A founder had structured everything about his US LLC correctly. The EIN was in place, the entity filings were current, and the accountant handling the US side had signed off on the year. By every measure he had access to, the business was clean. What nobody had asked him about was the Indian bank account the LLC used to receive an early transfer of setup capital before the US account was even open.
That account had sat quietly in the background for two years, holding a modest balance well above five figures at points during the year, never mentioned on any US filing because nobody had framed it as a US filing question in the first place. It was an Indian account, held in India, in Indian rupees. As far as the founder was concerned, it had nothing to do with his American tax obligations.
It had everything to do with them. Understanding FBAR filing requirements means understanding a strange feature of US reporting law: a US entity’s own foreign accounts – including one sitting in India, funding an Indian founder’s own business – can trigger a US filing obligation that has nothing to do with tax owed and everything to do with disclosure.
The Gap: Founders Look for Foreign Accounts in the Wrong Direction
Most guidance on foreign account reporting is written for a US person worried about undisclosed accounts abroad – a US citizen with a savings account back home or an expat with a pension fund. Indian founders read that framing and reasonably conclude it doesn’t apply to them, since they are not US citizens or residents holding secret accounts anywhere.
At Indam Advisors, we have structured 47+ India-to-US setups, and the conversation about FBAR filing requirements almost always starts from the wrong assumption. The question isn’t only whether the founder personally is a US person with foreign accounts. It’s whether the US LLC itself – a domestic entity by definition – has a financial interest in an account located outside the United States. That second question catches almost every founder who has ever moved capital through an Indian account on the LLC’s behalf.
What Is FBAR, and Who Actually Has to File It
FBAR stands for Foreign Bank Account Report, formally filed as FinCEN Form 114. It is a disclosure requirement administered by the Financial Crimes Enforcement Network, a bureau of the US Treasury – not the IRS, and not a tax return. No tax is calculated or owed on the form itself; it exists purely to report the existence and value of foreign financial accounts.
The filing obligation applies to any US person – which includes US citizens, green card holders, resident aliens, and notably, domestic entities such as US-formed LLCs, corporations, partnerships, and trusts – who has a financial interest in, or signature authority over, one or more foreign financial accounts where the combined maximum value exceeded $10,000 at any point during the calendar year. Nonresident aliens are generally not personally subject to the FBAR filing requirements, but a US LLC they own is a domestic entity in its own right, and that entity’s foreign accounts are squarely within scope.
FBAR for Foreign-Owned LLC: Why Your Entity May Have to File Even If You Don’t
This is the distinction that catches Indian founders specifically. An Indian founder who has never set foot in the US and holds no US tax residency is typically not personally subject to the FBAR filing requirements. But the US LLC they formed is a US person by virtue of where it was created, regardless of who owns it. If that LLC has a financial interest in an Indian bank account – even one used briefly to receive setup capital, or one still holding retained earnings – the LLC itself may carry its own FBAR obligation, independent of the founder’s personal status.
The threshold is easy to trip without noticing. It is based on the combined maximum value across all foreign accounts at any single point during the year, not the balance on December 31 and not a per-account figure. An account that briefly held a larger sum before funds were moved to the US still counts at its peak value for the year.
Foreign Account Reporting: What Counts as a Reportable Account
Foreign account reporting, as defined under the FBAR filing requirements, covers a broad range of account types: bank accounts, brokerage and securities accounts, mutual fund accounts, and certain foreign insurance or annuity products with cash value. An Indian savings account, current account, or fixed deposit held in the LLC’s name or under the founder’s signature authority on the entity’s behalf all fall within this definition if the value threshold is met.
Not sure whether your LLC’s Indian banking history has already created a reporting gap? The Indam US Entry Assessment from Indam Advisors is a structured diagnostic that reviews entity, account, and reporting exposure specific to your setup.
How to File FBAR
FBAR is filed electronically through FinCEN’s BSA E-Filing System, separately from any IRS tax return, and at no cost. It requires details on each qualifying account: the institution name, account number, address, and the maximum value reached during the year, converted to US dollars using the Treasury’s year-end exchange rate.
Because it is a Treasury filing rather than an IRS one, it does not get bundled with a US tax return, and filing it does not by itself create any additional tax liability. It is a disclosure obligation, not a tax bill – a distinction worth holding onto given how often the two get treated as the same thing.
FBAR Reporting Deadlines and What Happens If You Miss One
The FBAR deadline is April 15 following the calendar year being reported, with an automatic extension to October 15 that requires no separate request or form. For accounts held during 2025, the FBAR is due April 15, 2026, extending automatically to October 15, 2026.
The penalties scale sharply with intent. Non-willful violations currently carry penalties up to $16,536 per violation, adjusted periodically for inflation. Willful violations are treated far more seriously – penalties can reach the greater of roughly $165,000 or 50 percent of the account balance at the time of the violation. The size of the account rarely matters as much as whether the obligation existed and was ignored.
What This Looks Like in Practice
A founder came to Indam Advisors after using an India-based service provider to handle both the US entity formation and the ongoing compliance calendar. The provider filed the EIN application and the entity’s annual state filings correctly, but never asked about the LLC’s banking history in India, and never flagged that the LLC’s own Indian account could carry a separate federal disclosure requirement in the US.
By the time the gap surfaced, two years of filings under the FBAR filing requirements had been missed for an account that had never held tax-relevant income – it was pure setup capital. The compliance issue was never the money. It was that nobody had asked the right question about where the entity’s accounts actually sat.
A presence in the US is not the same as a position in the US. If you’re unsure whether your entity’s accounts on either side of the border carry unreported obligations, the Indam US Entry Assessment gives you a personalised map of the gap before it becomes a notice.
Frequently Asked Questions
What are the FBAR filing requirements?
Any US person – including US citizens, green card holders, resident aliens, and domestic entities like US LLCs – must file an FBAR if they had a financial interest in, or signature authority over, foreign financial accounts with a combined maximum value exceeding $10,000 at any point during the calendar year.
How do I file FBAR?
FBAR is filed as FinCEN Form 114 through FinCEN’s BSA E-Filing System, separately from any IRS tax return. It requires the account details and highest value reached during the year for each qualifying foreign account, converted to US dollars.
Does FBAR apply to a foreign-owned LLC with an Indian bank account?
It can. A US LLC is a domestic entity regardless of who owns it, and if that LLC has a financial interest in an Indian account exceeding the $10,000 aggregate threshold at any point in the year, the LLC itself may fall under the FBAR filing requirements, separate from the founder’s personal filing status.
What counts as foreign account reporting under FBAR?
Reportable accounts include foreign bank accounts, brokerage and securities accounts, mutual fund accounts, and certain foreign insurance or annuity products with cash value, whenever the combined maximum value across all such accounts crosses the threshold.
What happens if I miss the FBAR deadline?
The FBAR is due April 15 with an automatic extension to October 15. Missing both can trigger penalties – up to roughly $16,500 per non-willful violation, and substantially more for willful violations – regardless of whether any tax was actually owed on the underlying accounts.