Questions founders ask us

Automatic changes are filed with a timely return for the year of change, with a copy to the IRS. Non-automatic changes have to be filed during the year of change itself, which is the tighter constraint.

Missing the window usually means waiting a year. More on Form 3115.

Only if you need more time. Form 7004 is optional, and filing it gives most business returns an automatic extension of up to six months.

There is no downside to filing one as a precaution, and no explanation is required. It extends the filing date, not the payment date.

Work performed physically in the US is US-source income, even for a short visit, which changes both the withholding analysis and potentially the contractor's own filing position.

Track where work is performed rather than where the person usually lives. A week of US-based work is enough to matter.

The same federal return every US C-Corp files. There is no Delaware-specific version of Form 1120.

What Delaware adds is franchise tax and an annual report, which are state obligations separate from the federal return. Companies often conflate the two and miss one of them.

Every domestic C-Corp, every year, including companies with no revenue and no activity. Some other entities elect corporate treatment and file it too.

The zero-revenue case is the one founders get wrong. Our Form 1120 page covers who files and what the return needs.

It is necessary but not sufficient. Banks also want formation documents, proof of address, identification for the beneficial owners, and sometimes a US presence.

Requirements vary by bank, and policies for foreign-owned companies differ widely. The EIN is the first step rather than the whole answer.

Yes. There is no citizenship or residency requirement for LLC ownership.

The reporting is what changes. A foreign-owned single-member LLC files Form 5472 with a pro forma 1120 even with minimal activity, because capital contributions from the owner are themselves reportable transactions.

Connect your payroll provider so each run posts to your books with gross wages, employer taxes, withholding, and benefits split into their own accounts rather than landing as one net figure.

The split is what lets you reconcile against payroll filings and against the single debit that hits your bank.

If you have nexus in a state, yes. Employees, an office, inventory, or enough sales volume each create a filing obligation there.

Remote hiring is the usual trigger. One person in another state can create payroll registration and income tax filings. Our multi-state filing guide covers the exposure.

Because that is the entity that employs your Indian team, holds Indian contracts, and pays Indian payroll taxes. The US parent cannot do those things directly.

It also gives you a clean transfer pricing arrangement between the two entities. More on holding structures.

They are categorised separately from employee payroll, even when both run through the same provider.

The separation matters at year end, because contractor payments drive 1099 filings and wages drive W-2s. Mixed into one expense line, that becomes a January untangling job. More on expense categories.

FEMA rules restrict Indian residents from directly holding control-level stock in a foreign company that will itself have a subsidiary. Holding through a personal Indian LLP or registered partnership satisfies the requirement.

Each owner has their own vehicle, containing only them and family members. More on FEMA and residency.

US-source dividends to a foreign shareholder are generally subject to withholding at the statutory rate, reduced where a tax treaty applies and a valid W-8 claims it.

The company withholds and remits, then reports on Form 1042-S. The obligation sits with the payer, not the shareholder.

US TopCo: Forming each LLP and opening its bank account takes 2–3 weeks, and the ODI process adds about 2 more, depending on your bank. The US parent then takes just minutes to file, and setting up the wholly owned Indian subsidiary (a private limited company) takes about another month.

India TopCo: Setting up an Indian Private Limited company takes a few weeks. The US subsidiary takes just a few minutes, and wiring the ODI payment from the Indian parent to the US subsidiary takes another week or two.

Enter the company's details, the effective date of the election, each shareholder's name, ownership and consent signature, then submit by fax or mail. It is not e-filed with the return.

The consent signatures are where filings get rejected. Our Form 2553 guide covers each part.

30 days from grant, and no, it cannot be extended. There is no late filing procedure and no reasonable cause relief.

File by certified mail and keep the receipt. The IRS does not acknowledge these elections, so your proof of posting is the only evidence you will have.

Section 174 governs how research and experimental costs are treated. Amortising them rather than deducting them in the year incurred can produce taxable income at a company that is burning cash.

Engineering salaries often fall in scope, which is why software companies feel it most. The rules have moved recently, so confirm the treatment for your tax year.

Interest and penalties accrue, the company loses good standing, and after prolonged non-payment Delaware can void the charter.

A voided entity cannot get a certificate of good standing, which blocks financings and bank account changes. Reinstatement means paying everything owed plus fees. More on franchise tax.

Deadlines depend on when the company was formed and whether its information has changed since the last report. Newly formed companies have a shorter window than existing ones.

Because the timelines have been revised more than once, check the current deadline for your situation. Our BOI guide covers the filing.

You generally still file, reporting zero. Registration creates a filing obligation that continues until you formally deregister.

Zero returns left unfiled generate notices and penalties even with no tax owed. If you no longer have nexus, close the registration rather than letting it sit.

Yes, where you are doing business. Delaware is the state of incorporation; your home state is where the activity happens, and it wants its own registration.

Skipping it can mean penalties and, in some states, losing the right to bring a lawsuit until you register.

Foreign bank accounts, securities accounts, and certain other financial accounts, including ones you have signature authority over but do not own.

The signature authority part catches owners who signed on a subsidiary's account. Our FBAR page covers what counts.

File Form 8822-B. Putting the new address on your next return also updates their records, but that can leave months where notices go to the old address.

Updating your registered agent or state filing does not update the IRS. These are separate records, and penalty letters go to whatever the IRS has.

Form 966 tells the IRS your corporation has adopted a plan to dissolve. File it within 30 days of the date your board or members approved the dissolution, and attach a copy of the resolution or plan. It applies to corporations, including LLCs taxed as C-corps or S-corps, but not to partnerships or sole proprietorships. It is free to file, and it is one of the steps founders most often miss.