Here, you’ll find all the information you need to learn how to form a nonprofit corporation in South Dakota and become tax-exempt. Follow this step-by-step guide and learn how you can have a positive impact on your community without being overwhelmed by the process.
To form your nonprofit corporation in South Dakota, you’ll need a minimum of three directors who are unrelated. Their full names and addresses are also needed.
Names are key for branding. To form a nonprofit corporation in South Dakota, you might choose one that reflects the important work you do. It also needs to be unique. To secure the name you want, you can do the following:
A registered agent is a person or a business that acts as a contact point for your nonprofit corporation. It’s a key role that allows the state to get in touch with your corporation at any time.
In South Dakota, any resident or company with a registered office address can be a registered agent. They need to be willing to receive and accept legal documentation (service of process) and official mail from the state’s entity of business formation on behalf of a business.
While it might be tempting to be your own registered agent, it’s important to be aware of the downsides:
For these reasons, it’s often better to choose a professional registered service agent. At ZenBusiness we’re ready to help you. Consider our registered agent service to take this requirement off of your shoulders.
Once you’ve chosen a name and a registered agent, it’s time to file the Articles of Incorporation for your nonprofit corporation. The form can be found and filed online. The application requires the following:
Corporate bylaws are a state-mandated requirement and regulate the internal affairs of your South Dakota nonprofit. The directors are the ones tasked with creating corporate bylaws and are required to do so as soon as possible. You may need to include a copy of these bylaws with your state tax exemption.
Corporate bylaws should be decided during the first post-filing meeting of your board of directors. Additionally, during the first meeting, you can appoint officers, set term limits, and set your tax and fiscal year. You should also designate a person to take minutes and develop a conflict of interest policy.
A corporate record binder is the physical place where you store all paper copies of legal documents and records. You may also find it useful to back up copies to a secure cloud location. This makes them easily searchable in case you need to reference them.
To become exempt, you require an Employer Identification Number (EIN) so the IRS can use it to identify your nonprofit. It’s necessary for opening a bank account and hiring employees. You can apply for an EIN via the IRS website. Alternatively, we offer an EIN service to assist you and avoid paperwork so you can focus on your nonprofit’s goals.
To form a nonprofit corporation in South Dakota, you don’t require a statewide business license. However, you might still need permits and licenses depending on your location and the type of service you offer. Licensing requirements can be different at the federal, state, or county level, and some licensing is business-specific. It’s your responsibility to make sure your licenses are in order, but we’re here to help you. Check out our business licensing service to make sure your nonprofit stays up to date with all your licensing and permit needs.
To avoid paying federal taxes, you need to apply for the required exemptions. You should look to obtain 501(c)(3) tax-exempt status for public charities and private foundations with the IRS. This process starts by completing and filing IRS Form 1023. There’s specific language you need to use to satisfy the IRS, which you can find on their website. You’ll need to share information about your South Dakota nonprofit, such as its history, finances, structure, operations, and activities. There’s a short version and a long one, fill out the one that best applies to your nonprofit.
After you’ve been approved, you’ll receive a letter of determination. Then, you should apply for relevant state and local level tax exemptions on the Department of Revenue’s website.
South Dakota doesn’t require your nonprofit to be registered as a charity in the state. However, we suggest you also check with your county, as some localities might want it. There are also benefits to being registered, although more stringent reporting requirements often apply.
Protection from liability is important for your nonprofit, but it isn’t required by law. However, if you have employees you’ll need unemployment insurance. Whether you need other types of coverage depends on the needs of your nonprofit. Make sure you contact a qualified insurance service to get the right policies in place.
To open a bank account for your South Dakota nonprofit corporation you’ll usually need:
However, check first with your bank to find out what documentation they need.
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
Yes, the founder of a nonprofit can receive a salary as long as it’s considered reasonable. This means that it’s comparable to similar roles and the hours worked.
The revenue goes to fund the goals of the nonprofit, rather than being redistributed among members. Many nonprofits make money to fund their activities, including hospitals and charities.
To be eligible for nonprofit status, your corporation needs to be involved in a charitable, educational, literary, religious, or scientific activity. It may also be for the benefit of the local community in some other way.
Yes, they can, as long as the revenues aren’t redistributed among members. However, some revenues may be taxable, especially if they aren’t a core part of the nonprofit’s mission.
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.
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