Bookkeeping for a US company run from India

Why it matters more for foreign owners

• Form 5472 requires every transaction with you or your Indian company to be reported — which you can only do if it was recorded. See Form 5472.
• Delaware franchise tax is lowest when you can show gross assets from a proper balance sheet. See franchise tax.
• India-side reporting — the ODI Annual Performance Report, consolidation and transfer pricing all rely on the US company’s numbers.
• Investors expect monthly figures and a clean history in due diligence.

Cash or accrual?

For tax: C-Corps generally can’t use the overall cash method unless they meet the small-business gross receipts test — for tax years beginning in 2026, average annual gross receipts of $32 million or less over the prior three years. Most early-stage startups qualify.

For management and investors: keep accrual books anyway — deferred revenue for annual SaaS plans, accrued expenses and prepaid costs show the real picture, and it’s what investors, auditors and your Indian consolidation need. Your tax preparer can adjust to the tax method at year-end.

The setup

1. Accounting software in USD — widely used options such as QuickBooks Online or Xero — connected to the US bank account and payment processor.
2. A chart of accounts designed for both reports: US GAAP-style statements for the US and investors, and mapping to Indian group reporting.
3. Separate accounts for intercompany balances with the Indian company, and for each founder’s capital and reimbursements.
4. A bill-pay and receipt process — invoices and receipts attached to every transaction.
5. A named owner — an in-house finance person or a firm — with a fixed monthly close date.

Money between India and the US

• Founder capital sent from India is equity (or a loan, if documented as one) — never revenue.
• Founder-paid expenses (a card used for US software, formation fees) should be recorded as contributions or reimbursable amounts, with receipts.
• Intercompany services between the US and Indian companies should be invoiced under a written agreement at arm’s-length prices — see transfer pricing.
• Reconcile both sides monthly — the US company’s payable must equal the Indian company’s receivable, or consolidation will fail.

Monthly close checklist

1. Reconcile bank, card and payment-processor accounts.
2. Record revenue — and deferred revenue for annual or upfront plans.
3. Accrue unpaid expenses and contractor invoices; amortise prepaid costs.
4. Book payroll and payroll taxes if you have US employees — see first US employee.
5. Reconcile intercompany balances with the Indian company.
6. Review the P&L and balance sheet; produce a short investor or board update.

Records to keep

• Formation documents, EIN confirmation, stock ledger and board consents.
• Bank statements, invoices, receipts and contracts — IRS records generally need to be kept for at least as long as the return can be examined (commonly three years, longer in some cases).
• Evidence of every capital contribution and distribution — these feed Form 5472 and the Indian ODI filings.
• Year-end: trial balance, balance sheet (Schedule L), and 1099/1042 support.

Durgesh is a Xero Certified Advisor and runs month-end close and investor reporting as part of Virtual CFO services. All the filing dates are in the US compliance calendar.

Frequently asked questions

Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.