Newsletter #009 Starting and Running a Business in Japan – Part 5 What Does “Good Bookkeeping” Mean?

Helping foreign business owners understand Japan's tax system—one topic at a time.

In our last newsletter, we talked about the Blue Return.

One important requirement is good bookkeeping.

But what does that really mean?

You do not need to be an accountant to understand the basic idea.

Keep a Record of Your Business

Good bookkeeping means keeping a clear record of what happens in your business.

For example:

• How much did you sell?

• Who paid you?

• What did you buy?

• What business expenses did you pay?

• When did you receive or pay the money?

• What assets does the business have?

Your records should allow you to understand the financial activity of your business.

Keep Your Documents

Bookkeeping is not only about entering numbers into accounting software.

You should also keep documents that support your transactions, such as:

• invoices,

• receipts,

• contracts,

• bank statements,

• payment records, and

• other business-related documents.

These documents help show why the transaction was recorded and where the amount came from.

Keep Business and Personal Money Separate

This is especially important for a small business.

If possible, use a separate bank account and payment method for your business.

For example, if you use your personal bank account for both business and personal expenses, it can become difficult to understand which payments are business expenses.

Keeping them separate makes bookkeeping much easier.

Do I Need Accounting Software?

Not necessarily.

You can keep accounting records in different ways.

However, accounting software can make bookkeeping easier, especially when your business has many transactions.

The important point is not the software itself.

The important point is keeping accurate records and supporting documents.

One More Important Point

Good bookkeeping is not only for the tax return.

Your bookkeeping can also help you understand your own business.

You can see:

• how much you are selling,

• where your money is going,

• whether your business is making a profit, and

• whether you have enough cash to continue the business.

In other words, good bookkeeping is a business management tool, not only a tax tool.

Key Takeaway

Good bookkeeping means keeping a clear and reliable record of your business transactions.

Start from the first day of your business.

Do not wait until the tax return is due.

Good records make tax work easier—and help you understand your own business.

Coming Next

Starting and Running a Business in Japan – Part 6

Business Expenses – What Can You Deduct?

Next time, we will look at one of the most common questions from business owners:

“Can I deduct this expense from my business income?”

Prepared by　Kyoji Yasui Tax Accountant Office

Helping foreign business owners understand Japan's tax system with clear, practical guidance.