Yagō (屋号) is a trade name used by a sole proprietorship, including freelancers, for conducting business. Forms such as tax returns and business opening notifications have a field for entering this. The Yagō of a sole proprietorship is perceived to be similar to a company’s trade name, or Shōgō (商号). However, unlike companies, sole proprietorships are not legally required to register a Yagō.

The choice of whether to have a Yagō or not is up to each individual sole proprietorship, but having one can be advantageous (such as when promoting your business), and it can be widely used in various business contexts. To give you a deeper understanding of Yagō, this article will discuss how to choose a Yagō, things you need to keep in mind, and the registration process.

What’s in this article?

• What is a Yagō?
  
• How to choose a Yagō, and some examples
  
• Words that cannot be used in a Yagō, and legal caveats
  
• How to register a Yagō
  
• FAQs
  
• How to effectively use a Yagō
  

What is a Yagō?

As mentioned previously, Yagō is a trade name for sole proprietorships. According to the National Tax Agency’s website, Yagō is described as “a commercial name used by a sole proprietorship.” Since there is no need to register a Yagō at a Legal Affairs Bureau, you can conduct business without a Yagō, and if desired, you can create one later and even change it afterward.

The historical context for the definition of a Yagō dates back to the Edo period when surnames were not permitted for anyone other than samurais. This was inconvenient for merchants and farmers who ran businesses, so it became customary for each household to have its own name. Later, kabuki actors followed the example of merchants and also started adopting Yagō. Thus, Yagō have been used in Japan for a long time.

Likewise today, sole proprietors can better expand their operations using a Yagō compared to when using their real name for business. You can think of Yagō as a kind of signpost used in the business world. In order to use it effectively, you must first understand why you should have one.

Do you need a Yagō?

It is possible to choose not to have a Yagō at all. This can be seen especially among freelancers who do not need one for their business activities. On the other hand, some freelancers may still find it beneficial to have a Yagō to enhance their visibility and expand business opportunities, much like a company’s business name does.

For instance, Yagō can be used for various purposes such as the following:

• Opening a bank account with the Yagō in its name
  
• Business cards
  
• Contracts, estimates, invoices, and receipts
  
• Logo design for services or products
  
• Advertising through signs, flyers, posters, etc.
  
• Blogs, websites, and social media
  

Using a Yagō not only helps make your business better known, but it also allows you to open bank accounts with your Yagō in its name—simplifying and streamlining financial operations.

Advantages and disadvantages

Advantages

As mentioned earlier, there are advantages to having a Yagō, such as easier accounting management, direct promotion of business activities, and higher social credibility and recognition. Others advantages include:

• Professional appearance
  Using a Yagō allows you to separate your personal and business banking. This can help you draw a line between your professional and private life and have a higher professional mentality and appearance.

• Security
  Using a Yagō instead of your real name will help you keep your personal information (including private social media accounts) and your private life confidential.

• Incorporation
  If you incorporate your business at a later stage, you can use the Yagō as the Shōgō (corporate name) without making any significant name change. This can help new clients search for and learn about your business achievements prior to incorporation. (There are more specific rules for Shōgō, including permissible symbols, but if those rules are followed, the Yagō can be used as is.)

Disadvantages

• Time-consuming
  One disadvantage of a Yagō is spending time on its creation and registration—and possibly needing to change it midway or at a later time.

• Legality
  Another disadvantage is that it does not have legal binding power. Therefore, if someone else uses a very similar Yagō and conflicts arise, you cannot assert rights over your own Yagō (this will be explained in more detail later in “Words that cannot be used in a Yagō, and legal caveats. If you want your Yagō to have legal binding power and be made for your sole use, you must register it as a Shōgō.

How to choose a Yagō, and some examples

A Yagō can generally be freely chosen and may include hiragana, katakana, kanji, numbers, and letters from the alphabet. However, the use of symbols is limited to the following six types: comma (,), period (.), hyphen (-), ampersand (&), middle dot (・), and apostrophe (’).

The most important factors when choosing a Yagō are clarity, simplicity, and memorability. Ideally, it should also include words that emphasize the type of business or line of work, so that people can tell at a glance what kind of service is being offered. If marketing your business is important, consider choosing a name that is easy to search for online and on social media, and that does not overlap with other Yagō.

However, avoid names that clients would struggle to remember, and names that use specialized terms which are generally not well-known. Similarly, including words with katakana and letters from the alphabet that are complicated or difficult to pronounce or read would not be ideal. What your business does could be unclear to customers, causing them to shy away, and it could be harder to find online. To avoid these issues, choose your Yagō carefully, keeping in mind what role and purpose it will serve for your business.

Examples

The following are examples of Yagō by job type, which can help you decide your own Yagō:

• Engineering
  Engineering businesses often use English and katakana words to imprint an image of cutting-edge innovation. On the other hand, incorporating kanji to differentiate from other Yagō is also a viable strategy.
  Examples: XYZ Tech (〇〇テック), ABC Solutions (〇〇ソリューションズ), XYZ Systems (〇〇システム), ABC Workshop (〇〇工房), etc.

• Design
  Words that evoke an image of productivity and creativity are standard.
  Examples: XYZ Studio (〇〇スタジオ), ABC Creative (〇〇クリエイティブ), XYZ Graphics (〇〇グラフィック), etc.

• Store business
  Whether you do business online or in store, consider a Yagō that helps customers easily understand your services and business. If it does not readily convey the type of business, you can add a subordinate description such as “Specialty Store” (専門店) to make your store sound more appealing.
  Examples: XYZ Books (〇〇堂), Cafe ABC (カフェ〇〇), XYZ Diner (〇〇食堂), ABC Shop (〇〇ショップ), etc.

• Clinic and office
  For clinics and offices that specialize in a particular field, incorporating regional characteristics and business content into the Yagō can instantly imply reliability and expertise to clients and customers.
  Examples: [Regional Name] + [Expertise] + Clinic (地域名＋専門分野＋クリニック), [Regional Name] + XYZ Design Office (地域名＋〇〇設計事務所), XYZ Accounting Office (〇〇会計事務所), etc.

In addition, freelancers starting their business can use their own personal name in their Yagō. However, avoiding the usage of personal names might enhance credibility.

So far, we have discussed how to choose a Yagō and have seen some examples, but there are other points to keep in mind when choosing a Yagō for a sole proprietorship.

Words that cannot be used in a Yagō, and legal caveats

It is important to be aware that there are certain “prohibited words” that cannot be used when choosing a Yagō. For instance, using a name that could be mistaken for a corporation is not allowed for a sole proprietorship.

Words that cannot be used unless your business is incorporated:

• Inc. (株式会社), Company (会社), Corporation (法人 or コーポレーション), Incorporated Association (社団法人), Co. Ltd, etc.
  

Words that cannot be used as they imply specific regulated industries:

• Bank (銀行), Credit Union (信用金庫), Securities (証券), etc.
  

Existing and similar Yagō

You can use a Yagō that has already been registered by someone else or one that is similar, but it is best to differentiate your Yagō from such to avoid any potential legal issues in the future. While some resemblance might be unavoidable, being mistaken for the same company, a subsidiary, or a related entity can lead to problems such as:

• Not appearing in the top search results online
  
• Suffering collateral reputational damage when a business with the same trade name becomes known for having caused trouble
  
• Facing a lawsuit for trademark infringement and potential damages for using a trademarked name—even if such use was unintentional
  

It is important to understand these points and avoid potential issues as you anticipate your Yagō becoming more widely known. Particularly regarding the third point, you should ensure that your Yagō does not overlap with a registered trademark to avoid any legal issues. Note that Yagō for sole proprietorships—which do not require registration (unlike the trade names of corporations)—cannot be checked through the National Tax Agency’s website, so it is advisable to search online beforehand to see if the same or a similar Yagō is already being used.

For additional safety measures to avoid legal risks, you can verify existing legal names of corporations though the National Tax Agency corporate number publication site or the Ministry of Justice online registration information search service. To check for trademarks, you can also use government office resources such as the platform for patent information of the Japan Patent Office.

How to register a Yagō

After you have chosen your Yagō, taking into account the examples and caveats we have mentioned, the next step—if you wish to take it—is to register it.

Registering a Yagō is much simpler than registering a Shōgō.* Just enter your Yagō in the designated field on the Business Opening Notification Form (開業届) (Notification for Sole Proprietorship Opening/Closing, or 個人事業の開業・廃業等届出書) and submit it to a tax office. Registration is straightforward, and there is no charge for doing it. Your registered Yagō will not go through any screening, so you do not need to wait for the Business Opening Notification Form to be processed. Moreover, you can start using your Yagō before submitting this form.

More information on the Notification for Sole Proprietorship Opening/Closing can be found on the National Tax Agency’s website.

*Registering a Shōgō requires a ¥30,000 revenue stamp.

FAQs

You can reference some frequently asked questions about Yagō below:

• Q: When should I adopt a Yagō?
  A: As previously mentioned, you can register a Yagō when you submit the Business Opening Notification Form to the tax office that has jurisdiction over your business location. However, you can leave the Yagō field blank and the form would still be acceptable. You can also adopt a Yagō after submitting the notification form.

• Q: What should I do if I want to change my Yagō?
  A: If you wish to change your Yagō, you can do so by entering the new Yagō on your annual tax return, such as the tax return, statement of earnings and expenses, or financial statement for blue return. You can also resubmit the Business Opening Notification Form to a tax office.

• Q: Can I change my Yagō as many times as I want?
  A: You can change your Yagō at any time and as many times as needed. However, frequently changing your Yagō can cause inconvenience to financial institutions and clients, as well as possibly damaging your credibility. Therefore, it is important to stick to your Yagō until it becomes necessary to change it—at which point, you should promptly follow the change procedure.

• Q: Can I register more than one Yagō?
  A: You can have more than one Yagō at the same time. For example, if you manage a general store and a café that have different names, you can use each business name as its own Yagō and thus have separate Yagō for the respective commercial activities. Regarding their registration, you must create a separate Business Opening Notification Form for each and submit these to the tax office. You can also choose to register one Yagō for your main source of income, and operate the other business or businesses without registering their Yagō.

• Q: Do I need to include a Yagō on my tax return?
  A: While there is a field for your Yagō on the tax return form, this is optional. If you want to register a Yagō at the same time as your tax return, you can include your Yagō on your tax return form.

How to effectively use a Yagō

In this article, we have introduced Yagō for sole proprietorships. It is subject to fewer rules compared to Shōgō and is relatively easy to register. As discussed, a Yagō has its own advantages and disadvantages.

Registering and using it widely in business enhances your credibility and also makes your enterprise more recognizable to many people, thereby expanding its potential. Additionally, freelancers and other sole proprietors—whether just starting out or already in business—may find that having a Yagō will give them extra motivation as they work to achieve their professional goals.

On the other hand, to fully leverage its advantages, you need to be fully aware of any possible disadvantages and use it with care. What is appropriate as a Yagō will vary, depending on the proprietor’s own individuality and their business sector. Therefore, make sure that you consider and select your Yagō carefully.

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