Bookkeeping is the process of recording, organizing, and maintaining a company’s financial transactions. It forms the basis of all accounting processes and helps ensure that a business has an accurate picture of its income, expenses, and cash flow.
This blog explains what bookkeeping services typically include, how the process works in Nepal, and what to consider when choosing a provider.
Bookkeeping vs. Accounting
While bookkeeping focuses on recording transactions, accounting takes a broader view. Accounting involves analyzing, interpreting, and reporting financial information, turning raw data into meaningful insights.
- Accounting covers financial analysis, preparing statements like profit and loss reports, and advising on budgets and taxes.
- Bookkeeping is about maintaining accurate records to support these activities.
Both functions are closely connected: bookkeeping supplies the data accountants use to assess a business’s financial health and guide strategic decisions. Together, they ensure the business stays financially organized and compliant.
Core Components of Bookkeeping Services
Bookkeeping ensures every financial activity is properly recorded, categorized, and stored for future reference. In Nepal, these components must also align with local accounting standards and regulatory requirements.
Transaction Recording
Every financial event—whether it’s a sale, purchase, expense, or receipt—is recorded chronologically using source documents like invoices, bills, and receipts. Accurate transaction recording helps ensure nothing is missed and that each entry matches real business activity.
Bank and Cash Reconciliation
Reconciliation is the process of matching internal financial records with bank statements to identify any discrepancies. It helps catch errors, detect fraud, and maintain cash control—an essential practice for businesses dealing with daily cash flow in Nepal’s cash-heavy market.
Ledger Management
Ledgers are where transactions are grouped into categories such as revenue, expenses, assets, and liabilities. Maintaining a proper general ledger is critical for generating financial reports and tracking the financial health of a business over time.
Accounts Payable and Receivable
Bookkeepers track what the business owes (payables) and what is owed to the business (receivables). Timely updates ensure vendors are paid on time and customers are followed up for pending dues, which is especially important for maintaining cash flow stability.
Payroll and Statutory Compliance
Payroll entries, tax deductions, and contributions like the Social Security Fund (SSF) are also part of bookkeeping. Recording these correctly ensures compliance with labour and tax laws in Nepal and prevents penalties during audits.
Financial Reporting
Bookkeeping services typically provide monthly, quarterly, or annual financial summaries. These include profit and loss statements, balance sheets, and cash flow reports, all essential for understanding where the business stands financially.
Bookkeeping Methods and Tools
Bookkeeping can be done in different ways depending on the size of the business, available resources, and comfort with digital tools. In Nepal, traditional methods are still common, but digital bookkeeping is gaining ground—especially among startups and businesses aiming for long-term scalability.
Manual vs. Digital Bookkeeping
Manual bookkeeping involves recording transactions by hand in physical ledgers or spreadsheets. It's straightforward but time-consuming and prone to human error. On the other hand, digital bookkeeping uses accounting software to automate many tasks, reducing errors and improving efficiency.
Small businesses often begin with manual methods. However, as operations expand, digital tools become more practical for managing increasing data and meeting compliance standards.
Popular Tools Used in Nepal
Businesses in Nepal typically use software like Tally, QuickBooks, Xero, and Wave Accounting. These tools help streamline tasks such as VAT calculation, bank reconciliation, and generating real-time financial reports.
- Tally is widely used due to its local customization and VAT modules.
- QuickBooks and Xero are cloud-based and better suited for businesses with international operations or remote teams.
- Wave offers basic features and is a good starting point for freelancers or small service providers.
If your business operates in Australia or deals with Australian clients, leveraging Xero accounting software with expert bookkeeping services can save you time and keep your financials compliant with local standards. Reach out today to see how seamless bookkeeping can free you up to focus on growth.
Bookkeeping Process in Nepal
While the fundamentals are similar worldwide, businesses in Nepal also need to align with local tax laws and statutory requirements set by authorities like the Inland Revenue Department (IRD).
1. Collecting and Organizing Source Documents
Invoices, receipts, bank deposit slips, salary sheets, utility bills—these documents are the raw materials of bookkeeping. They need to be gathered regularly and sorted properly to avoid missing entries or mismatches later.
2. Journal Entry
Each transaction is first recorded in the journal, where dates, amounts, and relevant accounts are noted. It forms the foundation for the rest of the process and must follow the double-entry system of accounting.
3. Posting to Ledger Accounts
From the journal, entries are transferred to individual ledger accounts—such as sales, purchases, salaries, and utilities. It helps track each account’s activity and ending balance.
4. Bank Reconciliation
Monthly bank statements are compared against internal records to confirm that all bank-related transactions are recorded and accurate. Any mismatches (like unrecorded bank fees or errors) are adjusted.
5. Preparing Trial Balance
Once ledgers are updated, a trial balance is prepared to ensure that the total of debits equals the total of credits. It is a checkpoint before generating formal financial statements.
6. Reporting and Compliance
Reports such as profit and loss statements, balance sheets, and cash flow summaries are compiled—usually monthly or quarterly. For businesses in Nepal, this is also the stage where VAT returns and other tax-related filings are prepared as per IRD guidelines.
Types of Bookkeeping Services
Companies have the option to handle bookkeeping in-house or outsource it to professionals, each with its own advantages.
By Delivery Mode
In-house bookkeeping is when the business employs a bookkeeper or accounting staff internally. It offers more control and quick access to records but requires time and resources for hiring, training, and oversight.
Outsourced bookkeeping, on the other hand, involves handing over bookkeeping responsibilities to a third-party service provider. This model is increasingly popular in Nepal, especially among startups and SMEs that want expert support without the overhead cost of full-time staff.
By Level of Service
Some providers offer basic bookkeeping, which focuses on recording day-to-day transactions, reconciling accounts, and maintaining ledgers. This is ideal for small businesses that just need clean and up-to-date records.
Others provide full-charge bookkeeping or comprehensive service, which includes everything from payroll and tax filing to financial reporting and budget tracking. This is better suited for businesses looking for end-to-end support.
How Much Do Bookkeeping Services Cost in Nepal?
The cost of bookkeeping services in Nepal varies based on several key factors, such as business size, operational complexity, transaction volume, reporting frequency, and the qualifications of the bookkeeper or firm. Each of these elements plays a role in determining how much you'll need to invest in maintaining accurate financial records.
For businesses that prefer flexible engagement, hourly rates typically range between NPR 500 and NPR 2,000. Many small to mid-sized companies opt for monthly retainers, which usually fall between NPR 10,000 and NPR 50,000. Some service providers also offer per-transaction pricing, generally charging between NPR 50 and NPR 200, depending on the workload.
If you’re looking for long-term support, project-based pricing and annual contracts are also available. Medium-sized businesses may pay anywhere from NPR 100,000 to NPR 500,000 per year for ongoing bookkeeping services, depending on the scope and depth of service required.
Not sure what pricing model suits your business? Contact us for a free consultation and a custom quote tailored to your specific needs—no strings attached. Let’s build a solution that works for your growth.
Benefits of Professional Bookkeeping
While many small businesses still try to manage their books informally, investing in professional bookkeeping offers several long-term advantages.
Accurate Financial Tracking
Professional bookkeeping ensures that income, expenses, and liabilities are recorded consistently. This accuracy helps business owners understand their financial position at any point and make smarter budgeting decisions.
Simplified Tax Compliance
In Nepal, frequent tax updates, VAT filings, and income tax returns can be difficult to manage without up-to-date records. A professional bookkeeping system keeps everything ready for monthly, quarterly, or yearly tax submissions—minimizing errors and avoiding penalties.
Time and Cost Efficiency
Delegating bookkeeping allows entrepreneurs to focus on growing the business rather than spending hours sorting receipts or correcting spreadsheets. It also reduces the risk of costly errors from missed payments or misreported income.
Better Financial Planning
Clean, real-time financial data enables better forecasting. Whether it’s applying for a business loan, attracting investors, or planning expansion, solid bookkeeping gives you the confidence to move forward with clarity.
Audit Preparedness
If your business is ever audited by the Inland Revenue Department or needs to present financials to partners, having well-maintained books means you’re ready—no last-minute scrambling, no missing files.
Legal and Regulatory Aspects in Nepal
Bookkeeping in Nepal isn’t just about tracking numbers; it’s about staying compliant with a growing list of laws and regulations. Understanding these requirements helps businesses avoid fines, penalties, and legal complications.
Income Tax Act
All businesses registered in Nepal must maintain proper books of accounts as per the Income Tax Act. Accurate bookkeeping helps calculate taxable income correctly and supports timely submission of tax returns.
Value Added Tax (VAT)
VAT is applicable to most goods and services in Nepal. Businesses must keep detailed records of VAT collected and paid, ensuring proper filing of monthly or quarterly VAT returns with the Inland Revenue Department.
Social Security Fund (SSF)
Employers are required to maintain records of employee contributions to the SSF, including regular deposits and payroll deductions. Bookkeeping plays a key role in managing these statutory obligations accurately.
Labour Laws
Compliance with Nepal’s labour laws requires proper documentation of employee wages, benefits, and deductions. Bookkeeping supports this by maintaining transparent payroll records.
Record Retention
Nepalese law mandates that businesses keep financial records for a minimum period, typically seven years. Organized bookkeeping systems make it easier to store and retrieve these records whenever needed.
Conclusion
Bookkeeping is the backbone of a healthy business, offering clarity, control, and confidence in every financial decision. In Nepal’s fast-changing business environment, keeping accurate and compliant records is no longer optional—it’s essential.
Estartup Nepal offers professional bookkeeping services tailored to your business needs, using trusted platforms like Xero, QuickBooks, Tally, and other leading accounting systems. Whether you're just starting out or scaling up, our team is here to help you stay organized, compliant, and focused on growth.
FAQs on Book Keeping Services
Is it better to outsource bookkeeping?
Yes, outsourcing is often more cost-effective and reliable—especially for startups or small businesses without in-house finance teams. According to a 2023 survey by Clutch, 37% of small businesses outsource accounting and bookkeeping to reduce costs and access specialized expertise. Outsourcing also helps ensure compliance and reduces the risk of errors.
What bookkeeping software is popular in Nepal?
In Nepal, commonly used bookkeeping software includes Tally, QuickBooks, Xero, and Wave Accounting.
- Tally is popular for local businesses due to its VAT customization.
- QuickBooks and Xero are preferred by startups with international operations or remote teams.
- Wave is free and ideal for freelancers or small service providers.
Do I need bookkeeping if I already have accounting support?
Yes, bookkeeping is still necessary. Even if you have an accountant, accurate bookkeeping ensures your financial data is up to date and reliable for reports, tax filings, and audits. Many accountants actually require well-maintained books to perform their duties effectively.
How often should bookkeeping be done?
Bookkeeping should ideally be updated weekly or bi-weekly to maintain accurate cash flow visibility. However, businesses with high transaction volumes may require daily updates, while smaller firms might manage with monthly reconciliation. The frequency often depends on reporting needs and compliance deadlines.