Forming a US LLC as an Indian founder: a complete guide

Every month we talk to Indian founders who've been told three contradictory things by three different accountants. One says you need a US visa. Another says you need to pay US tax on everything. The third says you need to register with the RBI before you do anything. None of that is exactly right.

Here's the honest version. An Indian resident can form a US LLC entirely from India in about two weeks. You don't need a US visa, a US address, or a US bank account to do it. You will need to deal with three sets of paperwork: state formation, a federal EIN, and a tax filing on both sides at year-end. This guide walks through all of it.

Why Indian founders form US LLCs

Three reasons usually drive it. First, getting paid by US customers, especially through Stripe, App Store, Google Play, or US-based clients who only contract with US entities. A US LLC unlocks a US bank account, a US merchant account, and access to the dollar economy with far less friction than an Indian sole proprietorship or private limited company.

Second, simpler tax treatment for non-residents. A single-member US LLC owned by a non-resident Indian is treated as a “disregarded entity” by the IRS. You don't pay US corporate income tax on foreign-sourced income. You file a Form 5472 + pro-forma 1120 each year (paperwork, not a tax bill) and that's usually the end of your US obligation if you have no US employees, no US office, and no physical presence.

Third, credibility and access. US customers, US partners, and US fintech providers treat a US LLC very differently from an offshore entity. Cards from Mercury and Brex, Stripe accounts, AWS billing, US-domiciled SaaS subscriptions, all of it just works once you have an LLC and an EIN.

Choosing your state

For Indian founders forming a US LLC, the three states worth considering are Wyoming, Delaware, and New Mexico. California, New York, and Florida are usually wrong choices unless you have a specific reason (a US partner who lives there, a planned office, etc.).

Wyoming is the most common choice. Annual fees are $60. No state income tax. Strong owner privacy. The Secretary of State is fast (often same-day filing). Most of the international-founder packages from formation services default to Wyoming for a reason.

Delaware is the right choice if you plan to raise venture capital later, or if you're forming a C-Corp instead of an LLC. For a pure operating LLC that won't be raising VC, Delaware has nothing meaningful over Wyoming except the franchise tax is higher ($300 vs $60).

New Mexico is the budget option. No annual report fee at all after formation. Strong privacy. The trade-off is fewer name-availability options and a slightly less developed business-services ecosystem. Founders who want absolute minimum ongoing costs sometimes pick New Mexico.

For most Indian founders building a SaaS, an agency, or an e-commerce business with US customers, Wyoming is the right default. If you want the full LLC vs C-Corp comparison before you decide, our post on LLC vs C-Corp covers the ownership and fundraising angles.

Getting an EIN without an SSN

This is where most Indian founders get stuck. The IRS online EIN application requires a US Social Security number or ITIN, and you don't have either. The workaround is Form SS-4 filed by fax or mail.

The form is straightforward. You list the LLC, the responsible party (you, with your Indian address), and leave the SSN/ITIN field blank or write “Foreign”. Fax it to the IRS office that handles foreign applicants. You'll get the EIN back by return fax in about 4 to 6 business days. Mail takes 4 to 6 weeks, so use fax if you can.

A few tips:

1. Save the CP 575 confirmation letter the IRS sends after the EIN is issued. Banks and payment processors will ask for it. If you lose it, the replacement (147C) takes weeks to get.
2. You can only apply for one EIN per day per responsible party. Don't try to form multiple companies and submit on the same day.
3. Some formation services (we do this for international founders) submit SS-4 as a third-party designee and get faster turnaround. Worth it if speed matters.

Our short post on what an EIN is goes into the form itself in more depth.

Banking for Indian founders

Once the LLC is approved and you have the EIN, you can open a US business bank account from India. Mercury is the most common pick. They explicitly support non-US-resident owners, the application is online, and approval usually takes a few business days.

You'll need your Indian passport, your formation documents, the EIN confirmation letter, an operating agreement, and a Persona identity check (which Mercury runs as part of onboarding). Mercury is fully online and you'll never visit a branch.

Backup options if Mercury declines: Relay (similar profile, slightly different risk appetite), and Wise (multi-currency, but Wise is a money-services business not a bank, so not a true replacement). Our full roundup is at top banking options for new LLCs.

Two non-obvious things. First, deposits into the Mercury account from India usually flow through Wise or Stripe rather than direct INR-to-USD wires (the wire route works but it gets expensive). Second, Mercury will close your account if it sits empty for a year. If you're forming the LLC for a future project, fund it with even a small amount to keep it active.

US tax filing obligations

Here's the part Indian founders worry about most, and it's usually simpler than you expect.

A single-member LLC owned by a non-US person is “disregarded” for tax purposes. The LLC itself doesn't file a regular US tax return. Instead, it files:

• Form 5472 with a pro-forma Form 1120 attached. This is an information return disclosing transactions between the foreign owner and the US LLC. It's not a tax payment, just a disclosure.
• Form 1042 / 1042-S if the LLC pays US-source income to foreign persons (unusual for most Indian-owned LLCs in their first year).

If the LLC has no “US trade or business” (no US office, no US employees, no US-based service delivery beyond a website), there's usually no US federal income tax on the LLC's profits. Income is taxed in India under your personal tax bracket instead.

Two state-level traps. If you form in Delaware, you owe the $300 franchise tax annually regardless. If you accidentally trigger nexus in California (selling into California, having an employee or contractor there), you may owe the $800 California minimum franchise tax. State tax exposure is rarely about where you formed and almost always about where you do business.

The Indian side: RBI, ODI, and LRS rules

The Reserve Bank of India has rules about Indian residents investing abroad. There are two relevant frameworks: the Liberalised Remittance Scheme (LRS) and the Overseas Direct Investment (ODI) regulations.

Under LRS, Indian residents can remit up to USD 250,000 per financial year for permitted capital and current account transactions. Forming a US LLC and funding it modestly usually fits within LRS, but the bank making the outward remittance will ask for the purpose and may want documentation.

ODI applies when an Indian resident sets up or invests in a foreign entity for active business. The amended Overseas Investment Rules (2022) clarified that an Indian individual can hold a foreign entity engaged in bona fide business activity, with reporting through the AD Bank. If your US LLC is genuinely operating (not a passive holding vehicle), this is usually the right framework.

This is the area we'd strongly suggest you talk to a CA before doing. The penalties for getting RBI compliance wrong are not trivial, and the rules change. An hour with a CA familiar with Indian outbound investment is the best $100 you'll spend on the whole project.

FBAR and other Indian reporting

FBAR is a US obligation, not an Indian one. If you (the Indian individual) have signature authority over a US financial account with more than $10,000 at any point during the year, you may need to file FinCEN Form 114. For most Indian-resident founders with a US LLC and a US business bank account, FBAR doesn't apply (you're not a US person), but it's worth checking if you have a green card or a US tax residency question.

On the Indian side, you'll need to declare foreign assets and foreign income on your Indian tax return (Schedule FA). Income from the US LLC is taxable in India under your personal slab rate, with credit for any US tax paid (usually zero in the simple disregarded-entity case).

Common mistakes Indian founders make

Things we see go wrong:

• Forming in Delaware by default and paying $300 a year for nothing the LLC actually needed.
• Missing the Form 5472 filing in year one and getting hit with a $25,000 penalty. This form is mandatory even if the LLC made no money.
• Funding the LLC without going through the LRS or ODI route correctly, then having a mess to clean up with the RBI later.
• Using a personal address as the registered agent address, which exposes your home address in public records.
• Skipping the operating agreement because “it's a single-member LLC”. Banks will ask for one. Make it once and save it.

Frequently asked questions

Do I need a US visa or US address? No to both. The LLC can be formed with an Indian address, no US presence required. You will need a US registered agent in the formation state, but that's a paid service (often included in formation packages).

Can I form a C-Corp instead? Yes, and it's the right choice if you plan to raise US venture capital. For most Indian founders building bootstrapped or revenue-funded businesses, the LLC is simpler. Compare in detail at LLC vs C-Corp.

What about a W-8BEN? Your US payers (Stripe, App Store, customers) will ask for one. It tells them you're a foreign individual and lets you claim treaty benefits. The India-US treaty caps several withholding rates at 15%. We cover this in what is a W-8BEN.

How long does the whole setup take? Realistic timeline is 2 to 4 weeks end-to-end. State approval (1 to 7 days in Wyoming), EIN by fax (4 to 6 business days), Mercury account opening (3 to 7 business days). You can be operating in under a month.

Ready to start? Pick your state, gather your passport and a basic operating plan, and form your US LLC with EntityEngine. We handle the state filing, the SS-4 submission, and the EIN. Most Indian founders complete the application in about 15 minutes.