International subsidiary

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Gagan (Querist)
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04 March 2024 I wish to form a 100% owned subsidiary for our company in the US. I have already applied for the EIN number.
I wish to know what all steps I need to take in India, and how I can proceed.
I know that I need to get a UIN, ODI part 1. Anything else needs to be done to maintain proper systems and documentation. Can I get an expert to help me out in my journey?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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09 July 2024 Forming a 100% owned subsidiary in the US involves several steps both in India and the US. Here’s a comprehensive outline of the steps you need to take and considerations you should keep in mind:

### Steps to Form a 100% Owned Subsidiary in the US:

#### 1. **Business Plan and Strategy:**
- Define your business plan and strategy for the subsidiary in the US, including market analysis, financial projections, and operational details.

#### 2. **Legal Structure:**
- Decide on the legal structure of the subsidiary (LLC, Corporation, etc.) based on your business needs and advice from legal and tax professionals.

#### 3. **Registration in the US:**
- **Choose a State:** Select the state where you want to incorporate your subsidiary.
- **Name Reservation:** Check and reserve a unique name for your subsidiary.
- **Articles of Incorporation/Formation:** Prepare and file articles of incorporation or formation with the Secretary of State in the chosen state.

#### 4. **Obtain EIN (Employer Identification Number):**
- Apply for an EIN from the IRS (already in progress).

#### 5. **Bank Account and Financials:**
- Open a bank account for the subsidiary in the US.
- Establish financial reporting and accounting systems compliant with US GAAP or IFRS, as applicable.

#### 6. **Legal and Regulatory Compliance:**
- Obtain necessary licenses and permits to operate legally in the US.
- Comply with federal, state, and local tax requirements.

#### 7. **Corporate Governance:**
- Appoint directors and officers for the subsidiary.
- Establish governance policies and procedures consistent with corporate best practices.

#### 8. **Transfer Pricing and Documentation:**
- Establish transfer pricing policies and documentation to comply with international tax regulations.
- Ensure arm’s length pricing for transactions between the parent company in India and the subsidiary in the US.

#### 9. **HR and Employment Matters:**
- Comply with US employment laws for hiring employees.
- Establish HR policies and benefits for employees of the subsidiary.

#### 10. **Intellectual Property (IP) Protection:**
- Secure and protect intellectual property rights in the US, if applicable.

#### 11. **Local Compliance in India:**
- Inform relevant authorities in India about the formation of the subsidiary and comply with RBI (Reserve Bank of India) regulations for outward investments.

#### 12. **UIN and ODI Part 1:**
- Obtain a Unique Identification Number (UIN) from the RBI for reporting foreign investments.
- Complete Online Dissemination of Information (ODI) Part 1 form for reporting the subsidiary formation.

#### 13. **Tax Planning:**
- Ensure proper tax planning both in India (for repatriation of profits, if applicable) and the US (federal and state taxes).

### Expert Assistance:
- **Legal and Tax Advisors:** Consult with legal and tax advisors who specialize in international business to ensure compliance with regulations in both India and the US.
- **Business Consultants:** Engage business consultants with expertise in setting up subsidiaries abroad to guide you through the process.

By following these steps and seeking expert advice, you can effectively set up and manage your 100% owned subsidiary in the US. Each step involves specific legal, financial, and compliance considerations that are critical for the success and compliance of your subsidiary.

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