Whether selling goods at Sturgis or hosting tourists on the Missouri River, South Dakota is a place of opportunity. Forming a South Dakota LLC provides liability protection and flexibility for its owners. If you’re wondering how to set up an LLC in South Dakota, we’re here to help. Our team will walk you through the steps to complete the South Dakota LLC formation process on this page.
Starting any sort of business, however, can be tough. Figuring out where to start, what you’ll need to do, and how to do it on a budget can make you feel like you’re lost in Badlands National Park. Don’t fret, though, because our South Dakota LLC guide will give you a better idea of what to expect.
When figuring out how to start an LLC in South Dakota, did you Google terms like “LLC South Dakota” or “South Dakota LLC registration?” If so, here’s what you need to know: you’ll have to file Articles of Organization with the Secretary of State. You’ll also need to name a registered agent. Some additional steps include drafting an operating agreement that helps govern your business and getting an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
If any of these are new to you, rest easy because we’ll go into more detail below.
Our five-step guide will inform you about South Dakota LLC filing and other steps while making it as easy as possible to follow. Keep in mind that this guide is for starting a domestic, for-profit LLC in South Dakota. Starting a foreign LLC (formed outside of the state) follows different steps.
As we currently don’t offer formations for foreign LLCs, you’ll have to do some research to learn how to form one of those, a professional limited liability company (PLLC), or another type of entity. We do have an article about how to form a South Dakota PLLC. For now, be sure to follow each essential step in our guide.
Choose a name for your LLC in South Dakota. This is the perfect time to get creative. Your LLC’s name should reflect your brand, culture, and customer base. However, the name you choose must meet the state’s legal requirements for LLCs.
If it doesn’t meet these requirements, the Secretary of State may reject your formation documents and you’ll have to go back to the drawing board to find a new name. If you need some help coming up with a great name, then we have an article that can help you.
As you’re creating your list of potential business names, you’ll need to refer to South Dakota’s LLC naming requirements. The name must contain the words “limited liability company” or “limited company.” You can abbreviate limited as “Ltd.” and company as “Co.”
In lieu of these, you can use one of the following designators:
The name must also be distinguishable from other business names on record with the state. This includes the names of other South Dakota LLCs, corporations, and limited partnerships. Be sure to look over Section 47-34A-105 of South Dakota’s Uniform Limited Liability Company Act.
After coming up with a name that follows the state’s rules, you’ll want to conduct a South Dakota business search to see if it’s already taken. We have a page dedicated to performing a South Dakota business name search.
South Dakota allows for the reservation of business names. You may want to consider doing this so that no one nabs your name as you’re getting your LLC set up. To reserve your name, submit an Application for Reservation of Name with the Secretary of State’s office. You’ll pay a small filing fee, and your name will be reserved for 120 days.
Having a domain name (and, by extension, a website) is an important tool for reaching customers. You’ll definitely need one if your business will be strictly online. Even if it won’t be, lacking a web presence in the digital age is something you may want to avoid. Many people’s first inclination when looking up a business’s address, hours, phone number, and other information is to search online.
You can also use a website to market your brand and conduct business. And a domain name’s availability might influence your business name choice. When coming up with a name, you should consider getting a matching domain name. If you can’t, you may want to reconsider your business’s name until you find an identical domain name. When you find one, you can use our domain name registration service.
When choosing a name for your LLC, consider how you want to represent your business online. As we mentioned earlier, if your business’s name and domain name match, it’ll be easier for customers to remember and find you online. Thus, web domain availability might influence your name choice.
Use our domain name search tool to check to see if your potential company name is already in use. You might want to reserve the domain name right away if you come across it before someone else does.
Additionally, you may look to see if the social media handles you want are available. Getting the right social network handles can be crucial for successful online marketing because many companies market on sites like Facebook, Instagram, and LinkedIn. On top of registering a domain name, we can help you add privacy to it, set up a website, and get a business email address.
You may want to check if your prospective business name has a trademark. It’d be a terrible thing if, after starting your LLC, you suddenly received a trademark infringement notice. The thing with trademarks is that the state doesn’t check for them when you file your Articles of Organization. You’ll have to do it yourself.
You have three options. First, you can seek the help of an attorney that specializes in trademarks to check for you. Second, you can check at the federal level with the United States Patent and Trademark Office (USPTO) website’s search engine. Third, you can check the South Dakota Secretary of State’s “Trademark Search” page and use their tool to search at the state level.
You can also do an old-fashioned internet search on your potential business name. Search domain names, phone directories, and social media sites.
If you plan to do business under a name other than your LLC’s legal name, then you’ll need to register a “doing business as” (DBA) name. These are also referred to as “trade names” and “fictitious names.” DBAs can be helpful if you want to abbreviate your name or differentiate a new product line or service. The South Dakota Secretary of State registers DBA names for a small filing fee and requires renewal every five years. We can complete this filing for you with our DBA name service.
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Name a registered agent. This person or entity receives legal and other official notices on behalf of the company. They’re also known as resident agents, statutory agents, and agents for service of process in other states. All LLCs in South Dakota must have a registered agent. You’ll name this agent in your Articles of Organization.
A registered agent’s responsibility is to receive legal forms, official government correspondence, and other important documents on behalf of a business. These can include notices of service of process (lawsuits), tax forms, and more. The registered agent then informs the appropriate person at the LLC that these documents need their attention.
A registered agent must have a physical address in South Dakota. They must also be available during regular business hours. In South Dakota, your Articles of Organization will give you the option to name a commercial registered agent or a noncommercial registered agent (can be an individual).
You can appoint whomever you want as your registered agent as long as they meet the state’s requirements. As we mentioned above, they need to have a physical address (known as a registered office), meaning they can’t use a P.O. box. They must also be available at this address during regular business hours.
South Dakota maintains a list of commercial registered agents in the state. If you choose one, you only need to list the agent’s name and their CRA# on your formation documents. For a noncommercial agent, you’ll need to include their name and address. Check out the South Dakota Secretary of State’s “Registered Agents” page for more information.
Since South Dakota requires LLCs to maintain a registered agent, if yours isn’t found, then you may be looking at some repercussions. You can fall out of compliance with the state, lose your personal liability protection, pay fines, and even have the LLC dissolved. On top of that, if a process server can’t find your registered agent, then a lawsuit could move forward without you knowing. Always maintain a registered agent and be sure their information is always up-to-date.
In South Dakota, you can serve as your LLC’s registered agent, but the LLC itself can’t be its own agent. As long as you meet the state’s requirements for registered agents, then you can list yourself in the Articles of Organization. You may be thinking that being your own registered agent sounds great, but there are some drawbacks.
First, you must be at your registered office during regular business hours. This can make it difficult to meet with clients and customers, run errands, go on vacation, take a sick day, etc. Second, if a process server delivers a notice to you at your business, then potential customers and clients will know you’re getting sued. This can be both embarrassing and bad for business.
If you aren’t sure who to name as your registered agent in your formation documents and/or don’t want to serve as your own, then consider hiring a registered agent service to provide you with one. This way, you won’t have to worry about your registered agent retiring, leaving the position, or anything else.
With our South Dakota registered agent service, you won’t have to worry about losing or missing your agent, meaning your business will remain in compliance with the state. Whenever your LLC receives legal notices or other official documents, they’ll be scanned and uploaded to your online dashboard. Here, you can access them whenever you want. They’ll be organized, eliminating any worry that they’ll be lost or misplaced.
Complete and file your South Dakota LLC Articles of Organization with the Secretary of State. When the Secretary approves the Articles, your LLC will be officially recognized as a legal business entity in the state.
You’re required to pay a filing fee for submission. Look into our business formation plans to make sure everything in your Articles of Organization is correct.
The state’s Articles of Organization form is pretty straightforward in detailing the information you’ll need. Here are some things to expect:
There are a few other details to consider, so check out Section 47-34A-203 of South Dakota’s Uniform Limited Liability Company Act.
Your LLC in South Dakota can be member-managed or manager-managed. A member-managed LLC is, of course, managed by its members. This is the default management setup in the state for LLCs. You can, however, choose to have a manager-managed LLC.
If you want a manager-managed LLC, then you’ll have to make this designation in the Articles of Organization. The managers will head the company’s day-to-day operations. This can be a helpful setup if the company’s members don’t want to deal with this responsibility. A manager can be one of the members or an outside party chosen by the members.
Although you’ll mark your LLC’s management structure in the Articles of Organization, you can also do so in your operating agreement.
If you have all the information you’ll need to file your Articles of Organization, then you’ll have two options. The first is filing electronically with the Secretary of State. Go to the “Form or Register a New Business” page and follow the instructions to fill out this online form. There’s a one-time South Dakota LLC filing fee of $150 (as of this writing).
Your second option is filing by mail. You can use the same tool for online filings and print the Articles. You can also download and print the Articles from the Secretary of State’s “Business Forms” page. Paper filing has a one-time cost of $165.
The good news is that the Secretary of State immediately processes South Dakota LLC formation documents submitted online. It can take three to five business days if filed by mail. If you’ve signed up for our business formation services, we offer a faster filing speed service that prioritizes your filing.
You only have to file your Articles of Organization once, and if approved, your South Dakota LLC becomes official. If anything changes with your company after, such as a new member joining or a change in registered agent, then you’ll need to inform the state. You’ll do this by filing the Application for Amended Articles of Organization form. This is also known as the South Dakota Articles of Amendment. You’ll detail what specifically is changing in your Articles with this document.
As a customer, your Articles of Organization and other important business documents will be securely organized in your digital dashboard. This way, you won’t ever have to worry about misplacing these essential documents. They’ll be easily found and can be accessed whenever you need them.
In South Dakota, your LLC’s effective date is the day you filed your Articles of Organization with the Secretary of State. This also applies if the Articles get approval at a later date. For example, if you filed your documents on August 10 but they weren’t approved until August 13, then your LLC’s official effective date is August 10.
Some entrepreneurs, especially if it’s near the end of the calendar year, will delay their LLC filing date to January 1 of the coming year. This way, they can avoid the hassle and cost of having to pay taxes on an LLC in the current year. This is especially true if the future LLC owners don’t need to establish the company right away.
In South Dakota, you also have the option to tell the state that you want your effective date to be at a later time. You can choose to have your LLC’s effective date be up to 90 days past the date you submit the filing.
This is something else we can help you with. When you form your LLC in South Dakota with us, we give you the option of paying an extra fee to have your LLC’s effective date delayed. (This service is only offered from October to January.)
Draft a South Dakota LLC operating agreement. This isn’t a requirement, but many LLCs can find an operating agreement beneficial. This is an internal document that you can use to spell out the business’s policies, rules, and plans of action if the LLC runs into certain situations.
Without an operating agreement, your company will have to follow the state’s default provisions for LLCs. The great thing about this agreement is that you can detail how you want the business to run as long as your company’s operations don’t break any laws.
Here are a few other benefits:
Since there’s no official comprehensive operating agreement format to follow, you can include what you want in yours provided it’s legal and you feel it’ll help the business run smoothly. One great thing about these agreements is that there’s no maximum word count. Add as much as you’d like if you feel it’s appropriate. If you aren’t sure what to add to yours, here are some suggestions:
If you aren’t sure how to create an operating agreement for your LLC, then look into our guided customizable template. A chatbot will be available to walk you through the process of forming your operating agreement. An e-signature feature is also available for the document.
We mentioned above that an operating agreement can be used to outline how a business will run, and you might be thinking that putting one together is pointless as the only owner. Consider drafting one, anyway. Oftentimes, lenders and investors request to see an operating agreement before deciding to fund or work with a business.
Another major reason to draft an operating agreement is to lay out what will happen to the business should something happen to you. If you become incapacitated or die, do you want the business dissolved or handed over to someone else? An operating agreement can also be used to further show that you and the LLC are different entities, reinforcing the company’s limited personal liability feature.
Apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS) for your LLC. Sometimes called a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number, an EIN identifies your LLC when paying taxes and helps you apply for a business bank account. You can apply for your EIN online with the IRS, or you can let us handle your application with our EIN service.
If your business will engage in a taxable activity, then you must register with the South Dakota Department of Revenue. Any business in South Dakota must also obtain a sales tax collection license. You can register for most tax licenses on the Department of Revenue’s Filing and Tax Payment portal. Here, you can file alcohol, contractor’s excise, sales and use, wholesaler, and other tax license applications.
Finally, South Dakota doesn’t have a corporate income or general privilege tax. Additionally, all new South Dakota businesses must register with the Reemployment Assistance Tax Unit with the South Dakota Department of Labor and Regulation.
South Dakota doesn’t require employers to have workers’ compensation insurance coverage. However, it’s strongly recommended. An injured employee can file a civil suit against an employer who doesn’t have this insurance. A business owner may choose to enroll in the South Dakota Workers’ Compensation program to receive coverage for work-related injuries and illnesses.
Also, as an employer, you’re required to report all new hires to the South Dakota Department of Labor and Regulation New Hire Reporting Center.
The LLC structure’s flexibility doesn’t stop at its management. It’s also a very popular entity due to its flexible tax options. By default, a single-member LLC is taxed as a sole proprietorship. If the business has multiple members, it’s taxed as a partnership. This avoids “double taxation.”
An LLC can also choose either a C corporation or an S corporation tax designation. As a C corp, the LLC will deal with double taxation, in which the business’s profits are taxed both at the business level and again at the level of the individual business owner. However, certain LLCs may choose this designation anyway due to the benefits that it offers. For example, a C corp designation can have many tax deductions.
An LLC with an S corp designation retains pass-through taxation while having the potential for saving money on self-employment taxes. You can be an “employee-owner,” allowing you to split income into your salary and your share of the company’s profits. This way, you’ll only pay Social Security and Medicare taxes on the salary but not the profits. You may still need to pay other taxes on the profits, however.
Like all good things, though, an S corp designation comes with some drawbacks. LLCs filing as an S corp usually get more attention from the IRS, bringing with it a higher chance of an audit. The S corp status is also known for being hard to get.
Speak with a tax professional if you aren’t sure which designation to assign to your LLC or to learn more about business tax liabilities. If you feel the S corp filing is best for your company, then we can help you apply for that status in South Dakota. It’s only available during the LLC formation period.
Once you’ve gone through the five steps in our guide, take time to complete some additional ones that can help your LLC run smoother.
After getting your EIN, you’ll be able to open a business bank account to keep your company’s funds organized. Mixing your business and personal funds can make your taxes harder to organize, so you may want to avoid using your personal checking account for your business activity and vice versa. Additionally, if your LLC is ever taken to court and sued, it may be harder to prove that you and the business are separate entities.
Fortunately, we offer a discounted business bank account for your LLC. You’ll get unlimited transactions, a debit card, online banking features, and more. You should also check out our banking resolution template. With it, you can authorize other people in the business to use the bank account.
Your LLC’s finances will need to be carefully managed. Check out ZenBusiness Money. You’ll be able to create invoices, transfer payments, manage your clients, track your business expenses, and more. This can help you out with your business finance handling needs while running your LLC.
After completing the five steps in our guide, be sure to look into business insurance. Although LLCs come with personal liability protection by default, getting extra coverage through various types of business insurance doesn’t hurt. Many issues can result in heavy costs for your business. Professional mistakes and workplace accidents are just a couple.
There are many types of business insurance policies offered by countless insurers in the market. Do a bit of research to find one whose policies match your needs and budget. If you aren’t sure how to get started, we have an article that can help you learn the basics of business insurance.
In South Dakota, active registered business entities must submit an annual report on the first day of the anniversary month the paperwork for the business was filed. For example, if you submit your Articles of Organization on November 8, then your annual report will be due on November 1 every year after.
If you fail to file your annual report on time, the state will declare your LLC delinquent and you’ll incur a late fee two months after the original due date. Failing to submit your report while in delinquent status may result in the business’s dissolution. Go to the Secretary of State’s “File an Annual Report” webpage for additional information.
Learn more about annual reports.
As you near the last stages of finalizing your LLCs registration, there may be some additional requirements and questions about what to do after the business is set up. Consider the following topics and make the best-informed business decisions.
You’ll undoubtedly consider hiring employees to keep up with your business’s growth. How will you find them? Which skills and experiences will you want them to have? We can’t tell you who to hire for your company. Only you’ll be able to make that determination, but there are resources available online that can lend you a hand when you need to hire employees.
The South Dakota Department of Labor and Regulation website has a “Workforce Services for Businesses” page that can point you in the right direction. You’ll find such topics as employment laws and recruitment tools. You can even post jobs through the website to help you find the employees you need.
You can get a Certificate of Good Standing for your LLC in South Dakota. This document is also known as a Certificate of Status and a Certificate of Existence. You aren’t required to get one to form an LLC or do business, but a Certificate of Good Standing can come in handy for:
You can submit your Certificate either online or by mail filing. Go to the Secretary of State’s “Certificate of Good Standing” page to file electronically. You can also print the document from that same webpage, fill it out, and mail it. Both methods require a filing fee. If you’d like more information on getting this certificate, we have a detailed article on the topic. If you’re ready to file yours, then we can help.
Now that you know how to form an LLC in South Dakota, we hope the process doesn’t seem too overwhelming. We know that government filings and submitting legal forms of any sort can be nerve-racking.
Hopefully, our guide has hopefully properly informed and prepared you for what you’ll need to do during the South Dakota LLC formation process. If you’re still feeling a bit lost, don’t worry. Our professional services can help you start, run, and grow your business.
We’ll be with you every step of the way, no matter if you’re planning to start a touring company featuring the Black Hills or a flower shop in Sioux Falls. You can rest easy knowing that we have your back starting with our formation service.
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If you’re going to operate a taxable business in South Dakota, then you’ll need licensing from the Department of Revenue. You can also use this website to apply for tax licenses.
As for other South Dakota licenses and permits, the type of business you own and its location may come into play in determining what exactly you’ll need. You may need to reach out to your local governments to see if you need a license to do business in their jurisdictions.
Rather than spending hours trying to figure out what you’ll need, use our business license report service to learn what your licensing requirements are.
Typical South Dakota LLC costs start at $150 for online filing and $165 for paper filing. This may not be the only filing fee, though. If you plan to reserve your business name, register a DBA, or anything else, then the final sum will be higher.
Filing fees can also change over time. Be sure to check in with the South Dakota Secretary of State to keep up with the state’s fee schedule.
A major concern you might have involves what your South Dakota business taxes will be like. The LLC model comes with “pass-through” taxation by default. This happens when the members pay federal taxes on the business’s earnings as regular income, but the LLC itself isn’t required to pay specific corporate taxes on its earnings to the federal government.
An LLC can also choose a C corporation or S corporation designation for taxes at the federal level. As an S corp, the members could save money in self-employment taxes. This election also avoids double taxation. However, an S corp election is harder to get and, if approved, may result in the LLC getting more attention from the IRS.
As a C corp, the LLC could look forward to potential tax deductions that can make the double taxation it comes with worthwhile. For example, the business could write off certain expenses, like business insurance premiums. Before settling on tax filing designations, speak with a tax professional.
At the state level, South Dakota is extremely unusual in that it has neither a corporate income tax nor a personal income tax. Your business will still be responsible for other applicable taxes, though, such as sales tax.
You should refer to your operating agreement to check the rules you established for transferring ownership of your South Dakota LLC. Without an operating agreement, your business must follow the state’s default rules for ownership transfers.
South Dakota doesn’t require LLCs to draft a business plan. Putting one together could be a good idea, though. Investors and lenders may want to see this plan before doing business with you.
Another perk of having a business plan is showing that you’re serious about the company and want it to succeed. Read up on planning your business for more information.
The LLC model is one of the more popular business structures due to its benefits. A few South Dakota LLC benefits include:
If you don’t want the default LLC tax election, you’re also allowed to choose to be taxed as a corporation. Depending on which of the two is more beneficial, you can choose a C corporation or S corporation tax designation.
This depends on the filing method. If done online, processing can be immediate as long as everything in your Articles of Organization is correct. Mail filing can take between three and five business days, not counting the time in transit.
Sometimes, though, processing can take longer depending on the number of submissions the state receives and other factors.
No, South Dakota doesn’t require operating agreement filing for LLCs. However, putting one together can be very beneficial. Refer to Step 4 for a detailed list of benefits. You should also keep a copy of the operating agreement with your other essential business documents.
You can choose whichever tax structure you want for your LLC. Many owners go with the default pass-through taxation. Others choose a C corporation or S corporation election. You can learn more about how these methods of taxation compare on our LLC vs. S corporation and LLC vs. C corporation pages.
Check out the FAQ titled “How are LLCs taxed in South Dakota?” to learn more. And be sure to contact an accountant for guidance on which election is best for your situation.
Yes, South Dakota allows for the existence of series LLCs. This structure involves the creation of a “parent” LLC with several other LLCs falling under it, known as “child” LLCs. The purpose of this structure is to shield the parent and child LLCs from the liabilities of the others within the series.
Go to the Secretary of State’s “Series Limited Liability Companies” page to file your documents. At this time, we don’t offer series LLC formations, but we do have an article detailing series LLCs.
As you would when transferring your LLC’s ownership, you’ll have to refer to your operating agreement to check the reasons for and process of dissolving your LLC that you listed.
Once you’re ready to move forward with dissolving and winding up the LLC, you’ll need to file Articles of Termination with the Secretary of State.
Check out our South Dakota dissolution guide for a more detailed approach.
Yes, you can register a DBA name for your South Dakota LLC by going to the “Register a DBA – Business Name” page on the Secretary of State’s website. You’ll have to pay a filing fee. You can also amend, renew, and cancel your DBA on this page.
When you created your operating agreement, you should’ve included a clause detailing the reasons for and process of member removals from the LLC. If you didn’t, then you’ll need to follow South Dakota’s default rules for doing so.
Be sure to also take care of that member’s ownership portion. After this, you’ll need to inform the state of the changes in the LLC’s ownership. You can do this by filing Amended Articles of Organization with the Secretary of State.
As we went over in our guide, South Dakota requires all registered active business entities to file an annual report. It must be submitted on the first day of the anniversary month the Articles of Organization were filed with the state.
Failing to file your annual report within two months after the due date can result in fines and the business’s dissolution. Take advantage of our annual report filing service so you never fall behind in your filing requirements.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
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