Like any other business, online shops should be registered to conduct business. Be it a small home-based online shop or multi-vendor platform, it is always better to complete the paper works and registration first so that all the transactions, expenses can be recorded to business’s records. Before diving deep into the registration process of online shop in Nepal, let us understand the general types of eCommerce businesses and how they operate.
Types of eCommerce businesses:
- Sale product/service through their app and website
- Provide a platform for various vendors to sell their products and services.
- Mixed model; you sell your own products and provide a marketplace as well.
1. Selling product/services through the app, website or social media.
In this model, you are trading products. You are conducting sales and purchase the business but the difference is instead of having a physical shop you are doing through the internet. So, the same registration process applies as you were to start a shop. However, the fact that you are going to do it via the internet is to be mentioned in objectives while forming the business.
The normal accounting process:
- You buy a good
- List in on your e-commerce store/ social media
- Sell the good adding some margin
- Deliver the goods to the customer
- Issue your own store’s bill
- Profit= Sales price- Cost of sales
- You need to pay taxes on PROFIT earned.
2. Providing a platform where vendors can list their products and buyers can buy through your platform.
In this model, you will be providing the platform or marketplace where sellers can list their products and buyers can choose and buy the products. Generally, in such settings the platform provider handle the delivery, payment processing and packaging of the products. Alternatively, you can simply provide a platform for buyers and sellers to interact (like HamroBazaar) and earn through premium listings, ads etc. The point is you can set your marketplace however you like.
The normal business and accounting process
- You create a platform
- Vendor joins and lists her product
- Customer buys the product
- Collect the product from the vendor and hand it over to the customer
- You provide the vendor’s bill to the customer
- You charge a certain commission to the vendor (usually 1-5%)
- Your profit= Commission
- You will pay taxes for the commission earned
3. The third is a mixed model where you sell your own stuff plus provide a platform
You need to maintain separate accounts for your own sales to calculate the total profit and the commissions earned from the vendors.
How to register an online shop in Nepal?
All the process is the same as registering a normal supermarket (case A) or an IT company (case B). If you go in a mixed model, you need to have a company with objectives of both IT and supermarket. There is no special license needed to conduct online shop business. After the company is registered, you need to take affiliation (register) your company at the department of the cottage and small industries (Gharelu). For a company to get affiliation at Gharelu, you need to pay rajaswa Nrs. 100.
So there are two routes to register an online shop:
Route 1: Register at the department of cottage and small industries (Gharelu Bhibhag), take PAN certificate from IRD (kar karyalaya) and run the shop.
Route 2: Register a company, register that company at Gharelu, get PAN certificate from IRD and run the shop.
I want to sell the products I produce via an online shop? where and how to register it?
If you produce something, you need to register at the Department of Cottage and Small Industries (Gharelu) or you can register a company and get the company registered at Gharelu.
If you are planning to extend your business or add multiple partners in future, it is always safe to go with company structure. However, if it is your personal business and want to operate on a small scale, only registering at Gharelu is okay.
Can I sell products nationwide by registering a company/firm at my town
Yes, you can sell your products anywhere but the accounts and registers shall be maintained at the central office. If your company want to have multiple physical stores, your local authority (soda office) might ask you to register the branch there and pay them the applicable fees as well.
Who regulates/monitors the online business or ecommerce related businesses in Nepal? Are there any special acts or directives relating to ecommerce in Nepal?
Currently (19 July 2020), there are no any special acts regarding the conduct of eCommerce business in Nepal. Also, there is no special body that regulates the eCommerce market. However, the Nepal Government has stated that it is bringing a law related to eCommerce and online shopping in Nepal. In a program “Digital Sambaad”, Netra Prasad Subedi, director general at the department said that with e-commerce booming during the lockdown, there is an urgent need to introduce proper standards to protect consumers. The strategy covers the e-commerce sector and includes different government bodies to prepare and maintain law. The strategy is an overall guideline and a new draft is being prepared based on a national strategy for e-commerce for immediate implementation, he added. Once the draft is ready, the department will submit it to the Ministry of Industry, Commerce, and Supplies and it will be implemented immediately. We will update this section as soon as the government publishes the new regulation regarding online shopping.
What services can I get from bizsewa for my online shop?
We can help you in all the registration processes, guide you in accounting and also consult you regarding the taxation rules that are applicable to an e-commerce business. Also, we can provide part-time accountants or visiting accountants to your office periodically so that you can take the statutory, legal and accounting stuffs out of your head and focus solely on selling more products.
Starting an ecommerce business in Nepal, is it worth it? Shall I start my online shop in Nepal?
Well, I have covered this in another article : https://bizsewa.com/ecommerce-business-in-nepal-is-it-worth-it/