Pondicherry, which is located just around 135 kilometres from Chennai, is gaining steady momentum as a popular destination among start-up enthusiasts. There are some factors that work in favour of business owners in the city.
First, Pondicherry has significantly lower operational costs compared to Chennai and Bengaluru. Second, finding the right coworking spaces in Pondicherry isn’t at all a problem because many renowned providers have already opened their branches here. Third, the availability of many colleges in various fields lets business owners access a robust talent pool to meet their hiring needs.
If you’re planning to begin your entrepreneurial journey in Pondicherry, then there are several options that you can choose from based on your circumstances and preferences.
Let’s have a look at the most common options.
If you want to own and manage a business by yourself only, you may want to go with a sole proprietorship. As you only require a government registration related to your business, you can have it up and running quickly and easily. The downside of going with a sole proprietorship is that you get unlimited liability regarding all the debts. This essentially discourages any risk-taking like taking out a bank loan as the debt will be recovered from you only.
Limited Liability Partnership
This business structure has fewer compliance requirements than a private limited company and restricts the liabilities of the partners regarding their contributions to the business. It also provides each partner with protection from misdeeds, incompetence, or negligence of other partners.
The establishment cost of a limited liability company is also much cheaper than that of a private limited company, and there’s no restriction on the number of partners. As mentioned, an LLP needs to meet fewer compliance requirements. For instance, an audit doesn’t need to be performed if your turnover doesn’t go over a certain amount. You can also get tax benefits if the earnings from your business cross a certain threshold.
Private Limited Company
If you want to raise outside funding easily with restrictions on the liabilities of your business’s shareholders, opening a private limited company can be beneficial for you. In this structure, if a debt cannot be repaid by the business, only the amount invested to start the business will be lost, while keeping the personal properties of the shareholders safe.
While private limited companies can raise funding easily, they also need to meet greater compliance requirements. These range from yearly submission of IT returns, annual filings with the RoC (Registrar of Companies), quarterly board meetings, the filing of those meetings’ minutes, a statutory audit, and more.
If you don’t want to meet all these requirements, you should give registering your business as a private limited company a second thought.
One Person Company
Apart from these, you can also register your business as an OPC (One Person Company). While this structure gives you complete control over the business, it limits your liabilities to contributions to it. The downsides of an OPC are minimal tax advantages and high compliance requirements.
When you’re planning to open your business in Pondicherry, consider the pros and cons of each of these business structures before making a final decision.