Start your business
Starting a business is an exciting venture — albeit a stressful one. If you’ve decided to start a limited liability company (LLC) in South Dakota, you’re one step closer to being an official business owner. There are several steps to take, with some being more complicated than others.
The official step to getting your South Dakota LLC up and running is to file the Articles of Organization with the Secretary of State. Before you can do this, however, you have to figure out some other details — like who your registered agent will be and whether you need an Operating Agreement. We’ve created this step-by-step guide to decrease confusion and help you on your way to formalizing your South Dakota LLC.
1Name Your South Dakota LLC
2
Appoint a Registered Agent in South Dakota
To start an LLC in South Dakota, you’ll have to file your Articles of Organization through the Secretary of State’s website. However, before you do so, you’ll need to decide on a name for your business and appoint a registered agent. You’ll also need to decide on creating an Operating Agreement, even though it isn’t a requirement in the state of South Dakota.
While the process is relatively straightforward, this step-by-step guide will break down the process so that you don’t miss any necessary paperwork, fees, or licensing required to start your South Dakota LLC officially.
One of the most important steps in creating your South Dakota LLC is also the very first thing you will do for your business: naming your South Dakota LLC. Start by creating a list of alluring and captivating options that will give your future customers some idea of what you do and what kind of company culture to expect.
South Dakota also has set laws on naming LLCs. As your business will be designated a limited liability company, it is mandatory to place a form of “Limited Liability Company” on the tail end of your business name. You do have some choices about how you would like this designation to appear on all official documents. The following list represents all versions of the LLC title that can be legally applied to your business name:
Further, the state bans the use of certain terms in an LLC name. To avoid confusion with other types of business, you can’t use designations for other formal entities like “Corporation,” “Limited Partnership,” “Incorporated,” “Inc.,” or “Cooperative.” You must also avoid words that would associate your business with a government agency, like “FBI,” “federal,” “government,” and “city.”
Last but not least, your business name must be one of a kind. Visit the South Dakota Secretary of State’s business name availability search page to find an available LLC name. One tip during this process is to key in your names with just their fundamental portions. For instance, if you are considering “Janet’s Ice Cream Parlor,” search for “ice cream” first. Narrow your list to names that differ as much as possible from existing names. South Dakota law provides that a business name be “distinguishable on record” to be utilized for a new business entity. This means that sight changes in spelling, punctuation, or chosen suffix are not enough to form a unique and acceptable name.
Once you’ve found an available name, you’ll need to determine if you’re ready to file right away or if reserving the name is in your best interest. If you’re not quite ready to finish up the paperwork, you can reserve your chosen name for up to 120 days for a filing fee of $25.
If you plan to use an alternate name for your LLC, you’ll need to complete this process twice. Known as a fictitious name or “Doing Business As” (DBA) name, you’ll need to check that your DBA name is available and compliant with South Dakota’s requirements.
Unlike your LLC’s official name, your DBA name should not have any business entity suffix, including “Limited Liability Company,” “LLC,” or “L.L.C.” The DBA name should also not include any words relating to financial institutions, such as “bank,” “trust company,” “credit union,” or other similar words or phrases.
Once you’ve found an acceptable DBA name, you will need to register it on the South Dakota Secretary of State’s website. To fill out the application, you will need your business’s Secretary of State ID and the name and address of the business’s owner. You will be required to pay a $10 filing fee to register and a $10 filing fee annually to renew your DBA.
If you plan to operate beyond South Dakota, you may also want to trademark your name at the federal level. This gives you exclusive use of your business name across the entire United States. Head to the website of the U.S. Patent and Trademark Office to search the trademark database. You can then apply for an available trademark online.
You can also apply for a trademark at the state level, which is often easier and quicker. Fill out the South Dakota Trademark Registration application and submit it with a $125 fee. You’ll need to mail it to:
SD Secretary of State Office
500 East Capitol Ave.
Pierre, SD 57501
Choosing a unique name also makes it more likely that you’ll be able to secure a domain name for your business. Your website address should be easy to remember and ideally parallel your business name. Use an online search tool to check whether relevant domain names are free.
The above steps clarify that creating a business name is about more than finding a catchy moniker.
ZenBusiness can help you with the administrative aspects, for example, by handling your DBA and domain name registration. These are just some of the services offered in our business formation packages.
South Dakota requires every LLC to have a registered agent — a person or entity acting as the point of contact for all legal matters. This individual’s contact information must be provided when filing the Articles of Organization. If your company is subpoenaed or sued, the state of South Dakota will deliver all necessary documents to your registered agent, who is legally required to accept service of process.
As the owner, you can act as your South Dakota registered agent. While serving as your own registered agent might seem like a straightforward solution, it’s actually not the best idea. The agent needs to provide a physical address, not just a P.O. box. If you use your business address, you risk having sensitive paperwork like lawsuits delivered in front of clients. If you use your home address, anybody looking up your LLC’s registered agent details — which are a matter of public record — will know where you live.
Instead, you may benefit from hiring an outside registered agent service — one that is authorized to do business in South Dakota and has a permanent address in the state. This way, you can rest easy knowing that your privacy is protected, and you have a reliable point of contact for essential documents.
Once you’ve decided on a name and appointed a registered agent, the next step is making your South Dakota LLC official. To do so, you’ll need to complete your Articles of Organization — sometimes known as the Certificate of Organization in other states — and file it with the South Dakota Secretary of State. To accurately fill out this form, you’ll need the following:
You can fill out the document on paper and mail it or use the online portal to submit your paperwork. If you choose to file the Articles of Organization by mail, it is slightly more expensive, with online submission requiring a nonrefundable fee of $150 and mail submission requiring a nonrefundable fee of $165.
For those who choose to mail their document, it should be sent to:
Secretary of State Office
500 East Capitol Ave.
Pierre, SD 57501
ZenBusiness offers a preexisting Operating Agreement template to help protect your assets and company for just $35.
An Employer Identification Number (EIN) allows the IRS to identify your LLC on financial paperwork, like your annual tax filing. It’s also sometimes called a Federal Employer Identification Number (FEIN). Your nine-digit EIN is unique, and no other LLC will share it.
If you are the only member in your LLC and don’t have any employees, you may not be required to have an EIN. You should still get one, though. You will need it if you hire employees down the line, for example — or if you want to open a business bank account. It’s easy and free to get your EIN, so there’s really no reason not to. Just head to the IRS website to start your application. Alternatively, you can call the IRS Business and Specialty Tax Line at (800) 829-4933.
Starting an LLC in South Dakota is relatively affordable. Filing your Articles of Organization through the mail or online will cost $150 online or $165 via mail.
On top of the fee associated with filing your Articles of Organization, if you choose to reserve your desired name ($25), forming an LLC in South Dakota will cost a minimum of $175.
However, hiring a registered agent and obtaining any required licenses, permits, and insurance policies can cause the price to rise.
ZenBusiness can help you form your South Dakota LLC. Our experts will complete and submit all of the necessary paperwork, act as your registered agent, and provide a template for an Operating Agreement.
You can also choose more comprehensive packages for a bit more per year. These packages include expedited services, help obtaining your EIN, and even a business webpage. From basic to all-inclusive packages, partnering with ZenBusiness means peace of mind for you at every step of your LLC’s formation.
LLCs aren’t the only type of business you can form in South Dakota. However, an overwhelming majority of entrepreneurs opt for this business structure, thanks to the many benefits it offers compared to other entities. Unlike a corporation, for example, an LLC helps you avoid double taxation. It also offers customized ownership options and has simpler reporting requirements. The ZenBusiness guide to LLCs offers greater clarity on LLC benefits.
Forming a South Dakota LLC will further allow you to benefit from the following advantages:
With these state-specific benefits on top of the overall advantages an LLC offers, starting your business in South Dakota is undoubtedly a wise move.
No one likes to talk about the cut that Uncle Sam will take from their business, but forming an LLC in South Dakota means becoming acquainted with what you will have to deal with on the federal and state levels. An accountant specializing in business taxes is highly recommended here, but let’s break down the basics of your LLC tax expectations below.
Your Articles of Organization will be processed with the South Dakota Secretary of State immediately after payment is received if you file online. Filing by mail takes a bit longer — between one to two business days.
No. The Operating Agreement is kept internally by the owner and partners or managers. While some states legally require LLCs to have an Operating Agreement, South Dakota is not one.
Your South Dakota LLC can be taxed as a partnership, corporation, or single-member LLC. Each tax classification has its own requirements in terms of reporting and responsibilities.
The default option allowing your LLC to be taxed as a sole proprietorship (“disregarded entity”) or partnership is usually the most straightforward. The LLC itself will pay no taxes; instead, the LLC owners will pay their share of the LLC income on their personal tax returns.
Although South Dakota doesn’t have many types of taxes (no personal income, corporate income, or business inventory), there is still sales tax to account for you if you sell products or services. The state sales tax is 4.5%. There are also city sales taxes to take into account, depending on your location.
A Series LLC is a unique structure of a limited liability company permitted in only a handful of states. Under this framework, multiple independent LLCs operate under a single parent entity. Each LLC has its own members, assets, obligations, and liabilities — and each one is protected from the liabilities of the others. South Dakota does not allow Series LLCs.
While South Dakota doesn’t require a general business license to operate in the state, some businesses will be required to have certain licenses and permits. The South Dakota Governor’s Office of Economic Development offers a list of business types that must obtain special licensing and information on applying if needed.
While the list can be helpful in securing state licensing, there are many other licenses and permits your LLC might need, such as federal, local, and industry-specific licenses. You’ll need to do some research to find out what’s required for your business.
When it comes to insurance, what you need can range from professional liability insurance to unemployment and workers’ compensation insurance. South Dakota’s Department of Labor and Regulation has a Division of Insurance that produced this handy guide on everything you need to know.
In both instances, we recommend hiring a professional service like ZenBusiness to do the research for you. We can provide you with a comprehensive package of all the licenses and insurance required for your South Dakota LLC and help you file any necessary paperwork.
Every year, you’re required to file an annual report to keep your South Dakota LLC compliant and in good standing with the Secretary of State. You can file your annual report online or through the mail. If you choose to file online, you will be required to pay a $50 filing fee, and your report will be processed immediately. However, if you choose to file by mail, you will be required to pay a $65 filing fee, and your report will be processed within three to five business days.
To keep things simple, your annual report’s due date will be the same each year: the last day of the anniversary month following the year of formation. While the last day of your anniversary month is the deadline, you can submit your annual report one month prior to the due date.
South Dakota is an excellent choice for entrepreneurs seeking a favorable environment for the LLC foundation. However, if you are preparing to go through these steps to start your own business, you may feel overwhelmed.
ZenBusiness is here to help. We can secure your business name and website domain, provide registered agent services, get your EIN, and more. To learn more about starting a business in South Dakota, contact us today!
Already a South Dakota small business owner? Learn how ZenBusiness can help you run or grow your South Dakota small business today!
Additional tax and regulatory requirements may apply to you
Additional tax and regulatory requirements may apply to you
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