Launching a business in the United States is an exciting opportunity for many Non-Resident Indians (NRIs). Whether you’re expanding an existing venture or starting fresh, one of your first—and most crucial—decisions is choosing the right business structure.

Your choice between an LLC (Limited Liability Company), C Corporation (C-Corp), or S Corporation (S-Corp) will directly affect your taxation, ownership flexibility, and compliance requirements.

However, since NRIs are classified as non-resident aliens under U.S. law, not all business types are available to them. Understanding what’s allowed—and what’s most beneficial—can save you from costly restructuring later.

Understanding U.S. Business Entity Types

Let’s break down the three most common business structures in the U.S. and how each one impacts foreign owners, especially NRIs.

1. C Corporation (C-Corp)

A C-Corp is a standalone legal entity separate from its shareholders. It offers strong liability protection and has no restriction on foreign ownership, making it a preferred choice for international entrepreneurs and NRIs.

Key Advantages:

• Allows unlimited shareholders, including foreign individuals and entities.
• Can issue multiple classes of shares, useful for raising capital or onboarding investors.
• Ideal for scaling or going public in the future.

Taxation:
The company pays 21% federal corporate tax, and dividends distributed to shareholders are taxed again individually—this is known as double taxation.

Despite the dual taxation, C-Corps are often favored by growing businesses due to their structure, investor appeal, and visa eligibility (E-2, L-1, or EB-5).

2. S Corporation (S-Corp)

An S-Corp is designed for small, domestic businesses. It avoids corporate taxation by passing income directly to shareholders’ personal tax returns.

Key Advantages:

• Pass-through taxation, meaning no corporate-level tax.
• Potential savings on self-employment taxes.

Restriction for NRIs:
Only U.S. citizens and permanent residents can be shareholders in an S-Corp.
This means NRIs cannot directly own shares in an S-Corporation.

While certain indirect ownership routes (like Electing Small Business Trusts) exist, they add complexity and are rarely practical for NRI business owners.

3. Limited Liability Company (LLC)

The LLC combines the flexibility of a partnership with the protection of a corporation. It’s the most common and NRI-friendly business structure in the U.S.

Key Advantages:

• No restriction on foreign ownership.
• Simple to set up and maintain with fewer compliance formalities.
• Offers pass-through taxation by default, avoiding double taxation.
• Members can choose to be taxed as a C-Corp if beneficial.

For most small and medium NRI-owned ventures, the LLC provides an ideal balance of tax simplicity, asset protection, and management freedom.

Comparing the Three: What Works Best for NRIs

LLC vs C-Corp: Which One Should You Pick as an NRI?

When S-Corp is off the table, the choice comes down to LLC vs C-Corp. Here’s how to decide:

Choose LLC if you:

• Want a simpler and cost-effective setup.
• Prefer pass-through taxation to avoid double tax.
• Run a consulting, freelancing, or small trading business.
• Want flexibility in management and ownership.

Choose C-Corp if you:

• Plan to raise venture capital or institutional funding.
• Expect multiple investors or classes of shares.
• Aim to reinvest profits rather than withdraw them.
• Seek long-term credibility and structured governance.

Taxation Insights for NRIs

C-Corp: Pays 21% federal tax; dividends taxed again when distributed. Beneficial for reinvestment or global expansion.

LLC: Income “passes through” to members and is taxed once. Single-member LLCs are disregarded entities for tax purposes; multi-member LLCs file partnership returns.

NRIs must also consider foreign income reporting, FATCA, FBAR, and DTAA (Double Taxation Avoidance Agreement) implications when remitting or repatriating profits to India.

Compliance and Annual Filings

LLCs: Must file annual reports and maintain state registration; minimal paperwork.

C-Corps: Require board meetings, bylaws, and corporate tax returns.

Tax Filings for NRIs:

• Form 5472 (foreign-owned LLCs)
• Form 1120 (C-Corps)
• Form 1065 (partnerships)

Professional guidance is crucial to avoid penalties and ensure alignment between U.S. and Indian tax obligations.

NRI Business Setup and Tax Filing Assistance

At Dinesh Aarjav & Associates, we specialize in helping NRIs establish and manage U.S. entities—whether it’s an LLC or a C-Corp—while ensuring complete tax compliance on both sides.

Our end-to-end support includes:

• U.S. LLC and C-Corp formation assistance.
• EIN and ITIN registration for tax filings.
• Annual U.S. tax return preparation and filing.
• Guidance on DTAA benefits, repatriation of profits, and cross-border taxation.

With decades of experience in international taxation and NRI consulting, our team of expert NRI consultants ensures your business remains compliant, efficient, and strategically structured for growth.

Final Thoughts

For NRIs venturing into the U.S. market:

• S-Corp isn’t an option.
• LLC offers simplicity, flexibility, and single-layer taxation.
• C-Corp offers structure, investor readiness, and growth potential.

Your best choice depends on your business model, tax goals, and expansion plans.
Engaging professional advisors who understand both U.S. and Indian tax laws is key to setting up your entity correctly and filing the right forms each year.

FAQs – NRI Business Structures in the U.S.

Q1. Can an NRI open an LLC in the U.S.?
Yes. NRIs can form and fully own LLCs with no citizenship restriction.

Q2. Why can’t NRIs own S-Corps?
U.S. law allows only citizens and permanent residents to be S-Corp shareholders.

Q3. Which is better for taxation—LLC or C-Corp?
LLCs are simpler with single-layer taxation. C-Corps are better for reinvestment and long-term expansion.

Q4. Do NRIs have to file U.S. taxes for their LLC?
Yes. All foreign-owned LLCs must file annual returns, even with zero income, to remain compliant.

Q5. Can profits from the U.S. business be repatriated to India?
Yes, under proper FEMA and DTAA compliance. We assist in documentation and remittance planning.

Looking to Start or File for Your U.S. Business as an NRI?

Let Dinesh Aarjav & Associates handle your U.S. incorporation, compliance, NRI taxation, and annual tax filings
We ensure every step—from registration to profit repatriation—is compliant with both IRS and Indian tax laws.

Contact us today to begin your journey toward hassle-free U.S. business incorporation and cross-border tax management.