare the corporate income, local and consumption tax returns. However, completion of a Tax questionnaire will be required.
Q2. Do you provide transfer pricing advice?
A2. No, we do not. However, if the parent company’s international tax advisors have specific queries about Japanese income/VAT taxes, we can advise. The nature of our tax services focus on tax compliance.
Q3. How do you compute your tax return preparation fees?
A3.Please complete the tax section of our ‘Outsourcing Fees Calculator.’
Q4.Can you prepare Country-by-Country Reports? How about a Master File?
A4. We assume that the CbC Report will be submitted directly by the Parent company/shareholder. We can assist in filing the Master File on behalf of the Japanese subsidiary. It is up to the shareholder to store the Local File (i.e. documents necessary to calculate arm’s length prices) by the deadline for submission of the final returns.
Q5. Do you provide tax services for expatriates?
A5. Yes, OC & Associates Tax Co. can provide advice and prepare tax returns to some extent for our corporate clients.
Q6. Our tax department in the US needs to review, approve the tax returns before they are submitted. Can you correspond with them directly?
A6. Yes, we can prepare book to tax reconciliation worksheets and also communicate directly with your overseas tax departments. Such service is subject to additional billing.
Q1. Can you audit subsidiaries of foreign companies?
A1. Upon successful completion of our due diligence procedures and certain confirmation procedures, we can perform audits if the readers of the financial statements are outside of Japan. We are registered with the PCAOB (Public Accounting Oversight Board) in the US, which allows us to audit subsidiaries of US public companies.
Q2. What about Japanese companies based in Japan?
A2. In general, no. Japanese based companies have readers in Japan. Our Kreston Japan member firms can assist Japanese companies in this area.
Q1. Can you advise and help with registering a company in Japan?
A1. Unfortunately this is an area for attorneys and judicial scriveners in Japan. We can refer you to a local bilingual law firm whom we have a relationship with.
Q2. Can you provide a virtual address?
A2. Yes, we can provide an address in Chiyoda-ku, Tokyo.
Q3. Do you offer nominal representative director services?
A3. Yes, upon some due diligence, one of our partners can become a nominal representative director.