How to Register Accounting & Auditing Firm in Nepal 2025

Meta Description: Complete guide on how to register accounting and auditing firm in Nepal. Learn registration process, financial requirements, ICAN compliance, and business setup steps.

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Table of Contents

1. Introduction
2. Types of Accounting & Auditing Firms
3. Legal Framework & Regulatory Bodies
4. Step-by-Step Registration Process
5. Financial Requirements & Planning
6. Banking & Investment Process
7. LOC & Loan Facilities
8. Post-Registration Compliance
9. Financial Models & Planning
10. FAQs
11. Conclusion

Introduction

The accounting and auditing sector in Nepal has experienced significant growth, with professionals seeking to establish their own practice. Nepal Standards on Auditing 2024 have been approved for voluntary compliance starting July 2024, making it an opportune time to register your firm.

This comprehensive guide walks you through the complete process of establishing an accounting and auditing firm in Nepal, covering everything from regulatory requirements to financial planning and banking processes.

Types of Accounting & Auditing Firms

Understanding the different types of firms helps you choose the most suitable structure for your practice:

1. Sole Proprietorship Firms

• Minimum Capital: NPR 50,000
• Liability: Unlimited personal liability
• Taxation: Personal income tax rates
• Ideal for: Individual practitioners starting small

2. Partnership Firms

• Minimum Capital: NPR 1,00,000
• Partners: 2-20 individuals
• Registration: Department of Industry
• Suitable for: Medium-sized practices

3. Private Limited Companies

• Minimum Capital: NPR 1,00,000 for private companies in Nepal
• Shareholders: 1-101 members
• Liability: Limited to share capital
• Best for: Large-scale operations

4. Professional Service Companies

• Special Category: For chartered accountants
• Regulatory Body: ICAN oversight required
• Capital Requirements: As per company size

Legal Framework & Regulatory Bodies

Primary Regulatory Bodies

1. Institute of Chartered Accountants of Nepal (ICAN)

• Role: Professional regulation and licensing
• Requirements: CA membership mandatory for audit firms
• Registration: All accounting firms must register with ICAN

2. Auditing Standards Board (AuSB)

The AuSB was constituted by the Government of Nepal on March 10, 2003, under the Nepal Chartered Accountants Act, 1997. The board ensures compliance with auditing standards.

3. Office of Company Registrar (OCR)

• Function: Company registration and compliance
• Portal: Online e-Services platform available
• Authority: Ministry of Industry, Commerce and Supplies

4. Inland Revenue Department (IRD)

• Purpose: Tax registration and compliance
• Requirements: PAN and VAT registration mandatory

Legal Documents Required

• Nepal Chartered Accountants Act, 1997
• Company Act, 2063 (2006)
• Income Tax Act, 2058 (2002)
• Value Added Tax Act, 2052 (1996)

Step-by-Step Registration Process

Phase 1: Pre-Registration Preparation

Step 1: Obtain CA Qualification

Professional qualifications required:

• Chartered Accountant (CA): From ICAN
• Registered Auditor (RA): Upgraded CA membership
• Experience: Minimum 3 years post-qualification

Step 2: Choose Business Structure

Select appropriate firm type based on:

• Capital availability
• Number of partners/shareholders
• Liability preferences
• Growth plans

Step 3: Name Reservation

Submit 1–3 proposed company names through the OCR portal, with approval within 1–2 working days.

Name Requirements:

• Must be unique
• Cannot conflict with existing firms
• Should reflect accounting/auditing nature
• Avoid prohibited words

Phase 2: Company Registration

Step 1: OCR Portal Registration

Create an account on the OCR portal using email address and mobile number, with OTP validation required.

Required Information:

• Email address (username)
• Mobile number
• Citizenship details
• Proposed business address

Step 2: Document Preparation

Step 3: Capital Deposit

Banking Requirements:

• Open preliminary bank account
• Deposit minimum required capital
• Obtain bank certificate
• Submit to OCR

Acceptable Banks:

• Nepal Rastra Bank licensed institutions
• Commercial banks
• Development banks (Class B & C)

Step 4: Submit Application

Online Submission Process:

1. Log into OCR e-Services portal
2. Fill company registration form
3. Upload required documents
4. Pay registration fees online
5. Submit application

Processing Time: 7-15 working days

Phase 3: Post-Registration Requirements

Step 1: ICAN Registration

Requirements:

• Company registration certificate
• CA membership certificate
• Firm registration application
• Practice certificate fee

Annual Fees:

• Firm registration: NPR 15,000
• Practice certificate: NPR 5,000 per CA
• Continuing professional development: Mandatory

Step 2: Tax Registration

PAN Registration:

• Visit nearest IRD office
• Submit application with documents
• Obtain PAN certificate
• VAT registration required if annual turnover exceeds NPR 5 million

VAT Registration Process:

• Annual turnover threshold: NPR 5 million
• Registration fee: NPR 1,000
• Monthly/quarterly returns required
• Penalty for non-compliance

Financial Requirements & Planning

Initial Capital Requirements

Minimum Capital by Firm Type

Sole Proprietorship: NPR 50,000 - 2,00,000
Partnership Firm: NPR 1,00,000 - 10,00,000
Private Limited: NPR 1,00,000 - 50,00,000
Professional Service: NPR 2,00,000 - 1 Crore

Detailed Cost Breakdown

Revenue Projection Models

Year 1-3 Financial Projections

Small Firm (Sole Proprietorship)

• Monthly Revenue: NPR 2,00,000 – 5,00,000
• Annual Revenue: NPR 24,00,000 – 60,00,000
• Net Profit Margin: 25-35%
• Break-even: 8-12 months

Medium Firm (Partnership)

• Monthly Revenue: NPR 8,00,000 – 20,00,000
• Annual Revenue: NPR 96,00,000 – 2.4 Crores
• Net Profit Margin: 30-40%
• Break-even: 12-18 months

Large Firm (Private Limited)

• Monthly Revenue: NPR 25,00,000 – 75,00,000
• Annual Revenue: NPR 3 – 9 Crores
• Net Profit Margin: 35-45%
• Break-even: 18-24 months

Service-wise Revenue Breakdown

Banking & Investment Process

Banking Requirements for Accounting Firms

Primary Banking Services

Essential Accounts:

• Current account for operations
• Savings account for reserves
• Fixed deposit for security
• Letter of credit facility

Bank Selection Criteria

Recommended Banks:

1. Nepal Investment Bank Limited
   • Specialized SME services
   • Online banking facilities
   • Competitive interest rates
2. Standard Chartered Bank Nepal
   • International connectivity
   • Advanced digital services
   • Corporate banking solutions
3. Nabil Bank Limited
   • Extensive branch network
   • Professional service focus
   • Flexible loan products

Banking Process Steps

Step 1: Account Opening

1. Choose appropriate bank
2. Submit required documents
3. Complete KYC procedures
4. Deposit initial amount
5. Receive account details

Required Documents:

• Company registration certificate
• PAN certificate
• Memorandum and Articles
• Board resolution
• Specimen signatures

Step 2: Banking Relationship Management

• Designate authorized signatories
• Set up online banking
• Establish credit limits
• Arrange periodic reviews

Investment Opportunities

Local Investment Options

Government Securities:

• Treasury bills (91, 182, 364 days)
• Development bonds
• Citizens investment trust
• Expected returns: 8-12% annually

Private Sector Investments:

• Fixed deposits: 10-13% annually
• Corporate debentures: 12-15% annually
• Mutual funds: Variable returns
• Real estate: Long-term appreciation

Professional Development Investments:

• Staff training programs
• Technology upgrades
• Professional certifications
• Industry conferences

LOC & Loan Facilities

Letter of Credit (LOC) Requirements

When LOC is Required

• Import of accounting software
• International certification programs
• Foreign technology partnerships
• Overseas training programs

LOC Application Process

Step 1: Bank Application

• Submit LOC application form
• Provide import documents
• Offer security/collateral
• Pay processing fees

Step 2: Documentation

• Import license (if required)
• Proforma invoice
• Insurance documents
• Foreign exchange approval

Typical LOC Costs:

• Opening charges: 0.25-0.5% of LOC value
• Amendment charges: NPR 2,000-5,000
• Discrepancy charges: NPR 3,000-7,000
• Swift charges: NPR 1,500-3,000

Loan Facilities for Accounting Firms

Types of Business Loans Available

1. Term Loans

• Purpose: Capital expenditure, office setup
• Amount: Up to NPR 2 crores
• Interest Rate: 12-16% annually
• Tenure: 3-7 years
• Security: Property/asset mortgage

2. Working Capital Loans

• Purpose: Daily operations, salary payments
• Limit: 3-6 months gross receipts
• Interest Rate: 13-17% annually
• Repayment: Revolving facility
• Security: Cash credit or overdraft

3. Equipment Finance

• Purpose: Computers, software, furniture
• Financing: 70-90% of asset value
• Interest Rate: 14-18% annually
• Tenure: 3-5 years
• Security: Hypothecation of financed assets

Loan Eligibility Criteria

Financial Requirements:

• Minimum 2 years in business
• Annual turnover: NPR 50 lakhs+
• Debt-to-equity ratio: Maximum 3:1
• Current ratio: Minimum 1.25:1

Documentation Required:

Loan Application Process

Step 1: Pre-Application

• Assess financing needs
• Choose appropriate loan type
• Select suitable bank/NBFC
• Prepare documentation

Step 2: Application Submission

• Complete application forms
• Submit required documents
• Pay processing fees
• Await preliminary approval

Step 3: Evaluation & Approval

• Bank conducts due diligence
• Technical evaluation
• Legal verification
• Credit assessment
• Final approval/rejection

Processing Time: 15-45 working days

Alternative Financing Options

Non-Banking Financial Companies (NBFCs)

Advantages:

• Faster processing
• Flexible terms
• Less stringent requirements
• Competitive rates

Popular NBFCs in Nepal:

• Shubh Kamana Development Bank
• Nepal Development Bank
• Global IME Laghubitta

Microfinance Institutions

Suitable for:

• Small accounting practices
• Rural area operations
• Women entrepreneurs
• First-time business owners

Benefits:

• Lower collateral requirements
• Simplified procedures
• Community-based approach
• Government subsidies available

Post-Registration Compliance

ICAN Compliance Requirements

Annual Obligations

Firm Registration Renewal:

• Submit annual return
• Pay renewal fees
• Update partner/director details
• Provide practice certificate

Continuing Professional Development (CPD):

• Minimum 40 hours annually
• Attend ICAN approved programs
• Submit completion certificates
• Maintain CPD records

Quality Control Measures:

• Implement quality control systems
• Maintain audit files
• Regular internal reviews
• External quality reviews

Statutory Compliance

Company Law Compliance

Companies must file necessary reports with OCR and ensure VAT filings are timely to avoid penalties under the Company Act 2063.

Annual Requirements:

• Annual general meeting
• Filing of annual returns
• Board meeting minutes
• Statutory registers maintenance

Tax Compliance

Regular Obligations:

• Monthly/quarterly VAT returns
• Annual income tax returns
• Tax deducted at source filings
• Social security contributions

Penalty Structure:

• Late filing: NPR 1,000-25,000
• Non-filing: 100% of tax due
• Interest: 15% per annum
• Prosecution: Possible imprisonment

Labor Law Compliance

Employee Related:

• Employment contracts
• Provident fund contributions
• Social security fund
• Workplace safety measures

Mandatory Registers:

• Employee attendance
• Wage registers
• Leave records
• Training records

Financial Models & Planning

Business Plan Components

Executive Summary

Key Elements:

• Business concept and vision
• Market opportunity analysis
• Competitive advantages
• Financial projections
• Funding requirements

Market Analysis

Industry Overview:

• Market size and growth
• Key trends and opportunities
• Target client segments
• Competitive landscape

Client Segmentation:

• Small and medium enterprises
• Listed companies
• Government agencies
• Non-profit organizations
• Individual taxpayers

Service Portfolio Strategy

Core Services:

1. Statutory Audit Services
   • Annual audits
   • Tax audits
   • Special purpose audits
   • Internal audits
2. Tax & Compliance Services
   • Income tax planning
   • VAT compliance
   • Corporate restructuring
   • Transfer pricing
3. Financial Advisory Services
   • Management consulting
   • Due diligence
   • Valuation services
   • Risk management
4. Accounting & Bookkeeping
   • Monthly bookkeeping
   • Financial statement preparation
   • Payroll processing
   • Management reporting

Revenue Model Development

Pricing Strategy

Hourly Rate Model:

• Senior Partner: NPR 3,000-5,000/hour
• Manager: NPR 1,500-2,500/hour
• Senior Associate: NPR 800-1,200/hour
• Junior Associate: NPR 400-600/hour

Fixed Fee Model:

• Audit engagements
• Tax compliance services
• Monthly bookkeeping
• Annual retainer agreements

Value-Based Pricing:

• Complex consulting projects
• Merger & acquisition support
• Financial restructuring
• Strategic planning

Financial Projections (5-Year Model)

Revenue Growth Assumptions:

• Year 1: NPR 50 lakhs (Base year)
• Year 2: NPR 75 lakhs (50% growth)
• Year 3: NPR 1.12 crores (50% growth)
• Year 4: NPR 1.57 crores (40% growth)
• Year 5: NPR 2.12 crores (35% growth)

Expense Structure:

• Staff costs: 40-50% of revenue
• Office expenses: 15-20% of revenue
• Professional costs: 8-12% of revenue
• Marketing: 5-8% of revenue
• Other expenses: 10-15% of revenue

Profitability Analysis:

• Gross profit margin: 60-70%
• Operating profit margin: 25-35%
• Net profit margin: 20-30%
• Return on investment: 25-40%

Cash Flow Management

Working Capital Requirements

Monthly Cash Flow Needs:

• Staff salaries: NPR 3-8 lakhs
• Office rent: NPR 50,000-2,00,000
• Utilities: NPR 15,000-50,000
• Professional fees: NPR 25,000-1,00,000
• Marketing: NPR 20,000-75,000

Seasonal Variations:

• Peak season: Falgun-Asadh (audit season)
• Moderate season: Shrawan-Kartik
• Lean season: Mangsir-Falgun

Financial Risk Management

Key Risk Areas:

• Client concentration risk
• Seasonal revenue fluctuations
• Professional liability exposure
• Regulatory compliance risks
• Technology obsolescence

Risk Mitigation Strategies:

• Diversified client portfolio
• Professional indemnity insurance
• Regular compliance monitoring
• Technology upgrade planning
• Adequate cash reserves

FAQs

General Registration Questions

Q1: How long does it take to register an accounting and auditing firm in Nepal? A1: The complete registration process typically takes 30-45 working days, including OCR registration (7-15 days), ICAN registration (15-20 days), and tax registration (5-10 days).

Q2: What is the minimum qualification required to start an accounting firm? A2: You must be a Chartered Accountant (CA) qualified from ICAN with at least 3 years of post-qualification experience. For audit services, you need to be a Registered Auditor (RA).

Q3: Can foreign nationals start an accounting firm in Nepal? A3: Foreign nationals can establish accounting firms but must comply with foreign investment regulations. The minimum investment requirement for foreign investors is NPR 20 million as of May 2022.

Q4: What is the difference between CA and RA qualifications? A4: CA (Chartered Accountant) is the basic qualification, while RA (Registered Auditor) is an upgraded membership allowing statutory audit of companies. RAs must have auditing experience of institutions with transactions over one crore for at least 5 fiscal years.

Financial & Banking Questions

Q5: What are the typical startup costs for an accounting firm? A5: Startup costs range from NPR 5-15 lakhs for small firms to NPR 50 lakhs-2 crores for larger practices, including registration, office setup, technology, and working capital.

Q6: Which banks offer the best services for accounting firms? A6: Nepal Investment Bank, Standard Chartered Bank Nepal, and Nabil Bank are popular choices offering specialized services for professional firms.

Q7: How can I secure working capital loans for my accounting firm? A7: Banks offer working capital loans based on your firm’s revenue, typically 3-6 months of gross receipts. You’ll need 2 years of financial statements and proper collateral.

Q8: What insurance coverage is recommended for accounting firms? A8: Professional indemnity insurance (NPR 50 lakhs-5 crores coverage), office insurance, and cyber liability insurance are essential for protecting your practice.

Compliance & Operations Questions

Q9: What are the annual compliance requirements for accounting firms? A9: Annual requirements include ICAN firm registration renewal, CPD completion (40 hours), company annual returns, tax filings, and quality control reviews.

Q10: How often should I renew my ICAN registration? A10: ICAN firm registration must be renewed annually, typically before the end of the fiscal year (Shrawan 31st).

Q11: What software is recommended for accounting firms in Nepal? A11: Popular options include Tally ERP 9, QuickBooks, SAP Business One, and Nepal-specific software like NepalTax for tax compliance.

Q12: Can I operate multiple offices under one registration? A12: Yes, but you must inform ICAN and OCR about branch offices and ensure compliance at all locations.

Growth & Expansion Questions

Q13: How can I expand my accounting firm’s services? A13: Consider adding management consulting, financial advisory, internal audit, and specialized sectors like banking, insurance, or manufacturing.

Q14: What are the partnership opportunities in the accounting sector? A14: You can form partnerships with law firms, management consultants, IT companies, or international accounting networks for referrals and expertise sharing.

Q15: How do I attract and retain qualified staff? A15: Offer competitive salaries (CA: NPR 8-15 lakhs annually), professional development opportunities, flexible work arrangements, and clear career progression paths.

Unique Competitive Advantages for Your Accounting Firm

Technology Integration Strategies

Digital Transformation:

• Cloud-based accounting systems
• Automated bookkeeping processes
• AI-powered audit procedures
• Client portal for real-time access
• Mobile applications for field work

Data Analytics Services:

• Business intelligence dashboards
• Predictive financial modeling
• Risk assessment algorithms
• Performance benchmarking
• Trend analysis reporting

Specialized Service Offerings

Niche Specializations:

• Cryptocurrency and digital assets
• E-commerce taxation
• Startup valuation and funding
• ESG (Environmental, Social, Governance) reporting
• Forensic accounting and fraud investigation

Industry-Specific Expertise:

• Banking and financial services
• Manufacturing and trading
• Hospitality and tourism
• Healthcare and pharmaceuticals
• NGOs and development sector

Client Relationship Management

Value-Added Services:

• Monthly financial health reports
• Real-time tax planning advice
• Quarterly business reviews
• Industry benchmarking studies
• Regulatory update newsletters

Client Communication Excellence:

• 24/7 client support portal
• Video conferencing consultations
• Multilingual service delivery
• Regular client education seminars
• Personalized financial dashboards

Conclusion

Establishing a successful accounting and auditing firm in Nepal requires careful planning, adequate funding, and strict compliance with regulatory requirements. The growing economy and increasing demand for professional services create excellent opportunities for qualified practitioners.

Key success factors include:

• Proper regulatory compliance with ICAN and government agencies
• Adequate capitalization and financial planning
• Strategic service positioning and client acquisition
• Technology adoption and process efficiency
• Continuous professional development and quality maintenance

The investment in time and resources for proper establishment will yield long-term benefits through sustainable growth, client satisfaction, and professional recognition in Nepal’s dynamic business environment.

For personalized assistance with your firm registration process, consider consulting with experienced legal and business advisors who understand the local regulatory landscape and can guide you through each step of the journey.

About the Author: This comprehensive guide has been developed based on current regulations and industry best practices in Nepal’s accounting and auditing sector. For the most current information, always consult with ICAN and relevant regulatory authorities.

Last Updated: June 2025