Bookkeeping for a US Company Run from Abroad

Bookkeeping Last reviewed 2 September 2026 · 7 min read

Running a US company from India adds three problems to ordinary bookkeeping: two currencies, two sets of records that have to agree, and a set of transactions between you and your own company that the IRS wants reported in detail.

None of it is difficult month by month. All of it is painful if left to the end of the year.

What the IRS expects you to have

The requirement is stated broadly: keep records sufficient to support the income, deductions and credits shown on your return. In practice that means being able to produce, for any figure on the return, the underlying evidence:

• bank and card statements for every account the business uses;

• invoices issued and invoices received;

• receipts for expenses claimed;

• contracts, and records of who was paid for what;

• records of money moving between you and the company.

The burden of proof sits with the taxpayer. A deduction you cannot evidence is a deduction you may lose, and the question is asked long after the receipt would have been easy to find.

Keep the company's money separate

This is the most important habit in this guide, and the one most often broken by small foreign-owned companies.

Run the US company's transactions through the US company's own bank account. Do not pay company expenses from your personal Indian account because it was convenient, and do not use the company card for personal purchases intending to sort it out later.

Two reasons, and the second is the serious one:

• Reconstruction is expensive. Untangling mixed personal and business transactions after the fact costs more in professional fees than doing it properly would have cost in effort.

• It undermines the entity itself. The limited liability an LLC or corporation provides depends on it being genuinely separate from you. Treating its bank account as your own is the central fact in arguments that the separation is not real.

Owner transactions need their own trail

If you own a US LLC from India, money moving between you and the company is not incidental bookkeeping detail — it is reportable.

A foreign-owned single-member LLC must file Form 5472 reporting transactions between the LLC and its foreign owner, and capital contributed and money distributed both count. That filing is required whether or not any tax is due, and the penalty for missing it is substantial. Our LLC guide covers it in full.

The bookkeeping consequence is simple: every transfer in either direction needs its date, its amount, and what it was. "Transfer from owner" with no further detail is not enough when the form has to be prepared.

Two currencies

US federal returns are prepared in US dollars. If the business transacts in rupees at any point — paying an Indian contractor, buying equipment locally, receiving payment in INR — those amounts must be converted.

What matters is being consistent and being able to show your method:

• Record the original currency and amount as well as the converted figure. Keeping only the conversion destroys the audit trail.

• Use a defensible rate — generally the rate at the transaction date — and apply the same approach throughout the year.

• Keep a record of the rate source. "This is where the number came from" is a much better answer than "that seemed right at the time".

Where money actually moves between currencies, the difference between the rate at invoice and the rate at settlement is a real gain or loss and belongs in the books, not rounded away.

Cash or accrual

Cash basis records income when money arrives and expenses when they are paid. Accrual records them when earned or incurred, regardless of payment.

Cash is simpler and is what most small service businesses choose. Accrual gives a truer picture where you invoice on terms and wait to be paid, and some businesses are required to use it. The method is chosen when you first file, and changing later is a formal process rather than a decision — so it is worth a moment's thought at the start.

How long to keep it

The general expectation is that records supporting a return are kept for at least three years from filing, and there are circumstances that extend that considerably — substantially understated income extends it, and an unfiled return has no time limit running in your favour at all.

Records relating to assets should be kept for as long as you hold the asset and then some, because you will need the original cost when you eventually sell it. Employment records have their own longer retention expectations.

For a business run remotely, keep everything digitally and keep it somewhere that is not one laptop in one flat. Losing the records does not reduce the obligation to produce them.

A workable monthly rhythm

1. Reconcile every account against its statement. This is what catches missing entries, duplicates and unauthorised charges — while you can still remember what they were.

2. Categorise everything, leaving nothing in a suspense or "ask my accountant" bucket to accumulate.

3. File the evidence for anything unusual, at the time, attached to the transaction.

4. Record owner transfers with an explanation, in both directions.

5. Review the numbers. Books you never look at are a compliance chore. Books you read monthly are how you find out that a customer has quietly stopped paying.

Note: This guide is general information about record keeping for US tax purposes, not advice on your circumstances. Retention periods and accounting method rules have exceptions. Please confirm what applies to your business.