Japanese companies generally fix wages based on seniority and pay bonuses twice a year as multiples of the monthly basic wage. The bonuses are not directly linked to company performance but rather are widely accepted means of deferring compensation. Stock option incentives are also introduced into the Japanese labor and tax systems. Once an employer hires employees, he automatically incurs social insurance responsibilities. Employers should also be aware of labor regulations, especially the Labor Standards Law, in order to fully comply with all legal requirements on employment.
Termination of employment can be difficult as the legal system tends to protect the employee.
The number of venture capitalists in Japan increased tremendously in the last few years. Venture capitalists give money for growing businesses in return for a proportion of the share capital of the company. Business angels are similar to venture capitalists, but unlike venture capitalists, they tend to be providing their own funds, rather than funds they manage for others. To attract an investment of a venture capitalist a business operator should prepare a business plan which includes all key information and clearly point out what distinguishes his business idea from other ideas a venture capitalist receives every day. The company may attract further investment by floating its shares on a stock exchange.