Setting up a Business in Nepal

Registering a business in Nepal can be quite confusing and a lengthy process. There are a number of options available for those who wish to start a business in Nepal. With the large number of entrepreneurs growing in the country, it is important to have complete knowledge of the process.

 

1.      Sole Proprietorship/Private Firm

There are different types of business firms. One of those is sole proprietorship or private firms; it is a business which is owned by only one person. Private firms are unincorporated business, where only the owner has sole authority over the business. These types of firms are easy to create and run. Also, these firms are not expensive as compared to other types of firms. If you want to start this type of firm, you will not need to file a separate tax return. The owner can report all the profits and losses on their own personal return.The Merits and Demerits of this type of firm are:

S.N	Merits	Demerits
1	Easy to start and Dissolve	Sole proprietorship has limited capital
2	Motivation to Work	Sole proprietor only uses his ideas and innovation capacity. So there is limited managerial ability
3	Quick Decision
4	Independent Control	Sole proprietor must work more to earn more profit .higher profit generation is important. So, there is dull and monotonous wok
5	Business Secrets
6	Personal Contact	Death of sole proprietor causes death of sole proprietorship
7	Flexibility	There is no specialization in decision taking. So there can be chances of taking wrong decisions
8	Economy
9	Social Utility	There is low investment resulting in limited areas of operation

If the owner has someone else to support the business with finance, the business will no more be called a sole firm and it will automatically change into a partnership firm. Running a business as such is beneficial, if the owner runs a small business that does not require large capital.

Registration of Private Firm

Obtain necessary approvals from the relevant ministries/departments/bodies for permit/license to conduct business before getting it registered. There are some procedures that need to be followed for the registration of a private business firm in Nepal. The sole proprietorship or a private firm, according to relevant provision of the Private Firm Registration Act, 2014, requires the owner to register the business institute in either in:

Department of Cottage & Small Industries	Department of Commerce	Department of Industry
(घरेलु तथा साना उद्योग बिभाग)	(वाणिज्य विभाग)	(उद्योग विभाग)
http://dcsi.gov.np/	http://doc.gov.np/	http://doind.gov.np/
Ministry Of Industry	Ministry of Commerce	Ministry Of Industry
In case of Cottage and Small (Rural) Industry	In case if related to Commerce	In case for any other kind of Industries

The person who wishes to start a firm must register the firm by submitting an application along with the required documents to the related Department in the prescribed legal format provided by the department and the official fees.   

2.      Company (Private/Public Company)

Registering your company is what will finally give your startup a legal existence. Before registering it can be a sole proprietorship or a partnership but once you take the decision to register, your company takes a life of its own and can be closed only by legal intervention. Registering a Company is a long and tedious procedure though, which will be quite heavy on both your pocket and on your time, if you want to do it all yourself. But none the less becoming an owner of a registered company brings its own advantages and very less disadvantages to you.

Before registering a company you have to decide what kind of company is suitable for your business needs, and shall obtain necessary approvals from the relevant ministries/departments/bodies for permit/license to conduct business before getting it registered at:

Office of the Company Registrar

(कम्पनी रजिष्ट्रारको कार्यालय)

www.ocr.gov.np

Ministry of Industry

In case of Registration of Company (Pvt.Ltd./Ltd/NGO(NPO)

There are many types of companies, the most popular of which are Private (pvt. ltd.), Public (ltd.) and Not-for Profit.

A private limited company is a business entity that is held by private owners. This type of entity limits the owner’s liability to their ownership stake, and restricts shareholders from publicly trading shares.

 A public company is a company that has permission to issue registered securities to the general public through an initial public offering (IPO) and it is traded on at least one stock exchange market. A public company is not authorized to begin its business operations just upon the grant of the certificate of incorporation. In order to be eligible to run as a public company, it should obtain another document called a trading certificate. 

3. Setting up Business in Nepal (Sum Up)

Step 1: Obtain approvals

Obtain necessary approvals from the relevant ministries/departments/bodies for permit/license to conduct business.

Some of the relevant departments are:

Departmentof Industry

Departmentof Electricity Development

NepalRastra Bank

Departmentof Agriculture

Departmentof Roads

Step 2: Register a Firm / Company

Investors will need to register an appropriate form of firm / company in the Department of Cottage and Small Industries (DCSI) or, Department of Commerce (DOC) or, Department of Industry or Office of the Company Registrar.

Please refer to the following site for details on the registration process:

http://dcsi.gov.np/

http://doc.gov.np/

http://doind.gov.np/

www.ocr.gov.np

Step 3: Register with the tax office

Following Firm / Company registration, investors will need to obtain PAN and VAT, if applicable, registration numbers from the Inland Revenue department

Details for registration can be obtained from the following:

https://ird.gov.np/   

Step 4: Open a bank account

Foreign investors will need to open a foreign currency account at Nepal Rastra Bank, the central bank of Nepal, for more http://www.investmentboard.gov.np/

Domestic Investors can open Bank Accounts with any banks with in the country as per their preferences.

Happy Born Day Lord Krishna (KRISHNA JANMASHTAMI)

A long time ago in ancient India, in the modern day state of Uttar Pradesh stands a little town near the river Yamuna. it is known as - Mathura, a holy city. it is the birthplace of Lord Krishna.

Nearly 5,000 years ago, there lived King Ugrasen. He had two children, prince Kansa and princess Devaki. Prince Kansa was evil by nature. When Kansa grew up, he imprisoned his own father Ugrasen and made himself king.

But soon a happy news came. Crown princess Devaki was getting married to King Vasudev of the Yadus. The Mathura citizens welcomed the wedding, for it surely meant that Kamsa’s frequent wars with the Yadu dynasty would come to an end.

Soon, his sister Devaki was married to King Vasudev. However, after the wedding, Kansa heard a divine warning from the sky, "O King! Your sister’s eighth son will grow up to kill you." After Kansa heard this, he was afraid. He immediately thought of killing Devaki for he thought, “How can a child be born when the mother is dead?” So he drew out his sword and raised it to kill Devaki. King Vasudev was horrified at this cruelty and fell on his knees. “O Kamsa..” he begged, “…please don’t kill your sister. I shall personally surrender to you all the children she gives birth to, so that the voice of the Sky (Divine voice) doesn’t come true.”
Immediately he imprisoned his own sister Devaki and her husband king Vasudev, and kept them under continuous watch.

Each time Devaki gave birth to a child in the prison, Kansa arrived personally and killed the child. When Devaki became pregnant for the eighth time, King Vasudev’s friend’s (King Nanda’s) wife Yashoda was also pregnant. The eighth child, Lord Krishna, was born to queen Devaki at midnight in the prison. As soon as the child was born, Lord Vishnu appeared in divine form and the prison was filled with a dazzling light. Both Devaki and Vasudev prayed to Lord Vishnu. At the same time as Lord Krishna was born in the prison, the divine energy of Lord Vishnu was born in Gokul, as a baby girl to queen Yashoda.

A divine message came to Vasudev soon after the birth of Lord Krishna, "Take this child across the Yamuna River to Gokul and exchange him with Yashoda’s daughter. You will return to the prison before anyone comes to know about the birth of this child."

Vasudev approached the Yamuna River, which was very turbulent due to fierce winds and rain. But he had to proceed nonetheless. Then a miracle happened. As soon as the feet of Lord immersed in the river, the flow became normal and Yamuna made way for the Lord. To his amazement, Vasudev saw a huge black snake raising its head from the water behind him. He was scared out of his wits at first, but soon realized that it meant no harm when he saw the serpent positioning its hood like an umbrella to save the new born baby from rain. This snake was none other than Sheshnag, the Snake-God, who is known to be the roofing canopy of Lord Vishnu. It is mentioned in the texts that Krishna was the eighth incarnation of Lord Vishnu.

Vasudev reached the opposite bank of the river safely and found all the people of Gokul fast asleep. He entered the palace of king Nanda and queen Yashoda, and put the baby Krishna in the place of Yashoda’s baby girl. Then Vasudev returned to the prison with the baby girl.

As soon as Vasudev laid the baby girl by Devaki’s side, the prison doors shut automatically. The guards were now awake and were startled by the cries of the baby girl. The guards ran to Kansa and announced the birth of the eighth child.

Vasudev then narrated what happened on that night to his wife. Devaki, though sad at her separation from her son, was happy for the baby. Both of them prayed to God that her son should not fall into the clutches of his evil uncle Kamsa.

Kansa rushed to execute the child in the prison, remembering the divine warning that the eighth child would kill him. Devaki appealed, "O Kansa, this baby is a girl, and not the boy that the divine warning told you about. How can this child harm you?" However, Kansa ignored her, snatched the child from her lap, and hurled the child against the prison wall.

The child did not fall down; instead, she flew up and appeared in the sky as a Goddess with eight arms, each arm carrying a weapon. She said, "O evil king! You will gain nothing by killing me. The one who will destroy you is elsewhere." Then the Goddess disappeared. Kansa freed Vasudev and Devaki from prison.

Meanwhile, there was great rejoicing in Gokul, hailing the birth of a son in the household of Nanda. Nanda named the child Krishna. Entire Gokul wore a festive appearance. The streets were swept clean and all the houses were decorated with flags and flowers. Cows were smeared with turmeric, and adorned with peacock feathers and garlands. All people of Gokul danced in joy and flocked to Nanda’s house to see baby Krishna and to offer gifts.

In this way was born Lord Krishna, the supreme God who is the creator of everyone. He was born to save everyone from the terrible tyrants like Kamsa. In his boyhood, he became the cynosure of all eyes- he won the hearts of all men and women, wherever he went. And with his brother Balaram, he later went back to Mathura and killed Kamsa. But that, as people say… is another story.

   

Further, Krishan and Radha's Love has an incredible and the exemplified story.....

'FDI' the best Alternative for an Investment

FDI is Abbreviation for “Foreign Direct Investment”, where money from one Country (i.e Japan) is put into businesses in another Country (i.e Nepal).

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either purchasing a company in the target country by means of a merger or acquisition, setting up a new venture or expanding the operations of an existing one. Other forms of FDI include the acquisition of shares in an associated enterprise, the incorporation of a wholly owned company or subsidiary and participation in an equity joint venture across international boundaries.  

One of the advantages of foreign direct investment is that it helps in the economic development of the particular country where the investment is being made.

This is especially applicable for developing economies. During the 1990s, foreign direct investment was one of the major external sources of financing for most countries that were growing economically. It has also been noted that foreign direct investment has helped several countries when they faced economic hardship.

For host countries, inward FDI has the potential for job creation and employment, which is often followed by higher wages. Resource transfer, in terms of capital and technical knowledge, is also a key motivator that encourages inward FDI.

The advantages of foreign direct investment come from a long-term relationship between two countries. This happens when a country involves itself in the other country by transferring technology, expertise, or otherwise has an impact on its economy. This can spur the growth of that country’s economy and give birth to multinational corporations. It has an extraordinary role in maintaining the growth of global business as it can provide new markets and cheaper production facilities. The country at the receiving end benefits from the following types of resources.

Advantages

• Transfer of Technology (Resources transfer)
• Development of Human Capital Resources (Creation of New Job)
• Increment in Income (Overall Economic Growth)
• Access to Market
• Access to Resources
• Reduced Cost Production
• Easy International Trade
• Tax Incentives
• Reduced Disparity between Revenue and Cost
• Increased Productivity

      However, foreign direct investment also carries risks, and it is highly important for you to evaluate the economic climate thoroughly before doing it. 

Disadvantages

• Hindrance to Domestic Investment
• Risk from Political Changes (Unstable political and legal systems)
• Negative Influence on Exchange Rates
• Higher Costs
• Economic Non-Viability (Unstable economic conditions)
• Expropriation
• Negative Impact on the Country’s Investment\
• Modern-Day Economic Colonialism

      Investing into another country’s economy, buying into a foreign company or otherwise expanding your business abroad can be extremely financially rewarding and might provide you with the boost needed to jump to a new level of success. However, foreign direct investment also carries risks, and it is highly important for you to evaluate the economic climate thoroughly before doing it. Also, it is essential to hire a financial expert who is accustomed to working internationally, as he can give you a clear view of the prevailing economic landscape in your target country. He can even help you monitor market stability and predict future growth. 

In recent years, FDI has been used more as a market entry strategy for investors, rather than an investment strategy. Despite the decline in trade barriers, FDI growth has increased at a higher rate than the level of world trade as businesses attempt to circumvent protectionist measures through direct investments. With globalization, the horizons and limits have been extended and companies now see the world economy as their market. 

Additionally for investors, FDI provides the benefits of reduced cost through the realization of scale economies, and coordination advantages, especially for integrated supply chains. The preference for a direct investment approach rather than licensing and franchising can also been viewed in terms of strategic control, where management rights allows for technological know-how and intellectual property to be kept in-house. 

Remember that we live in an increasingly globalized economy, so foreign direct investment will become a more accessible option for you when it comes to business. However, you should weigh down its advantages and disadvantages first to know if it is the best road to take.