Financial Planning Basics Every Nepal SME Owner Should Master

Most small and medium business owners in Nepal are excellent at their craft but less comfortable with financial planning. This gap creates vulnerability — businesses run out of cash at the wrong moment, miss tax deadlines, or make poor investment decisions simply because they lack a clear financial picture.

The first thing we always recommend is separating business and personal finances completely. Open a dedicated business bank account and route all business income and expenses through it. This single step makes bookkeeping dramatically easier and cleaner.

Next, create a simple monthly budget. It does not need to be complex. List your expected income, your fixed costs (rent, salaries, loan repayments), variable costs (materials, utilities), and tax obligations. Compare actuals to this budget at the end of each month. Variances tell you where to look.

Cash flow management is often more important than profit for growing businesses. You can be profitable on paper but run out of cash if your customers pay slowly. Build a 13-week cash flow forecast to spot potential shortfalls before they become crises.

For tax planning, work backwards from your tax obligations. Income tax, VAT, TDS, and advance tax payments all have specific deadlines under Nepal law. Failing to plan for these leads to penalties and unnecessary cash crunches.

Finally, get your accounts prepared annually in accordance with Nepal Accounting Standards (NAS) or NFRS. This is not just a compliance requirement — well-prepared accounts help you understand your business and are essential for bank financing.

If you want to put stronger financial foundations in place for your business, we offer a one-day financial health check that gives you a clear picture of where you stand and what to do next.