Hiring from India for Your US Company: A Step-by-Step Guide for Indian Entrepreneurs

Hiring from India has become a practical route for many Indian entrepreneurs who have registered companies in the United States. Whether you’re the founder looking to officially employ yourself or want to onboard a few team members from India, the process needs to be handled with legal and financial clarity.

Several Indian professionals launch their US businesses while still residing in India. Naturally, they look to hire either themselves or others in India to work remotely for their US entity. However, doing this legally requires more than just transferring money across borders. It involves understanding employment laws, income tax obligations, and compliance with both Indian and US systems.

A common challenge is that most early-stage US companies set up by Indian founders don’t have a physical presence or payroll infrastructure in India. That’s where Employer of Record (EOR) services come in — these firms take care of employment contracts, payroll, taxation, and compliance without the need for setting up a local company.

1. Hiring from India: Check Legal and Tax Obligations

Before you hire anyone — including yourself — through your US company, begin by assessing your legal position.

If you’re the founder and reside in India, directly drawing a salary from your US entity may trigger double taxation or residency issues unless it’s structured properly. You must:

• Determine your tax residency status in India.
• Decide whether to pay yourself as a contractor or through an EOR.
• Consult with a cross-border tax advisor familiar with both Indian and US regulations.

When hiring others, the most efficient legal route is to partner with an EOR service provider. An EOR can act as the legal employer of record in India while the employee works directly for your US company. This lets you stay compliant with Indian labor laws and avoid setting up a local entity.

If you skip this legal due diligence, issues could arise around employment classification, payroll tax, and foreign remittance. It’s best to clarify all of this before making your first hire.

2. Hiring from India: Choose an Employment Model

There are three main ways for US-based Indian entrepreneurs to hire from India:

A. Contractor Agreement
This model is commonly used when hiring freelancers or consultants for short-term or flexible work. However, it can become risky if the working relationship mirrors that of a full-time employee — fixed hours, exclusive services, and long-term commitments can trigger reclassification risks.

B. Employer of Record (EOR)
An EOR acts as the legal employer in India and handles payroll, tax deductions, social contributions, and contracts. This is the safest method for employing full-time staff in India without opening a branch or subsidiary. It also allows founders to legally employ themselves, if needed.

C. Direct Employment via Indian Entity
If your US company already has — or plans to establish — a subsidiary or private limited company in India, you can hire staff directly. This gives you full control but involves more compliance, registration, and ongoing administrative responsibilities.

3. Hiring from India: Handle Payroll and Compliance the Right Way

Payroll in India includes salary distribution, income tax deduction (TDS), and contributions to statutory benefits like Provident Fund (PF), Employee State Insurance (ESIC), and gratuity.

If your US entity sends funds directly to the Indian employee’s bank account without addressing these requirements, it may violate Indian employment laws.

Here’s what you should do:

• Draft contracts as per Indian labor norms.
• Use INR for salary payouts.
• Deduct appropriate taxes at source.
• Maintain monthly payroll records.

Partnering with an EOR provider eliminates the need for managing all of this manually. They act as the local employer, manage tax filings, and issue payslips — while your hire continues to work directly with you.

4. Build a Recruitment Process That Works Remotely

Just because you’re hiring from India doesn’t mean you should skip process. Here’s a practical flow:

a. Define the Role Clearly
Write job descriptions with clear responsibilities, expectations, and working hours. Specify if the role is remote, hybrid, or requires overlap with US time zones.

b. Source Candidates Strategically
Post jobs on Indian platforms like Naukri, Instahyre, or use LinkedIn. You can also reach out to staffing agencies with experience in hiring for overseas companies.

c. Interview and Evaluate
Conduct 2–3 rounds of interviews. Consider a mix of technical, behavioral, and assignment-based evaluations. For senior roles, reference checks are strongly recommended.

d. Extend Offer and Onboard
Once you identify the right candidate, provide a detailed offer letter. If you’re working through an EOR, they will handle the official contract, onboarding process, and employment registration in India.

5. Hiring from India: Manage Team, Tools, and Expectations

After hiring, invest effort in setting up a solid working relationship.

Use digital tools to bridge the physical gap:

• Slack or Microsoft Teams for daily communication
• Zoom or Google Meet for team meetings
• Project tools like Jira, Trello, or Notion for task tracking

Set clear policies around work hours, reporting formats, holidays, and performance reviews. If you’re the only person based in the US, consider building a strong lead in India to coordinate operations.

Also, make time for periodic check-ins and feedback discussions. This helps remote Indian employees feel included and aligned with your company’s direction.

6. Hiring Remote Workers for Your Small Business Setup

If you’re hiring only 1–10 people in India and don’t have a legal setup there, it’s best to work with an EOR. You’ll avoid compliance risks, save on time, and still gain access to Indian talent.

Whether you’re hiring developers, marketers, or operations staff, the EOR takes on all legal responsibility while you focus on business growth. It’s especially useful for founders who also want to legally pay themselves from their US entity.

Employer of Record & Payroll Services

Hiring from India for your US company is possible, efficient, and legal — but only if each step is handled properly. Begin with compliance, choose the right hiring model, and maintain structured operations.

Indian entrepreneurs have the advantage of knowing both local and global talent pools. With the right setup — and possibly an EOR partner — you can build your team without unnecessary risks or delays.