Every week we meet an Indian founder with a Wyoming or Delaware LLC, a Stripe account, US revenue, and no clear picture of what is owed on either side of the ocean. Nobody did anything wrong; the formation took ten minutes and the compliance was never explained. Here is the whole picture.
US side: the LLC
A single-member LLC owned by an Indian resident is a disregarded entity for US income tax and a corporation for one reporting purpose: Form 5472 with a pro forma Form 1120, every year by April 15 (October 15 on extension), reporting transactions between you and the LLC. Capital you put in, money you take out, expenses paid from your personal card. Missing it costs $25,000 per year. It cannot be e-filed; it goes by fax.
State obligations follow the state of formation: Wyoming's annual report with a $60 minimum, Delaware's $300 franchise tax by June 1, and a registered agent everywhere. Sales tax applies only where the LLC has nexus, usually from inventory in a US warehouse or crossing a state's sales threshold.
US side: you
Whether you owe US income tax depends on whether the LLC's activity is a US trade or business with effectively connected income, or, under the India-US treaty, whether you have a permanent establishment in the US. Selling software or services to US customers from India, with no US office, employees or dependent agent, generally means no permanent establishment and no US income tax, even with substantial US revenue. Inventory in a US fulfilment centre, a US-based contractor doing the core work, or a US office change the analysis.
Where US tax does apply, you file Form 1040-NR with an ITIN, and the treaty prevents double taxation through credits in India. Where it does not, the LLC's profit is simply your income in India.
India side
- Income tax: as a resident you are taxed on worldwide income, so the LLC's profit is taxable in India as business income when earned (the LLC is transparent), or as dividend when distributed if you treat it as a company; the position should be taken consistently and documented.
- Schedule FA: the foreign asset schedule of your Indian return must disclose the LLC, its bank account and your interest in it, every year, even when nothing was transferred. Omission carries penalties under the Black Money Act.
- LRS: money sent from India to fund the LLC goes through the Liberalised Remittance Scheme, with TCS collected above the annual threshold and the Form A2 purpose code recorded.
- ODI: an investment in a foreign entity may require reporting to RBI under the overseas investment rules, particularly where the LLC is treated as a company rather than a transparent vehicle; the form and timing depend on the structure.
Banking and platforms
Mercury, Wise and similar accounts ask for the EIN letter, formation documents and good-standing certificates, and periodically for financial statements. Stripe asks for the LLC's W-9. You, personally, give a W-8BEN when a US payer asks, so they do not withhold 30% on payments that are not US-taxable.
The yearly calendar
| When | What |
|---|---|
| April 15 (or October 15 on extension) | Form 5472 + pro forma 1120, fax-filed; Form 1040-NR if there is US-connected income |
| State date | Annual report or franchise tax; registered agent renewal |
| July 31 (India) | Indian return with Schedule FA disclosure of the LLC and its account |
| Ongoing | Sales tax where nexus exists; W-9 and W-8BEN kept current; ledger of owner transfers for next year's 5472 |
The check: find the LLC's first bank statement and your last Indian return. If money went into the LLC and Schedule FA does not show it, both sides need attention.