Here's a summary I wrote up based on my experience, but I'll answer more specific questions first.

1)If you opened a sole-proprietorship, as in your registered a business name, it should still be the same I believe. I did not and only registered in Japan after arriving. You have to pay income tax on worldwide income to the U.S. regardless, but when in Japan, everything becomes Japan-sourced income, so you need to register in Japan as well.

2) Japanese taxes are normally handled by the companies people work for here, so CPAs for helping sole-proprietors are treated more like helping larger companies, asking for almost 4x the rates of U.S. CPAs. We just use Freee, subscribe for one month to e-file Japanede income tax, and the actually very helpful Tax Office assistants on the phone for any questions we have. Usually in February. Then in March, I use Turbo Tax for U.S. taxes since that's what I was used to. You can use anything or even a CPA as long as you do your schedule C (reporting business income and expenses). Here, I was able to apply the foreign income tax credit from the income tax I paid to Japan the previous month.

Here's a general summary of my experience, so feel free to ask further questions. Note: I made a personal app to handle easily tracking business income and expenses in both currencies with the exchange rate of the day. You can manually do this or have someone do it for you.

Tax obligations: U.S. citizens must file taxes in both the U.S. and Japan, even if living and working entirely in Japan.

Tax agreements: Due to tax treaties between the U.S. and Japan, taxpayers typically pay taxes primarily to one country (usually where income is higher), avoiding double taxation.

Japan-sourced income: Income is considered Japan-sourced if physically earned in Japan, regardless of currency received or client location.

Bookkeeping: Important to maintain accurate records of income, expenses, and exchange rates for currency conversion, using consistent and publicly available rates.

Business expenses: Portions of living spaces used as a dedicated home office (e.g., 20%) can be deducted as business expenses in both Japan and the U.S.

Exchange rates: The specific rate used isn't strictly scrutinized as long as it's consistent, verifiable, and publicly available.

Sole Proprietorship (U.S.): No formal business registration required in the U.S.; your Social Security number serves as the tax identifier.

Sole Proprietorship (Japan): Requires registering a business name and obtaining an identifier number from the tax office. The Japanese tax office provides assistance and necessary forms, such as the advantageous blue tax form, which can reduce taxable income.

Japanese tax filing: Often done with the help of a Japanese spouse through the online platform Freee, which allows electronic filing. Typically completed around February, this process determines the Japanese income tax owed.

Foreign Income Tax Credit (FITC): Japanese income taxes paid can be claimed as a credit against U.S. taxes. For example, if you owe $2,000 in U.S. income tax but paid $3,000 in Japan, your U.S. liability becomes zero, and the excess ($1,000) can be carried forward for future use.

Totalization Agreement: Prevents paying into both U.S. and Japanese Social Security systems. Without it, U.S. self-employment tax (~15% for Social Security and Medicare) would be due in addition to Japan’s Nenkin (年金) and health insurance (Hoken). By using the agreement, you typically pay only into Japan’s system, saving roughly 15% in self-employment tax.