How to Start a Business in the USA from India: Complete 2026 Guide

Starting a US business from India is permitted and well trodden, and most of the difficulty is sequencing rather than eligibility.

Each step depends on the one before it, and one of them takes considerably longer from abroad. Getting the order wrong is what leads founders to sign customers before there is an account to receive the money into.

This covers whether it is allowed, the steps in the order they have to happen, the mistakes Indian founders make most often, and what the process costs.

Is It Legal for Indian Residents to Start a US Business?

Yes. US federal and state laws do not require citizenship or residency for business ownership. An Indian resident can own 100% of a US LLC or corporation. What matters is compliance on both sides: US tax and corporate law, and Indian FEMA/RBI regulations.

10 Steps to Start a US Business from India

Step 1: Choose Your Entity Type

The two most relevant choices for Indian founders:

• Delaware C-Corporation: Required for US venture capital. QSBS benefits (Section 1202). Preferred stock available. Higher annual compliance cost.
• Delaware LLC: Simpler, cheaper to maintain. Better for bootstrapped businesses, no VC plans. Pass-through taxation.

If you are building a SaaS product targeting US customers and might want VC funding: Delaware C-corp. If you are a freelancer or consultant wanting a US billing entity: Delaware LLC.

Step 2: Choose Your State of Formation

Most Indian founders choose Delaware. Reasons:

• VCs expect Delaware C-corps
• Court of Chancery provides predictable case law
• No income tax on out-of-state income
• Best ecosystem for formation services and legal counsel

Wyoming LLC is an alternative for founders who want privacy and low cost without VC plans.

Step 3: File Formation Documents

File online at corp.delaware.gov (for Delaware). Cost: $90-$109 for most entity types. You will need a registered agent with a Delaware address before filing.

Step 4: Appoint a Registered Agent

Required before filing. As an Indian resident, you must use a registered agent service. Cost: $50-$200/year. Harvard Business Services is popular for international founders at $50/year.

Step 5: Get an EIN via Form SS-4

International founders without a US SSN/ITIN must use Form SS-4 by fax. Fax to +1-855-215-1627. IRS calls back within 4 business days with your EIN. Have a working phone number available when you fax.

Step 6: Open a US Bank Account

Best options for Indian founders, fully remote:

• Mercury: Most popular for Indian founders. Free. Requires EIN + formation docs + passport/ID. 1-3 business days.
• Relay: Alternative to Mercury, similar features, also free.
• Wise Business: Good for receiving international payments, not a full banking solution.

Step 7: Set Up US Payment Processing

• Stripe US: Apply at stripe.com with your US entity EIN and bank account
• Brex: Corporate card + USD account, designed for startups
• PayPal Business: Accepts international payments, USD payout to US bank

Step 8: Handle FEMA Compliance (Indian Side)

Before you remit capital from India to your US entity:

• Investments up to $250,000 per year: use LRS route through your AD bank
• Investment qualifies as Overseas Direct Investment (ODI): file Form ODI Part I with your bank before sending money
• File Annual Performance Report (APR) every year your investment is active
• Keep evidence of investment: bank statements, filing receipts

Step 9: Set Up US Payroll If Hiring US Employees

If hiring W-2 employees in the US:

• Register with each state's department of revenue and unemployment agency
• Use a payroll service (Gusto, Rippling, or ADP, all support small startups)
• Withhold and remit federal income tax, Social Security, and Medicare (FICA)
• File employer quarterly returns (Form 941)

Step 10: Appoint a US CPA or Virtual CFO

Non-US founders often underestimate US tax compliance complexity. A US CPA helps with:

• Form 5472 + 1120 (if LLC owned by foreign person)
• Form 1120 (C-corp annual return, due April 15 with extensions)
• Delaware franchise tax (due March 1 for C-corps, June 1 for LLCs)
• Ensuring transfer pricing documentation if you have both Indian and US entities
• Advising on QSBS eligibility and 83(b) elections for C-corps

Common Mistakes Indian Founders Make

• Skipping the 83(b) election: File within 30 days of founder stock grant or lose potentially millions in QSBS benefits
• Not filing Form 5472: $25,000 penalty per year. No exception for zero-revenue entities.
• Remitting capital without ODI filing: FEMA violation with severe penalties
• Not maintaining corporate formalities: Failing to hold board meetings, keep minutes, and maintain separate bank accounts can pierce the corporate veil
• Using personal accounts for business: Comingles assets and destroys limited liability
• Forming after the company already has value: Issue founder shares at formation when the price is still near zero

Cost Overview

Frequently Asked Questions

Written by

Abhinav Gupta, CPA, CA, MBA

Abhinav works with business owners across the US on industry-specific bookkeeping, from dental practices and restaurants to construction and e-commerce. He writes about what each trade's books actually need. Connect on LinkedIn