How an India-US SaaS company closed a 14-month books gap and stopped missing FEMA filings

The challenge

The company had incorporated a Delaware C-corp to bill US customers in dollars, while the original India entity kept the engineering team and Indian customer contracts. Each side had its own bookkeeper — an India CA firm for the parent, a US bookkeeping service for the subsidiary — and neither had visibility into the other's filings.

The gap surfaced when the founder tried to move retained earnings from the US subsidiary back to India and the bank asked for the RBI Form FC and Annual Performance Report that documented the original investment. Neither had been filed. The US side, meanwhile, had never filed Form 5472 for the intercompany management fee the India entity was charging the subsidiary — a $25,000 minimum penalty per year missed.

Books on both sides hadn't been reconciled against each other in 14 months. The India entity's ledger showed one number for the intercompany fee; the US entity's ledger showed a different number, because of a currency-conversion timing mismatch nobody had caught.

Our approach

We paired a CA on the India side with a CPA-partnered US bookkeeper under one engagement, working from one shared reconciliation model rather than two separate ledgers reporting different numbers.

First pass: rebuild the intercompany transaction history month-by-month, applying a consistent conversion-rate policy (RBI reference rate on the transaction date) so both entities' books tie out to the same intercompany balance.

Filed the retrospective RBI Form FC and the missing Annual Performance Reports for each year the subsidiary had existed, working with the Authorised Dealer bank to document the delay and avoid it recurring on the retained-earnings transfer already in motion.

Filed the outstanding Form 5472 + pro-forma 1120 for the US entity, along with a reasonable-cause statement — the IRS does not automatically penalize when correction happens before an audit notice, but only if the filing gap is closed properly and promptly.

Built one shared compliance calendar covering both jurisdictions — RBI APR due dates, US Form 1120/5472/BOI due dates, and India ITR/GST due dates — with the founder cc'd on every filing confirmation from both teams, not routed through them.

The results

Both entities' books reconciled to the same intercompany balance within 6 weeks, with a documented, repeatable month-end close process going forward.

The retained-earnings transfer the founder originally wanted completed inside 3 weeks of the retrospective RBI filings clearing, instead of stalling indefinitely at the bank.

Filed the missing Form 5472 proactively, before any IRS notice — avoiding what would have been a minimum $25,000 penalty per missed year had it surfaced in an audit instead.

The founder now gets one monthly close from one team, instead of reconciling two bookkeepers' numbers against each other himself.

Takeaways

• Two entities need one compliance calendar tracked by people who talk to each other — not two bookkeepers each covering their own half and assuming the other side is handled.
• Banks enforce RBI filings at the least convenient moment: when you actually try to move money. Retrospective filing is possible but slower than filing on time would have been.
• Fixing a US filing gap before an IRS notice arrives is a different, much cheaper conversation than fixing it after one does.