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India-based employee of a US startup: direct employment, EOR or contractor
The contract label does not answer every tax question. An India-based person working for a US startup needs a fact-specific review of where services are performed, employer and payroll setup, individual reporting, equity compensation and the company’s cross-border obligations.
Who it may apply to
India-based workers hired directly by US companies, placed through an employer of record, or engaged as independent contractors; and US startups expanding a remote team in India.
Records to collect
Employment or contractor agreement, EOR documents, pay slips, invoices, payroll records, travel history, equity plan documents, Indian tax records and US withholding statements if issued.
Filing and decision points
Review where services are performed, individual US and Indian tax residence, payroll and withholding data, contractor-versus-employee facts, equity timing and the company’s local compliance exposure.
Common mistakes
Assuming US payroll alone settles the issue, calling every remote worker a contractor, overlooking travel into the US, or failing to reconcile compensation with stock-plan records.
Official sources
- IRS source of personal-service income
- IRS persons employed abroad by a US person
- Related guide: RSUs, options and foreign brokerage
Reviewed by Gurleen Kaur, CPA (Washington State). Reviewed September 7, 2026.