US Company Formation for Indian Founders: After Approval: What Continues
US Company Formation for Indian Founders does not end at approval — a set of obligations continues afterwards. The questions below are the ones raised most often in practice; the full scope of the service is on the US Company Formation for Indian Founders page.
What is the FEMA ODI requirement — and what happens if I miss it?
Any Indian resident individual or Indian company making an investment in a foreign entity must comply with the Foreign Exchange Management (Overseas Investment) Rules, 2022. Under the Automatic Route (which covers investments in most countries including the US), an Indian company can make a total financial commitment of up to 400% of its net worth (as per its last audited balance sheet) without RBI approval, while a resident individual can invest only within the Liberalised Remittance Scheme limit (currently USD 250,000 per financial year) and only in an operating foreign entity that is not engaged in financial services. The investment must be routed through an Authorized Dealer Bank, which reports it to the RBI's FIRMS portal. After the US entity is formed and funded, an Annual Performance Report (APR) must be filed by 31 December each year. ODI reporting is done after the investment is made, not before it. A delay in filing Form ODI or the APR is a FEMA contravention that can generally be regularised by paying a late submission fee within the permitted window; other contraventions may need compounding with the RBI, and pending APRs can hold up further overseas investment.
In practice: FEMA ODI is frequently overlooked by Indian founders forming US companies. Online formation portals file the Delaware certificate and issue an EIN — they do not touch FEMA. We integrate FEMA ODI compliance into every US formation engagement from Day 1.
Can an Indian company (not an individual) make the ODI into the US entity?
Yes. An Indian company can invest in a foreign entity under FEMA ODI Rules, 2022, provided: the investment is permitted under the Automatic Route (US is on the Automatic Route for most sectors), the financial criteria are met (investment not exceeding 400% of net worth of the Indian company as per last audited balance sheet), the Indian company is not on the RBI caution list, and all prior FEMA compliance of the Indian company is in order. The Board of the Indian company must pass a resolution authorising the investment, and the investment must be routed through an AD bank with proper purpose coding. Annual APR must be filed by 31 December for each year.
In practice: An Indian company making an ODI is also subject to Indian Income-tax Act obligations: India does not currently have a Controlled Foreign Corporation (CFC) regime, but the US subsidiary's residence can be tested under the place-of-effective-management (POEM) rules, GAAR can apply to arrangements lacking commercial substance, and transfer pricing applies to any intercompany transactions between the Indian parent and the US subsidiary.
Does PNPC handle the US-side legal work — or do you work with a US lawyer?
PNPC is an Indian CA firm — we are not US-licensed attorneys and do not provide US legal advice. For US entity formation, we manage the strategic advisory, the India-side FEMA/ODI compliance, the ongoing India tax obligations, transfer pricing documentation, and the APR filings. For the US entity itself, we work with established Registered Agent services for the state filing, and coordinate with qualified US CPAs or attorneys for US tax return preparation and US legal documents. Our value is in managing the India-US compliance bridge — the piece that no US attorney handles and that most Indian CA firms without US experience miss.
In practice: Many Indian founders approach their US formation through a US attorney alone, who handles Delaware perfectly but does not know to ask about FEMA ODI. They then approach their Indian CA for the ITR, who does not know about the US C-Corp because the founder considers it a 'US matter'. The gaps in this split approach are where the most costly mistakes occur. PNPC coordinates the full picture.
What ongoing US compliance is required annually — and roughly what does it cost?
Annual US compliance for a standard Delaware C-Corp with no US employees: Delaware Annual Report and franchise tax (minimum franchise tax USD 175 under the Authorized Shares method or USD 400 under the Assumed Par Value Capital method, plus a USD 50 annual report filing fee, due 1 March); Registered Agent annual fee (varies by provider); US Federal income tax return Form 1120 (prepared by a US CPA; fees vary with complexity); any state income tax returns where nexus exists. For an LLC: Delaware LLC Annual Tax USD 300 (or Wyoming approximately USD 60); Form 5472 with pro-forma 1120 if foreign-owned disregarded (preparation fees vary). India-side: FEMA APR certified by CA (PNPC fee); Schedule FA disclosure in ITR. These figures are indicative and depend on the complexity of the entity.
In practice: A dormant or early-stage US entity (no revenue, no employees) still carries a recurring annual cost across US compliance and India-side FEMA/tax obligations; ask for a written estimate for your structure. For an operating entity with US employees, US customers, and intercompany transactions, the cost is significantly higher — but so is the value of being compliant.
What is the difference between Wyoming and Delaware for an LLC — and when is Wyoming better?
Delaware LLCs offer the same mature court system and legal familiarity as Delaware C-Corps. Wyoming LLCs offer: no state income tax (Delaware also has no income tax on out-of-state income), stronger member privacy (Wyoming does not require member names in public filings), an annual fee of approximately USD 60 versus Delaware's flat USD 300 LLC Annual Tax, and Wyoming's unique charging order statute — considered among the strongest creditor protection statutes in the US, preventing creditors from seizing LLC membership interests. Wyoming is generally preferred for holding structures, real estate holdings, and privacy-sensitive owners. Delaware is preferred when legal familiarity and Court of Chancery access matter.
In practice: For most Indian founders forming a US entity for tech or services business purposes without privacy concerns and without VC plans, the choice between Delaware LLC and Wyoming LLC is largely a cost and minor legal preference issue. We recommend Delaware if there is any chance of future VC interest or if the operating agreement needs to be recognizable to US attorneys. We recommend Wyoming for holding companies, IP vehicles, and real estate.
What is state nexus for sales tax — and does a SaaS company selling to US customers need to collect US sales tax?
Since the 2018 US Supreme Court decision in South Dakota v. Wayfair, states can require remote sellers to collect and remit sales tax based solely on economic activity in the state — without any physical presence. Most US states have adopted economic nexus thresholds: commonly USD 100,000 in annual sales to customers in a state, with some states also applying a 200-transaction test (several have dropped it), so check each state's current threshold. SaaS and digital services are treated differently by each state — some tax SaaS as a taxable service, some exempt it, and rules change frequently. A company selling USD 200,000/year of SaaS subscriptions to US customers across many states may have sales tax obligations in many states, each with different registration, collection, and filing requirements.
In practice: US sales tax compliance for SaaS companies is one of the most complex areas of US state tax law, and it is entirely separate from income tax. Services like Avalara, TaxJar, or Stripe Tax can automate collection and remittance, but threshold monitoring and state registration must be managed proactively. PNPC advises on nexus triggers and recommends appropriate compliance solutions.
How does PNPC coordinate US formation with India and UAE structures?
PNPC operates offices in Chennai, Bangalore, Hyderabad, and Dubai. For a client operating with an Indian company, a UAE entity, and a new US entity, we manage: the Indian company's statutory audit, MCA filings, and annual ITR; the FEMA ODI compliance and APR for the US investment; the UAE Corporate Tax registration and VAT filing for the UAE entity; the transfer pricing documentation for Indian-US and Indian-UAE intercompany transactions; and the Schedule FA and DTAA advisory for all three jurisdictions. For the US entity itself, we coordinate with qualified US CPAs for US federal and state tax return preparation. One engagement team manages the full international picture — not three disconnected advisors briefed in isolation.
In practice: An India-UAE-US structure is one that NRIs and international entrepreneurs may adopt. The interactions between the three jurisdictions — particularly FEMA ODI, transfer pricing, and DTAA withholding — require a coordinated advisory approach. Briefing three separate advisors on isolated pieces of the same structure consistently produces gaps that are expensive to correct.
What are the costs involved in forming a US company — and what does PNPC charge?
US formation costs have two components: (1) State fees and third-party costs: Delaware C-Corp filing fee (a minimum of USD 109 under the current Division of Corporations fee schedule, higher depending on authorised shares); Delaware Registered Agent (annual fee varies by provider); IRS EIN application fee (no fee — free); US bank account (fintech providers such as Mercury or Relay; check current fees and eligibility); optional expedited state processing (additional state fee). (2) Professional fees: PNPC charges a fixed, agreed fee for the India-side advisory and FEMA ODI compliance. US CPA fees for the initial setup and first-year tax filing are coordinated separately. PNPC provides a written scope and fee letter before any work begins — no work is initiated without a confirmed fee agreement.
In practice: The third-party US formation costs are genuinely low. The professional fee — for FEMA ODI compliance, strategic advisory, cross-border structure design, and DTAA analysis — is where the real value lies. Getting the structure wrong can cost more to correct than it would have cost to set up correctly. We provide a detailed written scope before engagement — ask us for it.
Where this sits in the wider engagement
US Company Formation for Indian Founders rarely arrives on its own. The statutory basis and the current requirements are set out on the US Company Formation for Indian Founders service page, and the related services are grouped under Business Setup.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On US Company Formation for Indian Founders we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.