Short answer
In Nepal you can register a business as a sole proprietorship or partnership firm (with the Department of Commerce, Supplies and Consumer Protection or the local government), as a cottage or small industry (with the industry office), or as a company (with the Office of Company Registrar). Firms are quicker and simpler; companies give limited liability and suit growth and investment.
| Sole proprietorship | Private Firm Registration Act 2014 BS — one owner, unlimited liability |
|---|---|
| Partnership firm | Partnership Act 2020 BS — two or more partners, partnership deed |
| Firm registered with | Department of Commerce, Supplies & Consumer Protection or local government |
| Company registered with | Office of Company Registrar (Companies Act 2063) |
| Industries | Industrial Enterprises Act 2076 — DOI or cottage & small industry office |
| Foreign owners | Cannot register a firm; must use the FDI route and a company |
The three main ways to register a business
| Route | Registering office | Owners | Liability | Best for |
|---|---|---|---|---|
| Sole proprietorship (private firm / निजी फर्म) | Commerce department or municipality | One individual | Unlimited | Shops, freelancers, small local trade |
| Partnership firm (साझेदारी फर्म) | Commerce department or municipality | Two or more partners | Unlimited, shared | Family or professional partnerships |
| Company (Pvt. Ltd. / public) | Office of Company Registrar | 1–101 shareholders (private) | Limited | Growing businesses, startups, investors, FDI |
If your business manufactures or provides industrial services, it may also need industry registration under the Industrial Enterprises Act 2076, whatever its legal form.
Registering a sole proprietorship (private firm)
A sole proprietorship — often called a private firm or “Banijya darta” registration for trading businesses — is owned by one Nepali citizen. Legally the owner and the business are the same person: profits are the owner's income and debts are the owner's debts.
- 1
Choose the name and activity
Pick a name that is not already used by a firm in the same area and define the business activity.
- 2
Get the ward recommendation
The ward office where the business will operate confirms the address.
- 3
Apply to the registering office
Submit the application with citizenship copy, photos, the rent agreement or ownership document and the recommendation to the Department of Commerce, Supplies and Consumer Protection or the municipality, as applicable.
- 4
Pay the fee and receive the certificate
Fees depend on the office, activity and capital.
- 5
Register for PAN
Apply for a business PAN — our PAN registration guide covers the steps — and VAT if your turnover or activity requires it.
Registering a partnership firm
A partnership firm has two or more partners who share profits, losses and liability under a written partnership deed. The deed should cover each partner's capital, profit share, decision-making, admission and exit of partners, and what happens on dissolution. Registration follows the same pattern as a private firm, with the deed and every partner's documents attached.
Because each partner can be personally liable for the firm's debts, partnerships suit people who know and trust each other well. Many partnerships later convert to a private limited company as they grow.
When a company is the better choice
- You want to protect personal assets from business debts and claims.
- There will be several owners, investors, or employees with shares.
- Any owner is a foreign national or a foreign company.
- You expect to bid for tenders or work with corporate clients.
- You want the business to continue beyond any one owner.
Our explainer on the private limited company in Nepal covers its features in detail, and our company incorporation team can handle the OCR filing for you.
After registration: the steps every business must complete
| Step | Office | Notes |
|---|---|---|
| PAN (and VAT if required) | Inland Revenue Department | VAT compulsory above NPR 50 lakh (goods) / 30 lakh (services) — see VAT registration |
| Ward / local registration | Ward office | Renewed annually in most municipalities |
| Sector licence | Relevant regulator | Tourism, health, education, finance and others |
| Employer registration | Social Security Fund | As soon as you hire — see employer rules |
| Bank account | Any commercial bank | In the business's name |
A quick way to decide
- One owner, small local trade, low risk, no investors → sole proprietorship.
- Two or more trusted people, professional practice or family business → partnership firm, or a company if liability matters.
- Plans to grow, raise money, hire widely or bring in foreign capital → private limited company.
- Manufacturing → choose the legal form above and check industry registration.
Registering a private or partnership firm online with the Department of Commerce
The Department of Commerce, Supplies and Consumer Protection (DOCSCP) in Babarmahal, Kathmandu regulates internal and cross-border trade and consumer protection, and registers private firms (प्राइभेट फर्म) and partnership firms (साझेदारी फर्म). Registration starts online at doc.gov.np:
- Documents at the office: application form, citizenship copy of the owner, 3 passport-size photos.
- Money exchange businesses need Nepal Rastra Bank approval; medicine businesses need approval from the Department of Drug Administration.
- 1
Sign up on doc.gov.np
Open the online user login form and choose sign up for a new firm. Enter email, mobile number, password, the firm's objective and the office, then verify the OTP sent to the mobile.
- 2
Enter firm and owner details
Fill in the firm's name, address, capital, objectives and the owner's details.
- 3
Upload documents
Self-declaration letter (स्वघोषणा पत्र), scanned photo and citizenship of the owner, PAN/VAT certificate and company certificate if already registered, tax clearance if any, and a bank statement or share lagat.
- 4
Visit the office
After submitting, the proprietor or director visits the department with the physical documents for verification.
- 5
Receive the certificate
Once approved, the firm registration certificate is printed. It is valid for five years and must then be renewed.
- 6
Register at the ward and IRD
Register the firm with the ward office and the IRD for PAN/VAT.
Ward (local) business registration
Every business also registers with the ward office of the municipality where it operates. In Kathmandu Metropolitan City this produces a business registration certificate (व्यवसाय दर्ता प्रमाण-पत्र). Typical documents: 2 passport-size photos, citizenship copy, rent agreement, the house owner's citizenship copy and a water or electricity bill. Industries follow the cottage and small industry route first.
Key takeaways
- Firms (sole proprietorship or partnership) are registered with the commerce department or local government; companies with the OCR.
- Firms are simpler but carry unlimited personal liability.
- Foreign owners must use a company through the FDI route.
- Every business needs a PAN, local registration and any sector licence after registering.
Frequently asked questions
Can business registration in Nepal be done online?
Company registration is fully online through the OCR's CAMIS system. Firm registration is increasingly online in some offices and municipalities, but usually still involves submitting documents at the office.
What is the difference between business registration and company registration?
“Business registration” is the broad term and often refers to firm registration. Company registration specifically means incorporating a company with the Office of Company Registrar, which creates a separate legal entity.
Can a foreigner register a sole proprietorship in Nepal?
No. Foreign nationals invest through the FDI route, normally by registering a private limited company after Department of Industry approval.
Can I convert my firm into a company later?
Yes. You register a new company and transfer the business into it, then close or update the firm's registration and tax records. We can plan the transfer so tax and contracts carry over smoothly.
Do small businesses need VAT registration?
Only above the turnover threshold or if the activity is on the IRD's compulsory list. Every business needs a PAN.
Which is cheaper to run: a firm or a company?
A firm has lower running costs because it has no statutory audit or OCR annual return. A company costs more to maintain but gives limited liability and credibility.
Sources and official references
- Private Firm Registration Act 2014 and Partnership Act 2020 — Nepal Law Commission
- Office of Company Registrar
- Department of Industry — industry registration
- Inland Revenue Department
Government fees and rules change with each Finance Act and OCR/IRD notice. We re-check the figures on this page regularly; confirm the latest amount with the office concerned or ask our team before you pay.