Who can form a South Dakota Professional Limited Liability Company?
Only certain registered professionals who are legally authorized and licensed to provide their services in the state can form a South Dakota PLLC. These include professionals in the following industries:
- Health care (as defined by applicable law)
- Physician’s assistants
- Public accounting
- Veterinary medicine
A South Dakota PLLC requires state registration, and it must have one or more licensed members who own the business. South Dakota also refers to a PLLC as a professional service firm.
Should you form a professional corporation or a PLLC?
South Dakota allows professionals to form professional corporations (PCs) or PLLCs. A PC is a corporation that’s owned by shareholders and controlled by a board of directors. A PLLC is owned by one or more members. Both structures provide similar protection in terms of liability. However, PCs may be subject to additional regulatory requirements and taxes. Because PLLCs are more flexible to operate and a bit easier to form, many professionals opt for the PLLC structure.
Choose a name for your South Dakota PLLC
Your South Dakota PLLC name must be unique and not in use by another active business. It must also meet the following criteria:
- Contain “professional limited liability company,” “Prof. L.L.C.,” “Prof. LLC,” “P.L.L.C.,” or “PLLC” as described by state law
- Accurately reflect the professional service offered
- Meet state licensing authority and ethical requirements that have jurisdiction over your PLLC’s professional services
Start by conducting a Business Information Search with the Secretary of State to see if your desired name is available. If you’d like to reserve a business name until you’re ready to file, use ZenBusiness’s name reservation service to hold the name for up to 120 days. Choosing a domain name now can be a good idea to ensure that it’s the same or similar to your corporate name. ZenBusiness’s domain name service makes it easy to check if your name is available.
Select a South Dakota registered agent
Your South Dakota registered agent is your PLLC’s official contact with the state. The state needs a contact on file where it can send important compliance information and official correspondence for your PLLC. This party will also be notified if you’re named in a lawsuit. A registered agent can be a business or individual as long as that entity is available during regular business hours at a registered office in South Dakota.
Complete and file South Dakota Articles of Organization
Forming a South Dakota PLLC requires submitting Articles of Organization. One thing to decide before filing is whether members or managers will control your South Dakota PLLC. Member-managed occurs when members oversee the day-to-day activities of your PLLC and make decisions on the PLLC’s behalf. Manager-managed occurs when you appoint a member(s) or hire an individual(s) from outside the PLLC with or without a stake in ownership to manage your PLLC.
You’ll also need the following information to complete your Articles of Organization:
- Registered business name, email address, and business address
- For some services, a certificate of registration from the state board that regulates the profession
- Registered agent’s name and office address
- Name, address, and signature of the filing member
- List of managers and members you wish to place on record
- State licenses for each professional who is a member of the company
A licensed professional PLLC member or another authorized party can complete and file these documents online or by mail with South Dakota’s Secretary of State (SOS). Paper applications require a $165 filing fee payable by check. Online applications cost $150 and can be paid by credit card. Once your filing is approved, the state will legally recognize your PLLC.
Create an operating agreement for your South Dakota PLLC
A South Dakota PLLC is permitted but not required to adopt a written operating agreement by the state. Because this internal agreement describes how you plan to run your business, it’s wise to have one.
Handle South Dakota tax obligations
Whether your South Dakota PLLC has employees or not, it will still likely require a federal tax ID number known as an Employer Identification Number (EIN). The IRS provides this nine-digit number that’s used to identify your business.
You’ll likely need to provide your EIN when opening a business bank account. You can get an EIN using ZenBusiness’s EIN service to save time.
South Dakota doesn’t have a state income tax, but your PLLC members will still have to pay federal taxes on their portion of the PLLC’s income on their personal tax returns.
Many South Dakota PLLCs have to pay state and municipal sales and use taxes for services and purchases. These may vary depending on the profession. For more information on business taxes in South Dakota, visit the Department of Revenue.
Confirm any potential additional local tax obligations with your city and county authorities.
Obtain South Dakota business licenses and permits
A general business license isn’t required to operate a South Dakota PLLC. However, depending on the professional services offered and your business location, you may need to obtain other licenses and permits.
Licensing may occur on the local, state, or federal level. Figuring out which licenses you need can be difficult without a central source of information.
ZenBusiness offers a business license report service that provides a list of licenses and permits needed for your South Dakota PLLC.
Acquire insurance for your South Dakota PLLC
South Dakota doesn’t require businesses to carry general liability insurance, but it can still be a very good idea to acquire certain types of insurance to protect yourself against various liabilities.
General Business Insurance
General liability insurance covers damages caused by your business’s or employees’ actions that are not due to your malpractice.
A South Dakota PLLC doesn’t protect its members from personal malpractice, so each member may wish to have professional liability insurance even though, in most situations, a PLLC automatically protects you from the professional malpractice of other members in your PLLC.
Workers’ Compensation Insurance
Your PLLC may wish to provide workers’ compensation insurance for your employees. Although this is not required for private employers, it can protect you and your PLLC from civil lawsuits brought by injured employees. However, if you wish to bid on state government projects in the future, you will need workers’ comp coverage.
Open a business bank account
Opening a business bank account is an essential part of managing a South Dakota PLLC. A business bank account is vital for keeping your business and personal income and expenses separate and simplifies record-keeping. Having a business account is also important for tax purposes as it provides an easy-to-read trail of income and expenses.
Ready to kick-start your business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, 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.
South Dakota PLLC FAQs
What are the filing fees for a South Dakota PLLC?
The online filing fee for a South Dakota PLLC is $150 for the Articles of Organization. Electronic payment by credit card is accepted. There’s a $15 surcharge for paper applications, and payments must be made by check and mailed to the Secretary of State.
Do I need a lawyer to form a South Dakota PLLC?
You don’t need a lawyer, but it may be helpful. A professional online business service like ZenBusiness can provide most of the information that you need to get started.
Does South Dakota have a professional corporation (PC) entity?
Yes, South Dakota allows licensed professionals to form PLLCs or PCs.
Can professionals from different fields form a South Dakota PLLC together?
In certain cases, a South Dakota PLLC may provide more than one type of professional service. For more information, check with a local business attorney.
How is a South Dakota PLLC taxed?
South Dakota doesn’t have a state income tax, but your PLLC members may still pay federal taxes on PLLC income. Many South Dakota PLLCs have to pay state and municipal sales and use taxes for services and purchases.