Fequently Asked Question
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Should I choose an LLC or C Corporation?
For Indian residents, we recommend C Corporation because:
- Required for accepting VC funding
- Better understood by banks and payment processors
- Clearer tax structure for foreign owners
- More credible with US business partners
Can an Indian citizen form a US entity?
Yes, Indian citizens can form US entities:
No US citizenship or residency required
No US visit needed
Only standard KYC documents needed
Must comply with RBI regulations
Can I open as an individual or need an Indian company?
You can open as an individual:
Direct individual ownership allowed
No requirement for Indian company ownership
Must comply with RBI’s ODI guidelines
Remittance through LRS scheme
Do I have to pay sales tax in the US?
Sales tax obligations depend on:
Your physical presence (“nexus”) in US states
Types of products/services you sell
Your customers’ locations
For most Indian businesses selling digital services or B2B services:
No sales tax collection required
Must keep records of transactions
Should review obligations if selling physical products
State-Specific Sales Tax Info
Physical products require sales tax collection if you have nexus
Each state has different nexus thresholds ($100k-$500k in sales)
Digital services generally exempt from sales tax
B2B services typically exempt from sales tax
Marketplace facilitators (Amazon, Etsy) handle sales tax for you
Will my income be taxed both in US and India?
Under the India-US Double Tax Avoidance Agreement (DTAA):
US Taxation
US entity pays federal corporate tax (21%)
State taxes if applicable (0% in Wyoming)
Profits taxed at corporate level
Dividends taxed when distributed
India Taxation
Foreign income taxable in India
Credit available for US taxes paid
Must report foreign income in India returns
Credit mechanism prevents double taxation
Key Treaty Benefit
Reduced withholding rates
Foreign tax credits
Protection against double taxation
Clear allocation of taxing rights
Companies should:
Maintain clear financial records
Document tax payments in both countries
Consider timing of profit repatriation
Consult tax advisors for optimisation
What is the minimum capital required for a US entity?
No legal minimum capital requirement
Recommended minimum: $2,000-$3,000 for initial setup
Ensures coverage of formation costs and initial expenses
Additional capital based on business needs
Will I get a US business address?
Yes, through our trusted virtual address service:
Professional business address in US
Mail scanning and forwarding
Can be used on business documents
Monthly cost: $20-25 depending on state
Meets state compliance requirements
What business activities are prohibited for my US entity under FEMA?
RBI/FEMA regulations prohibit the following activities:
Real Estate Business
Buying and selling of real estate
Trading in Transferable Development Rights (TDRs)
Note: Development of townships, construction of residential/commercial premises, roads, or bridges is allowed
Financial Services (Without Special Approval)
Banking operations
Insurance business
Investment advisory services
Local deposit taking activities
Trading Activities
Dealing in financial products linked to Indian Rupee
Any form of gambling or lottery business
Cryptocurrency trading involving INR
Restricted Jurisdictions
Business with entities in countries/jurisdictions restricted by RBI
Activities prohibited by host country regulations
Note: Manufacturing, IT services, consulting, e-commerce, and most other legitimate business activities are permitted.
US Compliance Requirements & Deadlines
Federal Filings
Form 1120 (Corporate Tax Return): April 15th or 15th day of 4th month after fiscal
year endForm 5472 (Foreign Ownership): Filed with Form 1120
BOIR Filing: Within 30 days of formation and updates within 30 days of changes
State Filings
1. DELAWARE
Annual Report & Franchise Tax: March 1st
Minimum Franchise Tax: $175
2. WYOMING
Annual Report: First day of anniversary month
License Tax: With Annual Report ($60 minimum)
Can an Indian citizen form a US entity?
Yes, Indian citizens can form US entities:
No US citizenship or residency required
No US visit needed
Only standard KYC documents needed
Must comply with RBI regulations
Can I open as an individual or need an Indian company?
You can open as an individual:
Direct individual ownership allowed
No requirement for Indian company ownership
Must comply with RBI’s ODI guidelines
Remittance through LRS scheme
India/RBI Compliance Requirements & Deadlines
One-Time Filings
Form FC: Before sending first remittance
Share Certificates: Within 6 months of investment
Annual Filings
Annual Performance Report (APR): December 31st each year
Audited Financial Statements: With APR
Ongoing Requirements
Report any changes in shareholding
Report additional investments/funding
Update UIN for material changes
How long does it take to form a US entity?
The entire process typically takes 3-4 weeks, including:
Week 1: Entity formation and EIN
Week 1-2: US bank account setup
Week 2-3: RBI compliance
Week 3-4: Final setup and operations read
Which state should I choose - Delaware or Wyoming?
Choose Delaware if you plan to raise venture capital or have future IPO plans
Choose Wyoming if you want lower maintenance costs and enhanced privacy
Both states offer excellent liability protection and business-friendly laws
What's the process for opening a US bank account?
We help set up your Mercury Bank account remotely with:
No US visit required
Only standard KYC documents needed
$250 bonus on deposits over $10,000
Multi-currency account capabilities
What documentation is needed for RBI compliance?
Essential documents include:
Passport copy
Address proof
Source of funds declaration
Business plan outline
KYC documents
How much can I invest in my US entity?
Under LRS (Liberalized Remittance Scheme):
Up to $250,000 per financial year
Includes all overseas investments
Investment must be through proper banking channels
You can open as an individual:
Direct individual ownership allowed
No requirement for Indian company ownership
Must comply with RBI’s ODI guidelines
Remittance through LRS scheme
How do I accept payments from US clients?
Your US entity can:
Accept payments via Stripe/PayPal
Use ACH transfers
Receive wire transfers
Process credit card payments
What are the annual tax obligations?
Required filings include:
Form 1120 (Federal Tax Return)
Form 5472 (Foreign Ownership Disclosure)
State annual reports
BOIR filing
Can I hire US employees?
Yes, your US entity can:
Hire US employees
Use payroll services
Offer benefits
Comply with US labor laws
What are the ongoing maintenance requirements?
Annual requirements include:
Federal tax returns
State annual reports
Registered agent renewal
Virtual address service
Annual compliance filings
What happens if I want to close the entity later?
Dissolution involves:
State filing fees ($224 for Delaware, $60 for Wyoming)
Final tax returns
Bank account closure
RBI closure reporting
Do I need to visit the US?
No, the entire process can be completed remotely:
All formation done online
Bank account opened remotely
Documents handled electronically
No physical presence require
How secure is the banking setup?
Mercury Bank provides:
FDIC insurance
Secure online banking
Multi-factor authentication
Fraud protection systems
What support do you provide after formation?
Our ongoing support includes:
Annual compliance reminders
Tax filing assistance
Document maintenance
Regulatory updates
hello@zenoledger.com
80 Descano Dr, San Jose,
CA, 95134