Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.
Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Nepal. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
| No. | Procedure | Time to Complete | Associated Costs |
|---|---|---|---|
| 1 | Verify the uniqueness of the proposed company name | 1 day | NPR 5 |
| 2 | A professional verifies and certifies the memorandum and articles of association | 5 days | NPR 10,000 depending on the professional’s charges |
| 3 | Buy a stamp to be attached to registration form | 1 day | NPR 5 |
| 4 | File documents with the Company Registrar’s Office, Department of Industry | 15 days | NPR 4,500 |
| 5 | Make a company rubber stamp | 1 day | NPR 275 |
| 6 | Register for VAT and income Tax with the Inland Revenue Office, the Ministry of Finance | 5 days | no charge |
| 7 | Enroll the employees in the Provident Fund | 1 day | no charge |