I’m planning on reselling Japanese products over social media but lost in the tax topics

[stanothweb]

I’m planning on reselling Japanese products (I offer the products on my social media to my followers), I live in Japan and I’m a U.S. tax payer, I can’t find info on how that would reflect on my Japan taxes or how to declare it. Should I register as a sole proprietor? I have a LTR status, no time or income restrictions for work, but just can’t find any info on any similar experience. Would love to hear some advice if anyone has been in a similar situation , thanks!

 

[kristhuy]

@stanothweb

Should I register as a sole proprietor?

There is no registration system for sole proprietors in Japan. What you are possibly asking is whether you should notify your local NTA office (and potentially your prefectural tax office) that you will be generating "business income". The answer to that question depends on whether your sole proprietorship activities will generate "business income" or "miscellaneous income".

Whether the income you are referring to constitutes business income or miscellaneous income depends on a variety of factors, the most important of which is the type of financial records you maintain. See this post for a detailed discussion of the NTA's most recent guidance on this point.

If the income you generate will be miscellaneous income, there is no need to notify anyone. You just declare the income as miscellaneous income on your annual income tax return. If the income you generate will be business income, you are supposed to notify the NTA that you have started generating business income using the form linked above (but there is no penalty for failure to do so). Whether you notify the NTA or not, you will need to declare the income as business income on your annual income tax return, attaching a statement of income and expenses, etc.

 

[stanothweb]

@kristhuy Thank you for all the info. I read the link with the business vs miscellaneous income and it is very helpful. Thanks thanks thanks

 

[wildlavender]

@stanothweb Consider using the blue form system. You have to keep books and prepare financial statements but you get an extra deduction.