Forming a US company from India takes a few days and costs very little. The filings that follow it are where the money and the risk sit — a single missed information return carries a penalty starting at USD 25,000, even for a company that never earned a rupee.
LLC or C-Corp?
| LLC | C-Corporation | |
|---|---|---|
| Best for | Consulting, agencies, SaaS billing US clients, Amazon sellers | Startups raising US venture capital, issuing stock options |
| US tax | Usually no entity-level tax; taxed in the owner's hands | 21% federal corporate tax, plus state tax |
| Dividends to India | Not applicable | Withholding tax, reduced under the India-US treaty |
| Compliance load | Lower | Higher |
Investors expect a Delaware C-Corp. If you're not raising US institutional money, an LLC in Delaware, Wyoming or New Mexico is usually cheaper and simpler.
Formation, step by step
- Choose the state — and remember that if you have people or property in another state, you register there too.
- Registered agent with a physical address in that state.
- File the formation documents — Certificate of Formation or Incorporation.
- EIN from the IRS. You do not need an SSN: international applicants apply on Form SS-4 by fax or mail.
- Bank account — a US bank or a fintech platform. Expect KYC on the Indian owners.
- W-8BEN-E to your US customers, so they don't withhold 30% on payments to a foreign parent.
The annual filings nobody mentions when they sell you the company
- Form 5472 with a pro-forma Form 1120 — for a foreign-owned single-member LLC, due by mid-April (October with an extension). It reports transactions with you, the foreign owner, and it's required even with zero revenue. Paying the state fee or putting capital in is itself a reportable transaction. The penalty is USD 25,000 per year, per entity.
- Form 1120 for a C-Corp, with actual tax due.
- State annual report and franchise tax — Delaware bills this every year whether or not you traded.
- Sales tax where you cross a state's economic nexus threshold — a real issue for e-commerce sellers.
- Beneficial ownership reporting rules were narrowed in March 2025, so most US-formed entities are outside them, but the position has changed more than once — check it in the year you file rather than assuming.
Whether the LLC's profit is taxable in the US depends on whether you're carrying on a US trade or business with effectively connected income. It's fact-driven, and worth settling before the first invoice — not during an audit.
The India side
- ODI or LRS. An Indian company invests through the ODI route via its AD bank, with Form FC and a UIN. An individual uses LRS within USD 250,000 per financial year, subject to the Overseas Investment Rules. Be careful with structures that end up owning an Indian company again — round-tripping has conditions.
- Annual Performance Report for the foreign entity, every year.
- Schedule FA in your ITR, disclosing the shareholding, the bank account and the interest held.
- Transfer pricing where the Indian entity provides development or support services to the US entity. A cost-plus arrangement without documentation is the standard audit finding.
- Foreign tax credit via Form 67 where US tax is paid on the same income.
How Vitt-Marg helps
We handle the India side end to end — route selection, AD bank filings, 15CA/15CB, APR, Schedule FA, Form 67 and transfer-pricing documentation — and work with US tax preparers on the 5472/1120 package so your two sets of books agree. If you already have a US LLC sitting unfiled for a year or two, tell us early; catching up is far cheaper than a notice.
General information, current as of September 2026, not advice for a specific case. GST and income-tax rules change often — check with us before acting on it.