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June 13, 2025
US Reporting for Indian Business Owners With US Business Bank Accounts
Introduction
Indian entrepreneurs often open US business bank accounts to access international markets. While this brings growth opportunities, it also triggers certain US compliance and reporting requirements; even if you’re not a US resident. Failing to meet these obligations can result in penalties, audits, or loss of banking privileges. This guide explains what Indian owners need to report, how, and why it matters.
What is US Reporting for Indian Owners?
If you’re an Indian resident holding a US business bank account; either personally or through a US company (LLC, Corporation, or Partnership), you are required to file annual reports with US authorities. These forms disclose ownership, account activity, and foreign control, regardless of whether the entity generated income.
Example: An Indian founder who owns a Delaware LLC must still file Form 5472 and Form 1120 annually; even if there were no transactions.
Why Is Reporting Required?
The US enforces strict compliance under laws like the Bank Secrecy Act (BSA) and FATCA to:
- Monitor foreign ownership in US businesses
- Prevent money laundering and tax evasion
- Ensure tax transparency with non-resident owners
- Track cross-border transactions through US banking systems
Who Needs to File?
You must comply if you are:
- An Indian citizen owning a US-based LLC, Corporation, or Partnership
- A signatory or joint holder of a US business bank account
- An individual receiving US income, investments, or dividends via US accounts
- A shareholder or controller of a US company with 25%+ foreign ownership
Essential US Forms for Indian Owners
| Form | Purpose | Who Files | Due Date |
|---|---|---|---|
| FBAR (FinCEN 114) | Report foreign financial accounts over $10,000 | Individuals with control over US accounts | April 15 (extension available till October 15) |
| FATCA (Form 8938) | Report foreign assets under FATCA law | US taxpayers with specified assets | Filed with personal income tax return |
| Form 5472 | Disclose foreign ownership & transactions in a US Co. | 25%+ foreign-owned US corporations/LLCs | Filed with Form 1120 |
| Form 1120 | US Corporation Income Tax Return | All US corporations (even without income) | April 15 |
| Form 1065 | US Return of Partnership Income | Partnerships with Indian ownership | March 15 |
You can verify updated deadlines and thresholds on the IRS official website.
Common Compliance Challenges
- Misinterpreting US rules due to unfamiliar tax terms
- Missing multiple forms with different deadlines
- Incorrect assumptions like “no income = no filing”
- Mismatch between Indian and US tax timelines
- Confusion in choosing the correct entity type and form
Step-by-Step Reporting Process
- Evaluate your ownership: Identify your US company structure and account type
- Get an EIN (Employer Identification Number) from the IRS
- Determine your filing obligations based on entity and activity
- Prepare forms (e.g., FBAR, 1120, 5472) using IRS guidelines
- File electronically or via an authorized tax professional
- Retain all proofs of submission for at least 5 years
Consequences of Non-Compliance
Failing to report can result in:
- Penalties up to $10,000 per FBAR and $25,000 per Form 5472
- IRS audits and reputational damage
- Closure or freezing of US bank accounts
- Loss of good standing or EIN deactivation
- Disqualification from future funding or investments
Penalties apply even if your business is inactive or earns zero income.
Benefits of Proper US Reporting
- Stay penalty-free and maintain business continuity
- Establish global credibility and trust with partners
- Simplify audits, investor reviews, and funding rounds
- Ensure access to platforms like Stripe, PayPal, and US banks
Real-Life Example
A Pune-based founder opened a Wyoming LLC in 2023 and linked it to a US bank account via Mercury. Assuming there was no income, he ignored reporting obligations. In 2024, the IRS issued a $25,000 penalty for non-filing of Form 5472 and 1120. A simple filing by a professional could have prevented the issue.
How to Stay Compliant?
Engage a qualified US compliance expert who can help you:
- Track applicable deadlines and forms
- Identify exemptions and filing thresholds
- File reports accurately using IRS systems
- Respond to IRS notices, if any arise
Conclusion
US business bank accounts offer global growth, but they come with serious compliance responsibilities. As an Indian owner, reporting to the IRS is not optional; it’s a legal requirement. Late or missed filings can trigger high penalties, restrict your access to financial services, and create unnecessary legal complications. Avoid the stress. Partner with compliance professionals to stay on top of all your filings and protect your international business presence.
Suggested Read :
Import Export License for LLC in USA
Company Name Reserve in the USA
Tax filing requirement in the USA
Tax advantages of C Corp in the USA
FAQs
1. Do I need to file US forms if my business earns no income?
Yes. US reporting is required even for zero-income or dormant businesses.
2. What’s the FBAR threshold?
You must file if your combined foreign account balance exceeds $10,000 at any time during the year.
3. Is FATCA filing the same as FBAR?
No. FATCA applies to US taxpayers; FBAR applies to foreign account holders with access or control.
4. What happens if I skip Form 5472?
You could face a penalty of $25,000 per year of non-compliance.
5. Can I file US tax forms from India?
Yes, through IRS e-Services or a professional filing agency.
6. What is an EIN and why is it needed?
It’s a US tax identification number required for business filings.
7. Does US reporting affect my Indian taxes?
Not directly, but double taxation agreements and disclosures must align.
8. What if I closed the bank account?
You still need to file forms for the period it was active.
9. Is a sole proprietorship in the US also reportable?
Yes, if linked to a business bank account or earning US income.
10. Who can help me with all these forms?
Ebizfiling offers expert compliance support tailored for Indian founders with US entities.
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About Ebizfiling -
EbizFiling is a concept that emerged with the progressive and intellectual mindset of like-minded people. It aims at delivering the end-to-end corporate legal services 0f incorporation, compliance, advisory, and management consultancy services to clients in India and abroad in all the best possible ways.
To know more about our services and for a free consultation, get in touch with our team on info@ebizfiling.com or call 9643203209.
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