If you're based in India and own a U.S. business, you're not alone—thousands of Indian founders launch U.S. corporations or LLCs to access global markets, payments, and investors. But with that comes an important question: do you need to file taxes in the U.S.?
The short answer is yes. If you’ve formed a U.S. entity—like a corporation or LLC—then you are subject to annual U.S. tax filing requirements. This applies regardless of where you live or run your business from. As long as your business is registered in the U.S., the IRS expects compliance.
U.S. Federal Tax Obligations
What Forms You Need to File (By Entity Type)
C-Corporation
- Form 1120 – U.S. Corporation Income Tax Return
- Form 5472 – If 25% or more is foreign-owned and there are reportable transactions
Single-Member LLC (Disregarded Entity)
- Form 5472 + Pro Forma 1120 – Required even with no income, if there are any reportable transactions
Multi-Member LLC (Partnership)
- Form 1065 – U.S. Return of Partnership Income
- Schedule K-1 – Issued to each member
- Form 8805 – If the LLC is required to withhold tax on foreign partners. If no withholding was necessary, Form 8805 may not be required.
Individual Filing
- Form 1040-NR – If you personally earned U.S. sourced income that is effectively connected with a U.S. trade or business
What Is ECI (Effectively Connected Income)?
ECI includes:
- Revenue from U.S. customers when services are performed in the U.S.
- Income from physical presence or employees in the U.S.
- U.S. rental income
Simply selling to U.S. customers from India does not necessarily trigger ECI. But if you or your team operate physically in the U.S., you likely have ECI.
Common Indian Business Types That Must File
These are just a few examples:
- SaaS companies billing U.S. users
- Freelancers and consultants paid by U.S. clients
- E-commerce brands using Amazon FBA or Shopify in the U.S.
- Startups raising from U.S. investors
Any business generating U.S.-connected income or operating through a U.S. legal entity will have filing obligations.
U.S. Tax Culture vs. India
Audits and Financial Statements
In India, even small companies often file audited financials. In the U.S., audits are rare unless required by investors or specific legal/regulatory contexts. Most small and early-stage startups file unaudited tax returns.
GST vs. Sales Tax
India uses a national GST system. In the U.S., sales tax:
- Is managed at the state level
- Usually applies only to physical goods
- Typically does not apply to service businesses
That said, e-commerce sellers may need to register in multiple states. Bookmate does not handle sales tax filings.
Other Common Misconceptions
- No income = no filing – Even if your business didn’t make money, filings are still required.
- Only U.S. residents file U.S. taxes – Filing depends on where your company is incorporated, not where you live.
State-Level Obligations: Delaware and Wyoming
Delaware Franchise Tax (for C-Corps)
- Due: March 1
- Cost: Typically $225–$400 (can be higher based on shares issued or assumed par value capital)
- Payment: Online through Delaware Division of Corporations or via your registered agent
Delaware LLC Franchise Tax
- Due: June 1
- Cost: Flat fee of $300/year
- Payment: Online through Delaware Division of Corporations or via your registered agent
Wyoming Annual Report (for LLCs and C-Corps)
- Due: Anniversary month of formation
- Cost: Minimum $60 (based on assets in Wyoming)
- Payment: Online through Wyoming Secretary of State or through your registered agent
These are separate from federal taxes and must be filed even if your company is inactive.
Do You Need an ITIN?
You do not automatically need an ITIN just for owning a U.S. business. However, if you're a foreign individual with U.S.-sourced income and you're required to file Form 1040-NR, then yes, you will need an ITIN (Individual Taxpayer Identification Number). This applies whether you're earning income directly or through an LLC partnership (K-1). An ITIN allows you to file your return and claim potential treaty benefits or tax credits.
Summary
If you're in India and own a U.S. business, you are responsible for U.S. tax compliance. The forms you need depend on your entity type, ownership, and income. Even if you owe no tax, failing to file can result in penalties of $25,000 or more.
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Every tax situation is different—speak with a Bookmate expert to get it right.
