How to Start a Business in Nepal: Legal Steps and Registration

• 03 April 2026
• in: Business & Startup
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Starting a business in Nepal is more straightforward than many people think, but the legal steps do require careful attention. Whether you plan to open a sole proprietorship, a private limited company, or a partnership firm, following the right registration process from the beginning saves you from serious problems later.

This guide walks you through the key legal steps every Nepal entrepreneur needs to know before opening for business.

Step 1: Choose Your Business Structure

Nepal recognizes several business structures under the Companies Act 2006 and the Industrial Enterprises Act. The most common options are sole proprietorship, private limited company (Pvt. Ltd.), and partnership firm. Most small businesses start as sole proprietorships because the process is simple. If you want to bring in investors or have multiple founders, a private limited company is the better choice.

Step 2: Register with the Office of Company Registrar

To register a private limited company, you file an application with the Office of Company Registrar (OCR) under the Ministry of Industry, Commerce and Supplies. You'll need a proposed company name, a memorandum of association, articles of association, citizenship copies of all directors, and a passport-sized photo. The OCR checks name availability and processes the application, typically within 3 to 7 working days.

Step 3: Obtain Your PAN from the Inland Revenue Department

After company registration, every business must obtain a Permanent Account Number (PAN) from the Inland Revenue Department (IRD). You'll need your company registration certificate, citizenship copies of directors, and the company's memorandum. PAN registration is mandatory for filing taxes and is required to open a business bank account.

Step 4: Register for VAT If Required

If your annual turnover is expected to exceed NPR 5 million (for goods) or NPR 2 million (for services), VAT registration is mandatory. Even below these thresholds, voluntary VAT registration is useful if you plan to work with large companies or export services. VAT registration also happens at the IRD and is linked to your PAN.

Step 5: Register with the Department of Industry

Manufacturing or production businesses need to register with the Department of Industry (DoI). Service businesses operating below a certain investment threshold may be exempt, but it is worth checking whether your business category requires DoI registration. This step is especially important if you plan to apply for government contracts or industrial land.

Step 6: Open a Business Bank Account

With your company registration certificate and PAN in hand, you can open a business bank account at any commercial bank in Nepal. Keeping your business finances separate from personal funds is not just good practice, it is required for auditing purposes once your business grows.

Step 7: Stay Compliant After Registration

Registration is not the end of the legal process. Nepal businesses are required to renew their registration annually, file tax returns, maintain proper accounting records, and submit annual reports to the OCR if you are a private limited company. Hiring an accountant or using accounting software from the start makes these obligations manageable.

Starting a business in Nepal requires upfront effort on the legal side, but the process is well-defined. Taking these steps correctly from day one gives your business a solid foundation and keeps you compliant as you grow.

Frequently Asked Questions

How long does it take to register a company in Nepal?

A private limited company registration at the Office of Company Registrar typically takes 3 to 7 working days once all documents are submitted correctly. PAN and VAT registration at the IRD usually take an additional 2 to 3 working days.

How much does it cost to register a business in Nepal?

The OCR registration fee depends on your company's authorized capital. For small companies with a capital of NPR 1 lakh, the fee is around NPR 1,000. Additional costs include legal fees for drafting the memorandum and articles, which vary by the service provider.

Can a foreigner start a business in Nepal?

Yes, foreign nationals can start a business in Nepal, but foreign investment requires approval from the Department of Industry and compliance with the Foreign Investment and Technology Transfer Act (FITTA). Certain sectors are restricted to foreign investment, so checking the approved sectors list is an important first step.