A little known privilege of foreigners in Japan, at least little known among Westerners, is the right we have to register a legal alias (通称名/tsushomei). Many Japanese use an alias, for instance women use their former names in the workplace, and Japanese refer to this as a 通称名, but ONLY foreigners can actually LEGALLY register an alias.
Koreans and Chinese frequently do this to accommodate their native language characters which are not included in the Japanese ideograph list approved by the Japanese government. A legal registered alias is incredibly convenient in Japan because it fits nicely on forms, is very easy to explain on the phone, and just generally makes life easier. Also, Japanese love it, and respect you for adopting a more Japanese approach.
I recommend choosing a very recognizable name from a Japanese perspective. Don't try to get creative with some meaningful ideographic characters so that you are trying to transliterate your Western name into Japanese. If you do not use something sweet and simple, you are just compounding the problem of your foreign name. If you can make your alias relate to your name, great, but don't try to stretch it.
One thing I did not do, and I wish I had, was consider the historical meaning of my Western name. There is a surprising amount of information on the Web about what a name means, and you can easily research the origins of your Western name. You may want to incorporate the historical meaning of our name to determine a Japanese name. However, again, don't disregard my cardinal rule of a Japanese alias: the goal is to make your life easier with a convenient name, not complicate it with an inventive, 'unique' name.
The best way is to take several months and ask many different Japanese for their ideas, and their opinions of the characters you are considering. You should give more weight to the opinions of people whom you respect more. However, taking advice from a cross-section of Japanese people enables you to find a versatile alias, and weighing the opinions of Japanese who are more familiar with you provides a more appropriate alias.
In my case, my personal name for my alias is Masahisa/眞久 because in English people call me Mak, short for McIntire. This comes out to Makku in Japanese. Those characters for Masahisa might be read something fairly close to Makku, so it kind of fits, but not quite. Most importantly, Masahisa is a fairly common name, and Japanese grasp it easily.

My family name for my alias is Minamoto/源, as in The Tale of Genji. Every literate Japanese knows how to write this character so that is a big advantage. Also, there is only one character for my last name, so writing it is quick and convenient. I chose the name because I wanted an extremely Japanese name, and I enjoy history. On the left is one version of the Minamoto Family Crest, all of which use minor variations of the Sasarindo leaf.
To register your alias is very simple. Just decide on your name, label your postbox with the name you want for an alias, and mail yourself a postcard addressed to that name. Take the delivered postcard to the place where you register your domicile.
All my Japan credit cards (e.g. Sumitomo Mitsui), health insurance (IMG), bank accounts (e.g. Shinsei), and everything outside of work use my alias. My work involves marketing myself as a foreigner, so I do not use my Japanese name at work, although I often wish I could when I am trying to leave a phone message. I have a registered seal using the name as well, but then you can have a registered seal showing anything you prefer.
I have a personal email account using the name, including my mobile phone email. Again, this makes explaining your email address incredibly easy. Also, you can set Web-based email to forward more than one email address to the same account.
Also, my US credit card companies (Citibank, CapitalOne, Bank of America) are very willing to issue me a credit card for each name. I use the Western name cards outside Japan, and the Japanese name card in Japan. This is convenient because there is no government issued transliteration of your Japanese name. However, you can get a photo on some Japanese credit cards. I have one on my Sumitomo Mitsui Visa, and I can sometimes use that to prove to non-Japanese speakers that my name is actually Masahisa Minamoto, but I don't often let myself get into a situation where I need to do so.
Curiously in Japan, very few Japanese even blink an eye when I hand them my credit card. I always sign my name using my Japanese ideographic characters if using my Japanese name. It is faster, and easier than katakana. Rarely, if ever does someone turn it over to check my signature.
The major drawback is now you have to decide which name to use where. I keep it simple by always using my Japanese name in Japanese, and for as many Japan-related matters as possible. I use my Western name in English, and for matters outside Japan. Another problem is my legal name has not changed, so my spouse and children have to use my legal name. However, my spouse uses my Japanese name as an alias much like any Japanese uses a married name.
I started this blog because quite a few people were asking me about my name, but I could not find any information about a Japanese alias in English on the web. If you find a web site explaining Japanese registered aliases in English, please let me know. If you have any questions, please don't hesitate to let me know. I enjoy discussing this, and cannot recommend adopting a legal alias strongly enough.
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