Registering a US company from India is a snap. The filing takes days to complete, and can be done from Bangalore or Mumbai online, without anyone having to step foot on US soil.
The things that go wrong are all the ones surrounding the filing. The EIN takes far longer than expected and holds up the bank account, which in turn holds up the payment processor, which holds up revenue. Compliance obligations back home are easy to miss on, but expensive when they're not. And the entity type chosen in month one dictates if the next funding round comes with a restructuring.
None of these are hard to get right. They're all hard to undo. This guide covers the seven mistakes that trip up Indian founders the most when incorporating in the USA, in the order that they tend to happen.
The most expensive mistake isn't in the US at all. it's reporting back home. Founders get the Delaware entity right, get the EIN, get Mercury open, and never file anything with the RBI because nobody told them an overseas investment by an Indian resident triggers reporting obligations. It surfaces years later, usually when they're raising or exiting, and by then it's a regularisation exercise with penalties rather than a form somebody should have filed in week two.
Anu Gupta, CA, EA, B.Tech · LinkedInCommon Mistakes Indians Make While Registering a Company in the USA from India
1. Choosing the Wrong Entity Type
Most Indian founders raising US venture capital need a Delaware C-Corporation, not an LLC. VCs use standard preferred stock instruments (Series A term sheets, SAFEs) that assume C-Corp structure. Forming an LLC and then converting later adds legal cost and time, typically $5,000-$15,000 in attorney fees for conversion. Form the right entity from the start.
2. Not Getting a US EIN Early Enough
This is the bottleneck, and it's the thing founders most consistently underestimate.
An EIN is required for the bank account, for payroll, for tax filings, and in practice for payment processor onboarding. Without it you have an entity that can't transact.
If no responsible party holds a US Social Security Number or ITIN, the instant online application isn't available to you. You apply by fax or mail on Form SS-4, and processing has historically run for weeks. Everything downstream waits on it. Apply the moment the entity is formed, not when you need the bank account, and build your commercial timeline around the EIN rather than around the formation date.
3. Ignoring Beneficial Ownership Information (BOI) Filing
The Corporate Transparency Act introduced a federal requirement for many US companies to report beneficial ownership information to FinCEN, the individuals who ultimately own or control the entity. It applies regardless of whether the owners are US persons.
Whatever the current position, treat it as something to confirm at formation rather than assume. It's a federal filing, separate from anything your state or registered agent handles, and separate again from your Indian obligations.
4. Not Setting Up a Registered Agent
A registered agent is a person or company with a physical US address (in the state of incorporation) authorised to receive legal documents on behalf of the company. It is legally required, without one, the state can dissolve your company or refuse to accept legal filings. Non-US founders almost always need a registered agent service ($50-$300/year). This is one of the first things to arrange before or at formation.
5. Ignoring FEMA/RBI Compliance in India
This is the one that surfaces years later, and it has nothing to do with US law.
When an Indian resident acquires equity in a foreign entity, it constitutes an overseas investment under India's foreign exchange framework, with reporting obligations attached. The rules were substantially restructured under the Overseas Investment Rules and Regulations introduced in 2022, and the applicable route and forms depend on the nature of the investment and the investor.
Two practical points that hold regardless of the detail. Non-compliance carries penalties in India, and regularising after the fact is more expensive and slower than filing on time. And the obligation is triggered by the investment itself, it doesn't wait for the US company to trade, raise or distribute anything.
Get this looked at before you form, not after. The structure you choose can affect which route applies.
6. Opening the Wrong Type of Bank Account
Two versions of the same mistake. Some founders open a personal US account and run business money through it, which undermines the entity separation they formed the company for and complicates every filing afterward.
Others attempt a business account without the required documents, you generally need the formation certificate, the EIN, and depending on the bank, the operating agreement or bylaws and ownership details.
Traditional banks often still want a founder physically present. The practical route for most non-resident founders is one of the platforms built for remote onboarding: Mercury, Relay, Brex among them. Be straightforward during verification about your location and structure; inconsistencies between what you declare and what the platform finds are a common cause of frozen accounts, and unfreezing one takes longer than opening it did.
7. Not Understanding Transfer Pricing Obligations
If your Indian team provides services to the US entity: development, support, operations, anything, you have intercompany transactions, and they have to be priced at arm's length.
This is more than a documentation exercise. India's transfer pricing regime carries its own filing requirements and is enforced actively, and the US side has its own rules and penalties. Getting the pricing wrong can produce adjustments in both jurisdictions on the same transaction, with the associated tax and penalties on both sides.
The common pattern is an Indian company invoicing the US parent a cost-plus fee that was chosen because it seemed reasonable rather than because it was benchmarked. That works until it's examined.
Put intercompany agreements in place at the start, price them on a defensible basis, and keep the documentation contemporaneously rather than reconstructing it during an assessment. This is a specialist area on both sides, take advice rather than a template.
The sequence that actually works
Order matters more than most founders expect:
- Take FEMA/ODI advice before forming, since structure affects the route
- Decide entity type against your funding plans, not against tax simplicity
- Form the entity and appoint the registered agent together
- Apply for the EIN immediately, this is your long pole
- Confirm the federal beneficial ownership position
- Complete the Indian reporting within its timeline
- Open banking once the EIN issues
- Put intercompany agreements in place before any cross-border invoicing starts
- Onboard payment processors last, since they'll want the bank account
Founders who compress this by starting at step 3 and working outward are the ones who end up regularising later.
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Frequently Asked Questions
How much does it cost to register a US company from India?
Startup attorney fees for charter, bylaws and founder stock issuance typically run $1,000 to $5,000. Formation platforms like Stripe Atlas, Clerky or Firstbase package this for roughly $500 to $2,000 with less customisation. Budget separately for FEMA advice in India and for accounting from year one, those aren't in any formation package and they're where the compliance risk sits.
Can an Indian citizen own 100% of a US company?
Yes. No US law restricts foreign ownership of an LLC or C-Corporation, outside regulated sectors like defence, aviation and broadcasting where CFIUS review may apply. What governs you is the Indian side, how the investment is structured and reported under the overseas investment framework.
Do I need a US visa to run a US company?
Not to own one, and not to run it remotely from India. You need work authorisation to work in the US: E-2, O-1 and EB-1C are the categories founders commonly look at, and a US company can sponsor certain of these. Owning and directing from abroad requires nothing.
How long does the whole process take?
Formation takes days. The EIN is the variable and has historically taken weeks by the fax or mail route. Banking follows the EIN, and payment processors follow banking. Plan on a couple of months from decision to being able to take payments, and start the EIN application as early as you can.
Do I pay tax in both countries?
Potentially, and it depends on the structure, where the income arises, and your residency. The India, US tax treaty and foreign tax credit mechanisms exist to prevent the same income being taxed twice, but applying them correctly requires someone who handles both sides. This is the single strongest argument for getting cross-border advice before you form rather than at your first filing.
Written by
Anu Gupta, CA, EA, B.Tech
Anu works with US businesses on tax and entity questions at Profitjets, from choosing a structure to the filings that follow it. She writes about the decisions owners make once and then live with for years. Connect on LinkedIn
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