The Nepali fiscal year runs from Shrawan 1 to Ashad end (mid-July to mid-July), and for most small businesses, the weeks around Ashad-end closing are the busiest of the year. Here’s a checklist to make year-end closing predictable instead of chaotic.
1. Reconcile every bank and cash account
Before anything else, every bank account and cash ledger needs to match your actual statements as of Ashad-end. Outstanding cheques, unrecorded bank charges, and timing differences between your books and the bank statement all need to be cleared up first. Everything downstream depends on this being accurate.
2. Close out your sales and purchase registers
Your VAT sales register and purchase register for the year should tie out to your monthly VAT filings. If there’s a mismatch between what was filed monthly and what your year-end books show, this is the point to catch and correct it, not after the annual return is already submitted.
3. Verify TDS deducted and deposited
Tax Deducted at Source (TDS) on rent, contractor payments, professional fees, and other applicable transactions needs to be:
- Correctly deducted at the applicable rate for each transaction type
- Deposited with the IRD within the required timeline
- Reflected accurately in TDS certificates issued to vendors and employees
Unreconciled TDS is one of the most common issues that surfaces during year-end closing, especially for businesses managing multiple vendor relationships by hand.
4. Take a full physical inventory count (if applicable)
If your business holds inventory, Ashad-end is when your books’ inventory value needs to match what’s physically on the shelf. Differences here affect your cost of goods sold and your reported profit for the year, so it’s worth doing properly rather than estimating.
5. Review outstanding receivables and payables
Go through every open invoice and bill: what’s genuinely still owed, what should be written off, and what’s simply been forgotten. Aged receivables sitting unresolved for multiple years are a red flag in any audit.
6. Prepare financial statements
With reconciliations complete, prepare your profit & loss statement, balance sheet, and supporting schedules for the year. These form the basis for your annual tax return and any audit requirements applicable to your business size and structure.
7. File your annual tax return on time
Nepal’s annual income tax return deadline follows fiscal year-end by a set number of months (check current IRD deadlines, as extensions are sometimes announced). Filing based on clean, reconciled books, rather than books still being patched together, is what makes this deadline manageable.
Why year-end closing is hardest for spreadsheet-based businesses
Every step above is dramatically easier when your bookkeeping has been current all year, rather than reconstructed in the final weeks before Ashad-end. Businesses running on spreadsheets or paper ledgers tend to spend the entire closing period just finding the data, before they can even start reconciling it.
Software that keeps your VAT registers, TDS records, and bank reconciliation current throughout the year turns fiscal year-end from a scramble into a checklist. That’s the problem LekhaX is built to solve for Nepali small businesses.