Technology is one of the most promising and lucrative sectors in the world today. Technology can create innovative solutions, products, and services that can solve problems, improve lives, and generate value. Technology can also create new opportunities for entrepreneurship, employment, and growth.
Nepal is a developing country that has a huge potential for technology development and adoption. Nepal has a large and young population, a growing internet and mobile penetration, and a vibrant tech ecosystem. Nepal also has some unique challenges and needs that can be addressed by technology.
If you are interested in starting a tech business in Nepal, you will need to follow some steps and processes to register, operate, and scale your business. In this blog post, we will guide you through the basics of how to start a tech business in Nepal.
What is a tech business?
A tech business is a business that offers a technology-based product or service. A tech product or service is one that uses technology to perform a function or deliver a value that is not possible or feasible without technology.
Some examples of tech products or services are:
• Software: Software is a set of instructions or programs that tell a computer or device what to do. Software can be used for various purposes, such as web development, mobile app development, software design and development, graphics design, digital marketing, etc.
• Hardware: Hardware is the physical component or device that interacts with software or performs a function. Hardware can be used for various purposes, such as network installation and maintenance, sales and purchase of hardware and software, hardware as a service (HAAS), etc.
• Platform: Platform is a software or hardware that enables other software or hardware to run on it or interact with it. Platform can be used for various purposes, such as cloud computing, blockchain, artificial intelligence (AI), internet of things (IoT), etc.
• Content: Content is the information or data that is created, stored, or transmitted by technology. Content can be used for various purposes, such as e-learning, digital media, online courses, podcasts, blogs, etc.
How to register a tech business in Nepal?
To register a tech business in Nepal, you will need to follow the following steps:
Step 1: Choose a legal form of business
The first step is to choose a legal form of business that suits your needs and goals. There are different types of legal forms of business in Nepal, such as sole proprietorship, partnership, private limited company, public limited company, cooperative, etc.
Each legal form of business has its own advantages and disadvantages in terms of registration process,cost,taxation,liability,ownership,management,and compliance.For most tech businesses,the recommended legal form of business is private limited company.A private limited company is a separate legal entity that has limited liability,perpetual succession,and easy transfer ability of shares.A private limited company can have 1 to 50 shareholders and 1 to 11 directors.
Step 2: Register your company name
The next step is to register your company name with the Office of Company Registrar (OCR). The OCR is the government authority that registers and regulates companies in Nepal.To register your company name,you will need to fill an online application form on the OCR website and pay a fee of NPR 200.You will need to provide some basic information about your company,such as proposed name,address,objectives,and authorized capital.
The OCR will check the availability and suitability of your proposed name and issue an approval letter within 15 days. You will need to print the approval letter and submit it along with other documents in the next step.
Step 3: Register your company
The final step is to register your company with the OCR. To register your company,you will need to submit the following documents to the OCR within 35 days of receiving the name approval letter:
• Application form
• Name approval letter
• Memorandum of Association (MOA)
• Articles of Association (AOA)
• Citizenship certificate or passport of shareholders and directors
• Passport size photos of shareholders and directors
• Consent letter from shareholders and directors
• Board resolution
• Power of attorney
• Bank voucher
The MOA and AOA are the legal documents that define the structure,rules,and objectives of your company.You will need to draft them according to the format prescribed by the OCR.You will also need to specify clearly the objectives related to the tech business in the AOA.
Some examples of objectives are:
• Web development
• Software design and development
• Graphics design
• Network installation and maintenance
• Sales and purchase of hardware and software
• Digital marketing
• IT consultation
• Training and classes related to IT
• Outsourcing and offshoring
• Software as a service (SAAS)
• Hardware as a service (HAAS)
You will also need to deposit at least 25% of the authorized capital in a bank account in the name of your company and obtain a bank voucher.
The OCR will verify your documents and issue a certificate of incorporation within 15 days. The certificate of incorporation is the legal proof of your company's existence and registration.
The registration fee for a private limited company is NPR 1,000 per NPR 100,000 of authorized capital, subject to a minimum of NPR 5,000 and a maximum of NPR 100,000.
How to operate a tech business in Nepal?
After registering your tech business in Nepal, you will need to follow some steps and processes to operate your business legally and smoothly. Some of the steps and processes are:
Step 1: Register with the tax office
The first step is to register your company with the tax office and obtain a Permanent Account Number (PAN) and a Value Added Tax (VAT) number, if applicable.
PAN is a unique identification number that is required for all taxpayers in Nepal. PAN is mandatory for all companies regardless of their turnover or income.
VAT is a tax that is levied on the value added by each stage of production or distribution of goods or services. VAT is applicable for companies that have an annual turnover of more than NPR 5 million or are engaged in import or export of goods or services.
To register for PAN and VAT, you will need to fill an online application form on the Inland Revenue Department (IRD) website ³ and submit the following documents to the nearest tax office:
• Application form
• Certificate of incorporation
• MOA and AOA
• Citizenship certificate or passport of shareholders and directors
• Bank account details
• Rent agreement or ownership certificate of office premises
• Photos of office premises
The IRD will issue your PAN and VAT registration certificates within 7 days. You will need to display them at your office premises and use them for all your tax-related transactions.
Step 2: Open a bank account
The next step is to open a bank account in the name of your company. You will need a bank account to manage your finances, such as receiving payments, paying salaries, taxes, bills, etc.
To open a bank account, you will need to visit a bank of your choice and submit the following documents:
• Application form
• Certificate of incorporation
• MOA and AOA
• PAN and VAT registration certificates
• Citizenship certificate or passport of shareholders and directors
• Board resolution
• Power of attorney
The bank will verify your documents and open your bank account within a few days. You will receive a cheque book, a debit card, and an online banking facility for your bank account.
Step 3: Hire employees
The final step is to hire employees for your tech business. You will need employees to perform various tasks and functions, such as development, design, marketing, sales, accounting, etc.
To hire employees, you will need to follow some steps and processes, such as:
- Define the job description, qualifications, skills, and salary for each position
- Advertise the job vacancies on various platforms, such as online job portals, social media, newspapers, etc.
- Screen and shortlist the applicants based on their resumes and cover letters
- Conduct interviews and tests to assess the applicants' suitability and competency
- Select and offer the job to the best candidates
- Sign an employment contract with each employee that specifies the terms and conditions of employment, such as duties,responsibilities,salary,benefits,leave,termination,etc.
- Register each employee with the Social Security Fund (SSF) and deduct their social security contribution from their salary every month
- Register each employee with the Employees Provident Fund (EPF) and deduct their provident fund contribution from their salary every month
- Pay income tax on behalf of each employee every month according to their income bracket.