US Taxes for Indian Founders: LLCs, Treaties and Compliance

Written by CA Sumit ChandwaniChartered Accountant & Founder · Reviewed by Minal Bihani, EA

The Indian-founder US LLC is one of the most common structures we handle. Here's the honest map.

The US side: what's mandatory every year

• Form 5472 + pro-forma 1120 — required for every foreign-owned single-member LLC, even at zero revenue. The penalty starts at $25,000; this is the filing Indian founders most often learn about from an IRS notice
• 1040-NR — only if you have effectively connected US income; working from India for US clients is often foreign-source
• State franchise tax / annual report — Delaware's $300 by June 1, Wyoming's report in your anniversary month
• BOI reporting — where federal beneficial-ownership rules apply to your entity

The treaty that helps you

The India-US tax treaty reduces withholding on several income types and prevents double taxation via foreign tax credits. Claiming it usually means a correct W-8BEN with the treaty article cited — and an ITIN where a TIN is required.

The India side: stay aware

Owning a foreign company touches Indian rules too — foreign asset disclosure in your Indian return (Schedule FA), taxation of the LLC's income in India as your income, and FEMA considerations on outbound investment. We coordinate with clients' Indian CAs so the two filings tell one consistent story.

Getting money home cleanly

Owner draws from a disregarded LLC are 5472-reportable transactions; document each transfer. Clean transfer records are also what make the Indian disclosure side painless.

The bottom line

The structure is proven: US LLC + EIN + fintech banking + annual 5472 discipline + treaty-correct W-8BEN, with Indian disclosure handled at home. MOREOFTAX runs the US side end to end for hundreds of Indian founders.