If you’re an Indian entrepreneur running a U.S. company—whether it’s a Delaware C-Corp or a Wyoming LLC—congratulations, you’re thinking globally. But expanding your business across borders means entering a more complex tax universe. And U.S. compliance isn’t just about filing on time—it’s about understanding the layers of responsibilities that apply to your structure, revenue, and operations.
Here’s a practical and up-to-date U.S. tax compliance checklist for 2025, tailored for Indian founders who’ve incorporated company in the US This guide walks through each phase—from initial filings to cross-border planning—with insights you won’t find in IRS manuals.
1. Know Your Entity Type — and What It Triggers
Your first step is to identify what you’ve actually registered. Each entity has its own tax obligations.
- Delaware C-Corp: Must file Form 1120 annually, and may need Form 5472 if foreign-owned.
- Single-member LLC (foreign-owned): Disregarded entity, but still requires Form 5472 + pro forma 1120.
- Multi-member LLC: Files as a partnership unless elected otherwise.
- Foreign Company with U.S. Presence: May trigger effectively connected income (ECI) and require Form 1120-F.
Tip: Even if you had zero revenue, you’re still required to file. Failing to do so triggers automatic penalties.
2. Build Your U.S.-Ready Financial Stack
Accounting in India ≠ accounting in the U.S. The IRS expects GAAP-style reporting, including clear documentation of:
- Revenue by geography
- Cross-border payments (contractors, IP, intercompany)
- Owner contributions and withdrawals
- Detailed expense logs with receipts
Recommended tools:
- QuickBooks Online, Xero for double-entry accounting
- Wise, Airwallex, Mercury for easy USD-INR transfers
- A Virtual CFO to bridge India-U.S. finance practices
3. Decode Forms That Apply to You
Here’s a simple overview of key tax forms that U.S. entities must file:
| Form | Purpose | Due |
|---|---|---|
| Form 1120 | U.S. Corporate Income Tax Return | April 15 |
| Form 5472 | Reportable foreign ownership transactions | With Form 1120 |
| FBAR (FinCEN 114) | Disclose foreign bank accounts | April 15 (auto extension to Oct 15) |
| Form 8865 / 5471 | Foreign ownership or affiliate disclosures | With tax return |
Missing even one of these can result in penalties of $10,000–$25,000 per form.
4. Set a Compliance Calendar
Forget once-a-year filing. U.S. tax compliance is year-round. Here’s what your calendar should include:
- Quarterly Estimated Tax Payments: April, June, September, January
- Annual State Franchise Taxes (e.g., Delaware due March 1)
- Form 5472 / 1120: April 15
- FBAR: April 15 (automatic extension to Oct 15)
- Payroll Reporting (Form 941): Quarterly if you have U.S. employees
💡 Pro tip: Use Google Calendar or Asana to create compliance reminders with your CFO or accountant.
5. Don’t Miss Out on Tax Credits & Deductions
Most Indian founders miss legal U.S. deductions because they don’t know they exist—or assume they don’t apply. Here are the big ones:
Eligible Deductions
- U.S. travel for fundraising, biz development
- SaaS tools (Notion, Slack, Figma)
- Cloud computing (AWS, GCP)
- U.S. contractors and advisors
- Equipment depreciation
Popular Tax Credits
- R&D Tax Credit – For product/SaaS startups
- Foreign Tax Credit – For taxes paid in India
- Startup Cost Deduction – Up to $5,000 in first-year expenses
6. Understand the India-U.S. Tax Overlap
India taxes global income for its residents. The U.S. taxes entities based on where they’re incorporated or generating revenue.
If you’re:
- An Indian founder with a U.S. company: The company pays tax in the U.S., and you may pay Indian tax on dividends, salary, or repatriated profits.
- Paying Indian taxes on the same income: You can offset it using DTAA provisions.
What is DTAA?
The India-U.S. Double Tax Avoidance Agreement allows you to:
- Claim a foreign tax credit in India for taxes paid in the U.S.
- Access reduced withholding tax rates on dividends (15%), royalties (10%), etc.
But: DTAA avoids double taxation, not double filing. You still need to file in both countries.
7. State Taxes Vary—Choose Wisely
Where you incorporate matters for both taxes and compliance. Here’s a simplified snapshot:
| State | Corporate Tax | Franchise/Other | Ideal For |
|---|---|---|---|
| Delaware | 8.7% | Min $300/year | Investors, C-Corps |
| Wyoming | None | None | Holding companies, LLCs |
| Texas | None | Margin tax if revenue > $2.47M | SaaS & services |
| California | 8.84% | $800 LLC tax | Larger ops, not cost-sensitive |
Choose your state based on whether you’re fundraising, setting up U.S. operations, or just needing a U.S. legal presence.
8. Why You Need a Virtual CFO
A Virtual CFO is your full-time financial ally—minus the cost. For cross-border businesses, they help:
- File IRS, state, and FinCEN forms on time
- Reconcile books under both Indian and U.S. GAAP
- Forecast cash flows & estimate quarterly taxes
- Communicate with IRS & registered agents
- Coordinate with Indian CAs for DTAA compliance
Hiring a part-time CFO can save your startup from costly legal issues—and improve investor confidence.
Summary Checklist
| ✅ Task | 👨💻 Owner |
|---|---|
| Determine filing forms (1120, 5472, FBAR) | CPA or CFO |
| Set calendar reminders for tax events | Founder/CFO |
| Track U.S. vs India income/repatriation | Virtual CFO |
| Claim eligible deductions and credits | CFO |
| Ensure DTAA is applied to avoid double tax | Indian CA + CFO |
| File BOI reports if required (2025 onwards) | Legal or CFO |
| Track multi-state tax implications | CFO or U.S. tax advisor |
Final Word
U.S. tax compliance for Indian founders is complex—but manageable with the right systems and people in place. Whether you’re early-stage or scaling, understanding U.S. tax rules will help you protect your company, optimize cash flow, and build long-term credibility with investors and regulators.
Need help staying compliant?
At USAIndiaCFO, we help Indian founders with U.S. entities manage tax filings, accounting, and DTAA planning—all virtually and seamlessly.
Frequently Asked Questions (FAQs)
1. Do I need to file taxes in the U.S. if my U.S. company made no revenue?
Yes. Even if your U.S. entity made no revenue, the IRS requires annual filings such as Form 1120 and Form 5472 (if foreign-owned). Failing to file can result in automatic penalties.
2. What is the penalty for not filing Form 5472 or FBAR?
The penalty for late or non-filing of Form 5472 is $25,000. For FBAR, it’s $10,000+ per year for non-willful violations, and significantly higher for willful ones.
3. Do Indian residents have to pay taxes in the U.S. on foreign income?
Not usually. Indian residents typically pay U.S. tax only on U.S.-source income. However, if they own a U.S. company, the company’s worldwide income may be taxable in the U.S.
4. How does the India-U.S. tax treaty (DTAA) work?
Under the Double Taxation Avoidance Agreement (DTAA), taxes paid in the U.S. can be claimed as foreign tax credit in India. This avoids being taxed twice on the same income.
5. Can I use Indian accounting standards for my U.S. company?
No. U.S. entities must follow GAAP (Generally Accepted Accounting Principles). Your financial statements must be U.S.-compliant, especially if you’re preparing for audits or investor due diligence.
6. Which U.S. states are best for Indian founders to register a company in terms of tax compliance?
Delaware, Wyoming, and Florida are popular choices due to low taxes, minimal compliance, and startup-friendly rules. Each has its own pros—Delaware for credibility, Wyoming for zero tax.
7. Do I need a CPA or Virtual CFO to file U.S. taxes?
While not mandatory, having a CPA or Virtual CFO familiar with both Indian and U.S. regulations is strongly recommended. They can ensure timely filings, handle IRS notices, and maximize deductions.
8. Is it mandatory to file FBAR if I use Indian bank accounts for my U.S. business?
Yes, if youraggregate foreign account balance exceeds $10,000 at any point in the year, you must file FBAR (FinCEN Form 114)—even if those accounts are in India.
9. Can my U.S. company be taxed in India as well?
Possibly. If your Indian operations create a Permanent Establishment (PE) or if you remit profits to India, Indian tax implications could apply. Coordination between a U.S. CPA and Indian CA is vital.
10. When are U.S. tax filings due for foreign-owned companies?
Here are the standard deadlines (for calendar-year filers):
- Form 1120 & 5472: April 15 (extendable to Oct 15)
- FBAR: April 15 (automatic extension to Oct 15)
- Delaware Franchise Tax: March 1
- State taxes: Varies by state
