Consulting for US company from India (non-USC/GC)

srig · Post by **srig** » Sun Oct 14, 2007 6:50 pm

Hi,

I am R2I'ing in the next couple of months. My US employer is willing to keep me as a consultant after my return to India. I am on H1B and hence, will not have any US status once I move.

I am looking for guidance on how I can setup a company in India and consult for this US company. Any ideas or experiences are appreciated?

thanks
-srig

sftrade · Post by **sftrade** » Sun Oct 14, 2007 8:30 pm

Best thing is to incorporate a company in India and use that company to bill the client. This can be a good step for you to becoming a entreprenuer. Make sure you contact a good CA and if you need one in Pune, I can refer you to someone who did something similar recently.
Congrats and all the best

sohu · Post by **sohu** » Mon Oct 15, 2007 7:34 am

sftrade;51033Best thing is to incorporate a company in India and use that company to bill the client.

Can this be a sole proprietorship in India, or does this have to be a incorporated indian company?

I'm in a similar boat and trying to figure out if incorporation has any advantages over sole proprietorship.

chentam · Post by **chentam** » Mon Oct 15, 2007 3:20 pm

I also consult for a US company from India and I am a US citizen. I setup a Pvt Ltd company in Chennai as I can write-off all my expenses that I incur (phone, club, car, petrol, driver, etc). I did not explore the sole proprietorship option.

My friend's company in the US bills my customer in the US and then I bill my friend's company. He sends out a certified check once every 3 months drawn in favor of my India company. I don't have to pay US taxes as my income in India is less than $80,000. However, my wife and my friend's sister who are Indian citizens are the two shareholders of the company. My wife and I are directors of the company and we both avail salary, write-off expenses, etc. If you need more info, please let me know. I am currently in the US but will be in India this Sunday.

moreqa · Post by **moreqa** » Mon Oct 15, 2007 7:48 pm

Hi mperiasamy
How does your US tax work out for you under this setup?
How does it affect your US friend's taxes?
Why does your friend mail you the draft instead of depositing in your US bank account?

chentam · Post by **chentam** » Tue Oct 16, 2007 5:36 am

My friend's company and my company are different entities. I get paid by the Indian entity as I am an "employee". My personal taxes in the US are OK as long as my earnings are within $80K in India. I don't owe any taxes in the US for my personal income as I work for an "Indian" company in India.

I don't think my friend is affected as he is paying his "vendor" in India, he has not mentioned to me that it is an issue for his company in the US.

He sends me a draft drawn in favor of the Indian entity and I deposit the draft (dollar gets converted to rupees). I then take "salary" from the Indian company.

sohu · Post by **sohu** » Tue Oct 16, 2007 7:14 am

Thats a good setup and can certainly work. You can even remove your friends company from the picture if the US end-client is willing to pay directly to your Indian company. But they are probably not willing to get in to that sort of payment to overseas companies and hence you may have your friends company as intermediary.

What I am interested in knowing is whether the same can be done if I have a sole proprietorship company in India (rather than Pvt. Ltd. company in India). Starting and maintaining a pvt. ltd. company in India is a pain.

USReturnee · Post by **USReturnee** » Wed Oct 17, 2007 5:20 am

mperiasamy

I have sent you a PM. Appreciate your reply.

sohu · Post by **sohu** » Wed Oct 17, 2007 8:34 am

sohu;51334What I am interested in knowing is whether the same can be done if I have a sole proprietorship company in India (rather than Pvt. Ltd. company in India). Starting and maintaining a pvt. ltd. company in India is a pain.

UPDATE: Based on my discussion with a Indian CS (Company Secretary, who can register companies) even a sole proprietorship can work in this scenario. It does not have to be a pvt. ltd. company.

ManMachine · Post by **ManMachine** » Sat Oct 27, 2007 10:32 am

Guys, I have a question in a similar scenario with a twist.

US client pays the Indian private limited company. The Indian company has an NRI USC in US at the client location. How can the Indian company pay the USC guy in a tax efficient manner? The salary will be nearly $100k/annum and can be split into US & Indian components.