Many institute owners start with fee notebooks and think about tax only when an auditor asks. A little structure early saves a lot of stress. This is general information, not tax or legal advice. Confirm current rules with the Inland Revenue Department (IRD) or your accountant.
VAT in brief
Nepal's standard VAT rate is 13%. Guides based on recent Finance Acts put the mandatory VAT registration threshold for service businesses at annual turnover of NPR 3 million, up from an earlier NPR 2 million (Law Alpine, Kintsugi). Thresholds change with each Finance Act, and the treatment of educational services depends on the kind of service, so ask your accountant how it applies to your courses.
The books you should keep regardless
Whether or not you are VAT-registered, you need:
- A receipt for every payment, numbered in sequence.
- A record of every expense with a bill or voucher.
- A ledger that shows income and expenses by account.
- A monthly check that bank and cash balances match the books.
Simple books vs double-entry
Simple books record money in and money out, and are enough for a small institute. Double-entry accounting records every transaction twice (where it came from, where it went), which is what produces a proper balance sheet and profit and loss statement. You need it when you have several branches, loans, assets, or an accountant asking for statements.
Know your fiscal year
Nepal's fiscal year starts on Shrawan 1 (mid-July) and ends at the end of Ashadh. Organise your yearly closing around it.
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