Business

Registering a business in Nepal is two separate acts that people routinely confuse. You register the company with one office and the tax identity with another, and the business is not operational until both exist. Everything downstream - a bank account, an invoice, an employee - depends on having done them in the right order.

Choosing a structure

Structure	Suits	Registered with
Sole proprietorship	One person, small local trade	Local government or Department of Commerce
Partnership	Two or more partners, modest scale	Department of Commerce
Private limited company	Most real businesses, limited liability	Office of the Company Registrar
Public limited company	Raising capital publicly	Office of the Company Registrar
Branch or liaison office	A foreign company operating here	Company Registrar, with sector approvals

For anything with employees, outside investment or meaningful liability, a private limited company is the normal answer. The paperwork is not much heavier than a proprietorship and the separation between you and the business is worth having.

The sequence

1. Reserve the name with the Office of the Company Registrar.
2. File the incorporation documents - memorandum and articles of association, shareholder details, registered address.
3. Collect the registration certificate.
4. Register for a PAN with the Inland Revenue Department. This is the tax identity and nothing works without it.
5. Register for VAT if your turnover will cross the threshold or your sector requires it regardless.
6. Register with the local ward or municipality where you trade.
7. Open a company bank account - see banking and finance.
8. Enrol in the Social Security Fund if you will employ people.

Doing step 4 before step 3 is the single most common ordering mistake, and it costs a week.

Tax and the fiscal year

Nepal's fiscal year runs mid-July to mid-July, not January to December. Annual returns, audits and renewals all key off it, and so does almost every government deadline you will meet. Government and administration covers the calendar.

Companies file annually and are audited; VAT-registered businesses file more frequently. Employee income tax is deducted at source. An accountant who files for businesses of your size is not a luxury here - the filing calendar is unforgiving and penalties for lateness are real.

What it costs and how long it takes

Registration costs scale with the authorised capital of the company rather than being a flat fee, so a small private limited company is inexpensive to form. The larger costs are professional: an accountant, and a lawyer if the shareholding is at all complex.

Step	Realistic timeline
Name reservation	A day or two
Company registration	Several days to two weeks
PAN registration	A few days
VAT registration, where required	A few days
Company bank account	A week, with all documents

Allow a month end to end for a straightforward company, longer if foreign shareholding or a regulated sector is involved.

Staying registered

Formation is the easy part. The recurring obligations are what catch small businesses:

• Annual return to the Company Registrar
• Audited accounts, filed annually
• Tax returns on the fiscal-year cycle, plus VAT returns if registered
• Social Security Fund contributions, monthly, where you employ people
• Local business renewal with the municipality

Lapsing on these is common and the penalties compound. A company that has not filed for years is expensive to bring back into good standing, and it will block things you need - a loan, a tender, a sale.

Foreign investment

Foreign investment is permitted in most sectors and governed by its own framework, administered by the Department of Industry for larger proposals. Three things shape any plan:

• A minimum investment threshold applies, is revised periodically, and should be checked against the current figure rather than any article.
• Some sectors are restricted or closed to foreign investment. Confirm yours before spending on anything.
• Repatriating profits and capital requires approval and the documentation trail to support it. Build that discipline in from the first transaction, not the first dividend.

Business for foreigners covers what a non-citizen specifically needs, including the visa that goes with investing.

Hiring

Employment is governed by the Labour Act, which sets minimum terms a contract cannot undercut - probation, hours, leave, notice. Enrol staff in the Social Security Fund, issue appointment letters, and deduct tax at source. Jobs and career sets out what employees will expect.

Hiring well here is mostly about networks. For most roles outside IT, a referral reaches better candidates than an advert.

Where this goes wrong

• Trading before the PAN exists. You cannot invoice properly, and regularising it afterwards is worse than waiting.
• Treating the fiscal year as January to December. Deadlines arrive in July while you are looking at December.
• Assuming a foreign company can simply open here. Sector rules and approvals come first.
• No shareholder agreement between founders. The articles cover the company; they do not cover what happens when two founders disagree.

Where to go next

Legal information covers contracts and the law behind the structures above, and the business directory lists established companies by sector. If you are setting up to serve clients abroad rather than locally, read the foreign-currency section in banking and finance first.

Registration, and the order it happens in

The sequence matters, because several steps depend on the one before and doing them out of order wastes weeks.

Broadly: reserve the name and register the company, register for tax and obtain a permanent account number, register the industry or obtain the sector licence where one is required, register locally with the municipality, and open the bank account. A foreign-invested company adds investment approval before all of it.

Two things that decide how smoothly it goes. Get the objectives right at registration, because what you may lawfully do is defined there and amending it later is a process of its own. And appoint an accountant early, since monthly and annual filing obligations begin immediately and penalties for missing them accrue quietly.