Basic Bookkeeping for Small Businesses in Nepal

A cash book is the simplest bookkeeping tool there is, and it's also the most useful one. Every day, write down every amount of money that came into the business and every amount that went out. Date, amount, a short description, done. It doesn't matter if it's a physical exercise book, a spreadsheet on your phone, or an app; what matters is that you do it the same day, not from memory a week later.

The habit only works if it's daily. Skip three days and you'll spend an hour trying to remember whether that NPR 3,000 was a supplier payment or a personal loan to your cousin. Ten minutes a day, right after closing, beats an hour of guesswork later. Total the day's in and out before you close the shop, and you'll also catch cash-drawer shortages while they're still fresh enough to trace.

If your business is VAT-registered, keeping bills isn't optional; the law requires you to issue and retain VAT invoices for your sales and to hold your purchase bills to claim input VAT back. But even if you're nowhere near VAT-registered, saving every invoice is simply good practice, because it's your proof that a transaction happened, at what price, and with whom.

Set up one physical folder or one phone folder for the year, split by month if you want to keep it tidy. When a supplier hands you a paper bill, photograph it that day before it fades, gets crumpled, or gets thrown out with the packaging. When you issue a bill to a customer, keep a copy for yourself, whether that's a carbon copy, a photo of a handwritten receipt, or a PDF from a billing app.

A missing invoice is more than an inconvenience. It's an expense you can't prove if the IRD ever asks, and it's a sale you might undercount, both of which cost you money in different directions.

This is the single most common mistake small business owners make in Nepal, and it's also the most expensive one to fix later. If your shop's cash and your household cash live in the same pocket, the same wallet app, and the same bank account, you have no reliable way to know whether the business is actually profitable, and no clean paper trail if you're ever asked to show one.

Open a separate bank account in the business's name, or at minimum a separate account you use only for business, even as a sole proprietor. Route your business income into it and pay business expenses out of it. When you need money for yourself, transfer it out as an explicit 'owner's draw' and log it as such in your cash book, rather than just spending from the same pot.

The same logic applies to eSewa, Khalti, or Fonepay: if you can, use a merchant or dedicated wallet for business transactions rather than your personal one. It takes a single afternoon to set up and it will save you days of untangling later.

Once a month, sit down and total things up. Add all your sales for the month, add all your purchases and expenses, and subtract. That number is roughly your profit before tax for the month. It's not a substitute for a proper profit and loss statement, but for a small operation it tells you the one thing you actually need to know day to day: are you making money or not.

While you're at it, check your cash book total against what's actually in the till and the bank account. If they don't match, find out why before the gap grows. A monthly summary also makes your annual tax filing almost mechanical, because you're just adding twelve numbers you've already calculated instead of reconstructing a year from a shoebox of receipts.

A notebook and a folder can carry a small shop a long way, but there's a point where doing it yourself starts costing you more than it saves. Watch for these signals rather than waiting for a crisis.

Crossing the VAT threshold is the clearest one: once you must register for VAT, your filing frequency and record-keeping requirements step up, and the cost of a small mistake rises with it. Hiring employees is another, because payroll brings its own tax withholding and reporting. And if your monthly summary stops telling a clear story, multiple sales channels, inventory that's hard to track, loans, or partners splitting profit, that complexity is itself a signal.

You don't need a full-time accountant for any of this. A local bookkeeper or accountant on a monthly or quarterly retainer, reviewing your cash book and invoice folder and handling your filings, is usually a modest cost against the time and penalties it saves you. Bring your own clean daily records to that relationship; a bookkeeper who has to build your books from scratch every time costs far more than one who just checks your work.