Expense Categories (勘定科目) Guide for Japan Freelancers 2026

Disclaimer: This article provides general information only and does not constitute tax or legal advice. Please consult a qualified tax professional (zeirishi) for advice specific to your situation. Information is based on official National Tax Agency (NTA) sources and current as of February 2026. Disclosure: This article is published by Denpyo, a receipt and expense management service.

Introduction: Master Expense Categories to Maximize Tax Savings

"Which expense category should I put this receipt in?"

If you''re a freelancer or sole proprietor in Japan filing your own taxes, you''ve probably asked yourself this question. Understanding expense categories (勘定科目 / kanjō kamoku) is essential for correctly recording your business expenses and maximizing your tax deductions.

What you''ll learn in this article:

• What expense categories are and why they matter

• The 11 major expense categories with practical examples

• What counts as a deductible expense (and what doesn''t)

• How to handle tricky classification cases

• Receipt management best practices

1. What Are Expense Categories (勘定科目)?

1.1 The Basics

Expense categories (勘定科目 / kanjō kamoku, literally "account titles") are standardized names used to classify and record business transactions. Think of them as folders to organize your expenses by type.

Why They Matter:

• Required for tax filing — You must list expenses by category on your tax return

• Audit protection — Correct classification demonstrates proper bookkeeping

• Business insights — See exactly where your money is going

1.2 No Strict Legal Requirements

Here''s something many people don''t realize: there are no strict legal requirements for expense category names in Japan. You can technically customize them to fit your business.

However, since the NTA tax forms and accounting software use standard categories, following these conventions is the most practical approach.

Source: NTA "Income and Expense Statement (General)"

2. The 11 Major Expense Categories [Complete List]

Below are the expense categories most commonly used by freelancers and sole proprietors in Japan.

2.1 Travel & Transportation (旅費交通費 / Ryohi Kōtsūhi)

Definition: Costs incurred for business-related travel and transportation

Key Points:

• Suica/PASMO history is accepted as supporting documentation

• For meetings, note the client name and purpose

• For business trips, you can also deduct a daily allowance (nissho)

2.2 Consumable Supplies (消耗品費 / Shōmōhinhi)

Definition: Items with a useful life under 1 year or costing less than ¥100,000

Key Points:

• Items under ¥100,000 can be expensed immediately

• Items ¥100,000-300,000 can be fully expensed in one year (Blue Return filers only)

• Items over ¥300,000 require standard depreciation

2.3 Communication Expenses (通信費 / Tsūshinhi)

Definition: Costs for telephone, internet, postal services, and other communication

Key Points:

• For mixed personal/business use, calculate home office allocation (家事按分)

• Example: If 70% business use, deduct ¥7,000 from a ¥10,000/month phone bill

2.4 Entertainment & Client Expenses (交際費 / Kōsaihi)

Definition: Dining, gifts, and other expenses for maintaining business relationships

Key Points:

• Sole proprietors have no limit on entertainment expenses (corporations do)

• Amounts must be reasonable by social standards

• Record who you met and the purpose (important for audits)

2.5 Meeting Expenses (会議費 / Kaigi-hi)

Definition: Small food and beverage costs during business meetings

Key Points:

• Guideline: Under ¥5,000 per person

• Expenses over ¥5,000/person should be classified as "Entertainment"

• Solo café work is a gray area — may be better as "Miscellaneous" or "Supplies"

2.6 Utilities (水道光熱費 / Suidō Kōnetsuhi)

Definition: Water, electricity, and gas expenses

Key Points:

• For home offices, home office allocation (家事按分) is required

• Common calculation methods: floor area ratio or usage hours ratio

• Example: 6-tatami work room ÷ 40-tatami total home = 15% deductible

2.7 Rent (地代家賃 / Chidai Yachin)

Definition: Rent for office or store space

Key Points:

• For home offices, calculate using floor area allocation

• Security deposits are only deductible for the non-refundable portion

• Key money (reikin) may be expensed immediately or amortized depending on amount

2.8 Service Fees (支払手数料 / Shiharai Tesūryō)

Definition: Various fees and service charges

2.9 Advertising Expenses (広告宣伝費 / Kōkoku Sendenhi)

Definition: Costs for business promotion and advertising

2.10 Training & Books (研修費・新聞図書費)

Definition: Costs for professional development and business-related information

2.11 Miscellaneous Expenses (雑費 / Zappi)

Definition: Small expenses that don''t fit other categories

Key Points:

• Avoid the trap of "when in doubt, use miscellaneous"

• High miscellaneous ratios may invite scrutiny during tax audits

• Recurring expenses should have their own dedicated category

3. What Counts as a Business Expense? Decision Criteria

3.1 Basic Principles

The Three Requirements for Business Expenses:

• Business relevance — The expense must be necessary to earn income

• Documentary evidence — You can prove it with receipts/invoices

• Reasonable by social standards — The amount is sensible for the purpose

3.2 Common "Gray Areas"

4. Receipt Management Best Practices

4.1 Retention Period

4.2 Information to Record

For each receipt, record:

• Date of transaction

• Amount paid

• Payee (vendor/store name)

• Purpose/Description of the expense

• Expense category assigned

• (For entertainment) Names and number of attendees

4.3 Rules for Digital Storage

From January 2024, the revised Electronic Books Preservation Act requires electronic preservation of digital transaction data.

Requirements for Digital Storage:

• Timestamp or revision/deletion history

• Search functionality (by date, amount, vendor)

• Cross-reference capability with related documents

Source: NTA "Electronic Books Preservation Act Overview"

5. Frequently Asked Questions

Q1: What happens if I use the wrong category?

A: If the total expense amount is correct, simply using the wrong category usually won''t result in additional taxes. However, if you recorded non-deductible items as expenses, corrections will be required.

Q2: Can I claim expenses without a receipt?

A: Receipts are generally required, but alternatives may be accepted:

• Bank account statements

• Credit card statements

• IC card (Suica/PASMO) usage history

• Self-created payment slips (for small cash payments)

Q3: How do I calculate home office deduction (家事按分)?

A: See our detailed guide → Home Office Deduction Calculation Guide

Q4: Can pre-opening expenses be deducted?

A: Yes, these can be recorded as "startup expenses" (開業費). This includes equipment, training, and transportation costs incurred before officially starting your business.

Summary

By correctly understanding expense categories, you can record all your business expenses without omissions and maximize your tax savings.

Key Takeaways:

• No strict rules for category names — Classify based on your business reality

• Always keep receipts — 7 years for Blue Return filers

• Clearly separate personal use — Use home office allocation calculations

• When in doubt, ask a professional — Consult a tax accountant

• Regular organization matters — Don''t scramble at tax filing time

2026 Tax Filing Deadline: March 16 (Monday)

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• Home Office Deduction (家事按分) Calculation Guide

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• Blue vs White Form Tax Filing 2026

• Who Needs to File a Tax Return 2026 Checklist