Payroll calculation service

For local employees and/or directors who are working for Japanese entity, we provide payroll services, such as calculation of monthly payroll (including calculation of withholding income tax, social insurance and labor insurance etc.) and preparation for payment slips distributed to local employees and/or directors.

We also provide payment services, so we can pay monthly salary to employee and pay social insurances on behalf of your company.

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Our fee for Payroll services

Initial Payroll services (one off)
1. Set up of master payroll data for each employeeJPY 5,000 / Person
Monthly Payroll services
2. Monthly Payroll Calculation (Basic fee)
– Calculation of income tax, social insurance to be withheld
– Preparation for monthly payslips
– Preparation for monthly payroll calculation report for HQ’s review (in English)
JPY 20,000 / Month
– Up to 3 employees
– from 4, +JPY4,000/person
– from 10, +JPY3,000/person
– from 20, +JPY2,000/person

Ex) Number of employee in Japan : 3

  1. Initial set up fee : JPY15,000 (JPY5,000 x 3 Person)
  2. Monthly Payroll Calculation : JPY20,000 / Month

Ex) Number of employee in Japan : 5

  1. Initial set up fee : JPY25,000 (JPY5,000 x 5 Person)
  2. Monthly Payroll Calculation : JPY28,000 / Month (JPY20,000 + JPY4,000 x 2)

Calculating Gross Income

Before calculating payroll, you have to know what the employee’s gross income is.

It is determined by multiplying;

  • Basic salary
  • Commuting allowance (non-taxable)
  • Overtime allowance and other allowances (taxable)

What is social insurance?

Types of social insurance are as below;

  1. Health Insurance
  2. Nursing Insurance
  3. Pension
  4. Unemployment Insurance
  5. Labor Insurance

Of the five social insurance programs, 5 is a full company burden, but 1 to 4 are  paid by both company (employer) and employees. 1 to 3 are generally called “Social Insurance Premiums”, but sometimes 4 and 5 are also included in it.

In this articles, “Social Insurance Premiums” means 1 Health Insurance, 2 Nursing Insurance and 3 Pension. And “Labor Insurance Premiums” means 4 Unemployment Insurance and 5 Labor Insurance.

A corporation such as a stock company (including the case of only the business owner) is obliged to enroll in these social insurances.

Calculation method of Social Insurance Premiums

1) What is the Standard monthly remuneration?

The Standard monthly remuneration will be notified to company by the “Health Insurance / Employee Pension Standard Insured Persons Notification Form”, which is calculated by the average of wages from April to June. It is basis for calculating the amount of Social Insurance Premiums from September to August of the following year.

2) Calculation method of Social Insurance Premiums (Health/Nursing Insurance Premium and Pension)

Health/Nursing Insurance Premiums and Pension are borne half by employee and half by company (employer).

Each premium is calculated as follows;

  Premium = Standard monthly Remuneration × Insurance rate ÷ 2

As the insurance rate is regularly revised, it is necessary to check the latest information.

Nursing Insurance are deducted from salaries for age 40 to 65. From age 65 and over are deducted from the public pension as a rule. Pension premiums will no longer qualify for the insured at age 70.

Company (employer) is required to pay Social Insurance Premiums (including both employee portion and employer portion) by the end of the following month. i.e. for September insurance, it has to be paid by the end of October (auto-withdrawal is also available).

Calculation method of labor Insurance and Unemployment Insurance Premiums

Labor Insurance Premiums are calculated based on the total amount of Salary for whom company insured. Company pays the estimated Labor Insurance Premiums of the new year in advance, which is calculated based on the figures of previous year. And then, it’s be settled with the figures calculated by  the actual amount of annual salary.

Calculation method of Labor Insurance Premiums

For Labor Insurance Premiums, the insurance ratio for Employee and Company contributions is fixed on the Ministry of Health, Labor and Welfare website.

Each premium is calculated as follows;

  Premium = wage × insurance ratio

As the insurance rate is regularly revised, it is necessary to check the latest information.

Unemployment insurance are borne by both employer and employee, but labor insurance is borne by employer 100%. Hence, there would be no deduction of labor insurance in the employee’s payslips.

Example of monthly payroll calculation

For example (Office: IT business/ address: Tokyo/ payroll for May 2019)

  • Employee: age 40
  • Basic salary: monthly 400,000 JPY
  • Commuting allowance: monthly 20,000 JPY
  • Spouse: wife (total gross income: less than 1,030,000 JPY) Dependent: Child age 15
  • Resident tax: 25, 000 JPY per month

National Tax Authority website_Withholding income tax

Client Testimonials

Varden Vadiveloo / Stylus Japan K.K. / Finance Director (Stylus Media Group)

We have been working with Kota Shimada for almost one year and have been very impressed by his expertise and understanding of our business. We have always received professional and expert advice regarding our accounts, payroll and tax matters. Kota always responds very quickly to emails despite working in different time zones. I would recommend Shimada & Associates to anyone looking for exceptional accounting support services in Japan.

Dr. Dirk Heinrich Neumann / JADEA K.K. CEO

With company headquarters in Berlin, San Diego and Tokyo, I can highly recommend the services by Shimada-san. He and his company work on solutions that were always suited to my company needs in Japan. Having a one-stop solution platform in Japan is very valuable and the friendly staff handles company matter bilingually. From a business standpoint, Japan has gotten more attractive over the past few years and requires companies to adapt fast in order to benefit from these changes. Transparent fee structures as well as knowledgeable staff make him a good and recommendable partner in Japan.

Wayne Baxter / Representative of Wayne’s English school

I have used Shimada and Associates services for help with my taxes for the last couple of years. 
The service is very good. I always received a reply within minutes whenever I had questions and queries. They always provided me with clear explanations and every matter is handled smoothly. Dealing with Shimada & Associates is very reassuring as I know I can hand everything over to them and there are no problems. I highly recommend this company. 

Susan Spann / Author of The Hiro Hattori Novel

Shimada & Associates provides prompt, detailed service that makes filing my taxes easy. I recommend them to everyone who needs to file taxes in Japan.

As an American with income both inside and outside Japan, I was worried about filing Japanese taxes. Shimada & Associates made the process easy. Now, with their expert help, my taxes are always finished properly and on time.

Kota Shimada takes the fear out of filing taxes in Japan. Whether you have foreign income, Japanese income, or a combination of the two, Shimada & Associates can prepare and file your Japanese taxes promptly and efficiently—they make the process easy.

I am so glad I found Shimada & Associates. Their prompt, professional services make me confident that my Japanese taxes are prepared and filed properly every year—and they make the process easy.

Shimada & Associates takes the guesswork out of filing taxes in Japan. From proper reporting of foreign income to deductions like furusato nozei, their professionalism and experience makes the process easy. I recommend them to anyone who needs to file taxes in Japan.

James Chie / Wells Fargo Bank, N.A. Head of a Multinational Corporate Banking Division in Singapore

I highly recommend Shimada and Associates as a highly qualified accountant for both individuals and businesses. This past year, I was looking for a highly qualified english speaking accountant who would be able to handle my complex real estate related tax matters in Japan. Thankfully I was referred to Shimada and Associates as they not only had an office in Japan, but also was conveniently located in downtown Singapore where I currently reside.
Shimada was extremely professional and answered quickly and coherently every question I had regarding tax matters for myself and my entire real estate investor group. Shimada and his team expeditiously handled every inquiry presented, while recommending the most optimal solution regarding my tax filing. As a result we were all extremely pleased at how smooth the tax filing process ended up, and found Shimada to be extremely transparent. We are excited to continue using Shimada and Associates as our tax accountant given their depth and understanding of Japanese accounting rules and doing so at a very reasonable cost.

Contact

We are bilingual professionals who can provide “one stop solution” for back office matters in Japan, such as payroll, payment, accounting and taxation. We help you build your business in Japan.

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