US Incorporation

You've built your MVP, landed your first customers, and now serious US venture capitalists are asking: 'Where's your US entity?' Most founders try to operate from India, reinventing the entity structure later — at enormous cost and tax risk. A US incorporation done right from day one is the single largest arbitrage between founders who are VC-ready and those scrambling six months in.

We guide Indian founders through the exact entity type (Delaware C-Corp vs LLC), the 30-day 83(b) election window, FEMA compliance, and everything needed to open a US bank account and hire your first team — all inside three to five weeks, with zero back-and-forth on paperwork.

At a Glance

• Who needs it: Indian-resident founders, NRI entrepreneurs, and tech teams planning to raise US venture capital, operate in US markets, or hire US employees.
• Governing law: Delaware General Corporation Law (DGCL) for entity formation; US Internal Revenue Code Section 83(b) for founder equity taxation; Foreign Exchange Management Act (FEMA) for Indian-side compliance.
• Turnaround: 3–5 weeks, end-to-end: Delaware filings → EIN issuance → 83(b) election → foreign qualification → FEMA compliance.
• Key thresholds: Founder vesting typically 4 years with 1-year cliff; ESOP pool usually 10–20% of cap table; FEMA ODI reporting mandatory at time of investment for Indian residents.
• Entity type decision: C-Corp (venture-ready, QSBS eligible, institutional investor default) vs LLC (pass-through taxation, simpler ops, not VC-fundable).
• Foreign qualification: Mandatory in all States where you have physical presence, employees, or material operations — California, Texas, New York minimum for most tech startups.

What's New for FY 2026-27

Recent regulatory and procedural updates affect US incorporation timelines and tax compliance for Indian founders:

• FEMA ODI / OPI Streamlining: RBI clarified ODI / OPI reporting requirements — Form FC-ODI-Part-I filing is now digitally integrated with most Authorised Dealer Banks, reducing sign-off time to 5–10 days.
• IRS Form 5471 (Controlled Foreign Corporations): For Indian residents holding >50% of a US corporation, Form 5471 reporting to IRS is now mandatory e-filing, and CRS (Common Reporting Standard) data-sharing with India means non-compliance surfaces immediately.
• State Franchise Tax Nexus Clarity: California, Texas, and New York clarified nexus triggers in 2026 — remote employees in those States alone trigger franchise tax obligation, not just physical office.
• Delaware 83(b) Electronic Filing: IRS launched e-filing for 83(b) elections in Q1 2026; we now file digitally within 24 hours of stock issuance, eliminating courier delays.
• Transfer Pricing and Profit Shifting: India's updated Transfer Pricing rules (as of April 2026) require contemporaneous documentation if a US parent will charge the Indian subsidiary for services or IP licensing — this must be architected from day one.

Why Indian Founders Must Incorporate in the US

• Institutional investors will not lead or co-invest without it: Tier-1 US VC funds (Sequoia, Andreessen Horowitz, Y Combinator, etc.) require a Delaware C-Corp as a condition of investment. Operating from India signals you are not venture-track-ready. This alone costs you years of opportunity cost and founder dilution.
• Section 1202 QSBS tax exclusion: A qualifying Delaware C-Corp's stock can exclude up to USD 10 million of capital gains for each founder when held >5 years — a benefit not available to LLC members or Indian company shareholders. At any material exit, this is the difference between USD 2 million in tax or USD 500,000.
• Founder 83(b) election avoids seven-figure US tax bills: Founder shares with 4-year vesting, if not 83(b)-elected, trigger ordinary income tax on the appreciation at each vesting cliff. For any Series A or later company, this balloons to USD 500,000–2,000,000 in unexpected US tax liability. The election must be filed within 30 days — delay costs founders permanently.
• Employee equity and option pools are legally defensible: Only a US corporation can grant options under ESOP (Exercise Stock Option Plan) mechanics recognized by US tax law. Granting foreign options to US employees triggers Section 409A tax penalties; granting options to contractors requires elaborate foreign private issuer rules.
• FEMA / RBI compliance must happen on day one, not when you raise funds: An Indian resident holding shares of a foreign company must file Form FC-ODI within a prescribed timeline. Delaying this triggers back-filing penalties, blocked accounts, and RBI show-cause notices — issues that surface during Series A due diligence and sink the deal.

How It Actually Works

Our process takes you from concept to operational in 3–5 weeks. Here's the sequence:

Step 1: Strategy Workshop & Cap Table Design (1–2 Days)

Before we file anything, we sit with you (and any co-founders) to decide: C-Corp or LLC? Delaware or another State? Who holds equity, in what split? What's the ESOP pool size? If you're flipping an Indian operating company into a US parent, we sketch the structure — share-swap or greenfield subsidiary. This conversation prevents costly pivots later. We document the cap table and ownership intent before touching any legal documents.

Step 2: Delaware Articles & Bylaws (3–5 Days)

We file the Certificate of Incorporation (Articles) with the Delaware Secretary of State. This grants your company legal life, usually within 24 hours of filing. Simultaneously, we draft and adopt bylaws, which set the board meeting cadence, stock-issuance mechanics, and governance rules. We appoint a registered agent in Delaware (required by law), who receives official service-of-process documents. All three pieces are closed before we move forward.

Step 3: EIN & Federal Tax Identification (2–3 Days)

Once Delaware approves the incorporation, we apply for an Employer Identification Number (EIN) from the US Internal Revenue Service using Form SS-4. The EIN is your company's US tax ID — equivalent to a US PAN. We typically receive it within 24–48 hours. With the EIN in hand, we open a payroll-tax account with the IRS and set up your federal tax reporting spine.

Step 4: Founder Stock Issuance & 83(b) Election (3–5 Days)

We issue founder shares to each shareholder, documenting the vesting schedule (typically 4 years with 1-year cliff). We then prepare IRS Form 83(b), which each founder signs and files with the IRS within 30 days of issuance. This election is critical: it lets founders pay tax on the nominal value at grant (near-zero) rather than on appreciation at each vesting date. Founder vesting and 83(b) filing happen in lockstep; neither works without the other.

Step 5: Founders' Stockholder Agreement & Leaver Clauses (3–5 Days)

We draft a Stockholders' Agreement that documents reverse vesting, leaver clauses (what happens if a founder exits), IP assignment to the company, and non-dilution provisions. This agreement is Series A due-diligence standard and protects both the company and departing founders. We execute it alongside the stock issuance. The agreement also covers tag-along / drag-along rights if future investors join.

Step 6: Foreign Qualification & Operating-State Tax Setup (5–7 Days)

If your team, customers, or office is in California, New York, or Texas, you must register as a foreign corporation in that State, appoint a registered agent there, and file a statement of foreign business purpose. You'll also obtain a State tax ID and register for State franchise tax. We handle all three-State foreign qualifications in parallel. Some States charge annual franchise tax minimums (California: USD 800; Texas: none; New York: graduated).

Step 7: FEMA ODI Compliance via Authorised Dealer Bank (5–10 Days)

If you (the founder) are Indian-resident, holding equity in the US corporation triggers ODI (Overseas Direct Investment) compliance under FEMA. We coordinate with your bank's Authorised Dealer wing to file Form FC-ODI-Part-I, which reports the transaction to the RBI. We also obtain a valuation report (usually required by the bank) and coordinate any share-swap accounting if you're flipping an Indian company. This happens in parallel with Step 6 and closes within 5–10 days.

A Real Example: Three Founders, Series A Readiness

Let's walk through a concrete scenario to show how the timeline and coordination work:

• The Setup: Priya, Arun, and Vikas are India-based, built a SaaS MVP, and just landed USD 50,000 in customer MRR from US companies. A US VC (Index Ventures) signals interest in a USD 5M Series A in Q4 2026. All three are resident in India. No prior Indian company; pure greenfield.
• Days 1–2: Strategy Workshop We decide: Delaware C-Corp, Priya 40%, Arun 35%, Vikas 25%. ESOP pool sized at 15%. They will stay India-based; one contractor works part-time from San Francisco. No existing Indian entity to flip.
• Days 3–5: Delaware Incorporation & EIN Articles filed with Delaware Secretary of State. Certificate arrives same-day. EIN Form SS-4 filed; EIN received within 48 hours. Registered agents appointed in Delaware and California. Total time: 3 days.
• Days 6–10: Founder Stock & 83(b) Founder shares issued (40/35/25 split). Each founder completes IRS Form 83(b), signed and filed with the IRS. The form is timestamped within the 30-day window. Simultaneously, Founders' Agreement is executed, documenting 4-year / 1-year cliff, reverse-vesting, and IP assignment.
• Days 11–15: Foreign Qualification & State Taxes Foreign qualification filed in California (where the SF contractor is). California Franchise Tax Account opened; annual USD 800 minimum established.
• Days 16–20: FEMA ODI Compliance Each of Priya, Arun, and Vikas files Form FC-ODI-Part-I through HDFC Bank's Authorised Dealer wing. Valuation report prepared (cost: ~USD 500–1000). RBI approval turnaround: typically 5–10 days, but filed immediately. All three ODIs complete by day 20.
• Days 21–25: Banking & Payroll Setup Priya opens a Mercury business account with the EIN, US address and proof of incorporation. Account live within 2 days. External accountant (Guidepoint, etc.) onboards. Payroll platform (Rippling, ADP) configured for the SF contractor.
• Day 26: Operational Entity is now VC-ready. All founder tax elections are locked in. FEMA is clean. Series A due diligence will find zero structural issues. Cost to this point: USD 6,000–8,000. Without this sequence, the team would spend months retrofitting, face an 83(b)-election miss, and pay USD 500K+ in unexpected US tax at Series A close.

Annual Compliance After Incorporation

Once your incorporation closes, you'll have a few annual (and ongoing) compliance obligations:

• State franchise tax and annual reports: Each State where you foreign-qualified (California USD 800/yr minimum, New York graduated, Texas none) requires annual filing and tax payment. We remind you of deadlines; you or your accountant handle the filing.
• Form 5471 (Controlled Foreign Corporation reporting): If you're an Indian resident holding >50% of the US corporation, you must file Form 5471 with the IRS (due with your personal US tax return, typically April 15). This reports the corporation's financials to the IRS and is checked against India's CRS data.
• FEMA Annual Performance Report (APR): If you hold ODI-flagged shares, you must file an Annual Performance Report via your Authorised Dealer Bank (typically due by March 31 in India). The APR reports the company's financials and any shareholding changes.
• Delaware annual report and tax: Delaware requires an annual report (due by March 1) and annual tax (minimum USD 175 per year, higher if capital exceeds certain thresholds).

Where US Incorporation Goes Wrong — And How We Prevent It

• 83(b) election filed late or not at all: The single most common mistake. Founders issue themselves stock, assume they'll file the IRS form later, and miss the 30-day window. Once missed, the right is lost forever, and the founder is now exposed to ordinary-income tax on vesting appreciation — a USD 1–3M surprise at exit. We file this within 24 hours of stock issuance, always.
• Wrong entity type chosen (LLC instead of C-Corp) for a venture-track company: Founders choose LLC to save USD 200 on annual filings, then spend two years trying to raise institutional capital. When they finally pivot to a C-Corp, they owe taxes on the flip, the old option pool is gone, and Series A investors require a new cap table. Choosing wrong costs USD 50K+ and 6–12 weeks to fix.
• Delaying FEMA ODI filing until Series A diligence: Indian-resident founders often skip FEMA ODI because it feels like a 'nice-to-have.' Due diligence surfaces it immediately. RBI show-cause notices, blocked accounts, and repatriation denials follow. We file Form FC-ODI within 20 days, always, before it becomes a problem.
• Operating in California (or other States) without foreign qualification: Founders run employees or operations in California without foreign-qualifying the Delaware corporation. They operate outside the law, void contracts, and expose officers to personal liability. When sued or audited, the judge dismisses the company and looks to the founders personally.
• Founder equity not documented in a Stockholders' Agreement: Some founders skip the formal agreement, thinking they'll 'keep it simple.' When one founder leaves or disputes arise, there's no legal binding force, and the company loses ownership leverage. We draft a standard Stockholders' Agreement (4–5 pages) that closes leaver clauses, IP assignment, and reverse vesting.

What You Receive at the End

• Delaware Certificate of Incorporation (original, filed and stamped)
• Bylaws and Resolutions (board adoption, stock issuance, ESOP authorization)
• Federal EIN Letter from the IRS
• Founder Stock Certificates (for each founder, with vesting schedule)
• IRS Form 83(b) Elections (executed and filed copies for each founder)
• Founders' Stockholder Agreement (fully executed, with leaver clauses and IP assignment)
• State Foreign Qualification Certificates (for California / New York / Texas, as applicable)
• State Tax ID Numbers and Registered Agent Appointments (all operating States)
• FEMA ODI Filing Confirmations (Form FC-ODI-Part-I and valuation reports)
• Capitalization Table (clean, timestamped, investor-ready)
• Annual Compliance Calendar (State franchise-tax deadlines, Form 5471 reminders, FEMA APR timelines)
• Bank Account Authorization Package (documents needed for Mercury / Brex / Chase account opening)

How to Get Started

Email us (or call) with the following: your name, co-founder names (if any), intended State of incorporation (Delaware is our default), primary operating State (California / Texas / New York), and a rough description of your business. We'll send a 15-minute intake call where we confirm the entity type (C-Corp vs LLC), check registered agent pricing, and timeline your incorporation.

We'll then issue a proposal with the fixed price, scope, and 3–5-week turnaround. Upon engagement, we'll send a secure document collection form where you upload founder passports, PAN, proof of residence, and cap-table intent. The clock starts once we receive complete documents. We'll keep you updated weekly and handle all interactions with Delaware, the IRS, Authorised Dealer Banks, and State authorities. You focus on building the product; we handle the legal spine.