How to Start an LLC in South Dakota: If you’re interested in setting up a South Dakota LLC, you’ve come to the right place. Having an LLC not only protects your personal assets but also is less complicated than other business structures. South Dakota laws make it easy to establish your LLC in South Dakota. On this page, You’ll find all the steps that must be taken to ensure that your South Dakota LLC has been correctly established. We recommend you read the whole article very carefully word by word, don’t miss anything 🙂
On this page, you’ll learn about the following:
- How to Start an LLC in South Dakota
- After Starting Your South Dakota LLC
- South Dakota Foreign LLC
- South Dakota LLC Formation Review
How to Start an LLC in South Dakota
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection.
If you wish to start an LLC in South Dakota, mainly you have to file your Certificate of Formation with the State and pay a filing fee of $150. There are some more steps to follow to get your LLC established in South Dakota. The following steps explain everything you need to create your LLC in South Dakota in 2022. Let’s get started!
Step 1: Decide a Name for Your South Dakota LLC
The very first step while forming an LLC in South Dakota is to give a proper name to your LLC. Before you name your business, you must know that the name should be easy to remember, available in the state, and follows all the LLC naming guidelines.
South Dakota LLC Naming Guidelines
There are a few specific requirements all the LLCs in South Dakota have to follow while naming their Company. Some of the most important requirements are as follows:
- Your business name should be available and no other existing business in South Dakota can have the same name. Perform a name search from the below-mentioned source to be sure your name isn’t taken already.
- “Limited Liability Company”, “LLC”, and “L.L.C.” – any one of these has to be used as a suffix in your business name.
- You cannot use any name for your business that is confusing or misleading. Terms such as “Treasury”, “State Department”, “FBI”, “CIA”, etc. shouldn’t be included.
- Terms like “Bank“, “University“, “Attorney“, “Doctor“, etc can be added only after the additional requirements by South Dakota State Government are fulfilled.
- (Optional) It’s better to name your business something for which your desired domain is available.
|Important Links –||Submit Offline Form to –|
|South Dakota Business Entity Search – Online Name Search|
Name Reservation Form – PDF
Name Availability Standards – Guidelines
South Dakota LLC Name Search – Instructions
|Secretary of State|
500 East Capitol Avenue
Pierre, SD 57501-5070
Reserve Business Name for Future
If you do not wish to file your LLC right now but want to hold the name you have decided then you can reserve your LLC name for 120 days. To keep the name, you have to file a name reservation application and pay $25 to reserve your name with the South Dakota Secretary of State.
Doing Business As (DBA) or Trade Name
Once you have a legal name for your LLC, you can register it. However, it is not mandatory. You can, instead, use DBA, Fictitious Name, or Trade Name. In that case, you must register your name with the South Dakota Secretary of State by submitting an Application to Register a Trade Name in South Dakota along with the filing fee of $10.
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Tailor Brands offer DIY website templates and incredible logo designs. If you plan to get a website then it is wise to have a “.com” domain for your business but these days you can also use other TLDs like “.company”, “.xyz” etc. With Tailor Brands, you can get everything you need at an affordable price.
It is not legally mandatory to use the word LLC in your domain name or email. If you want you can use it. However, it is recommended not to use LLC in the domain name. A domain name should be short and easy to remember.
Step 2: Assign a Registered Agent in South Dakota
The second step to forming a South Dakota LLC is to appoint a Registered Agent. A registered agent is a person or business entity that will act or work on your LLC’s behalf. This person or business will receive important tax forms, legal documents, all notices of lawsuits, and other official government correspondence in South Dakota. Hence, hiring a competent South Dakota Registered Agent for your LLC is necessary.
Make sure your registered agent is a resident of South Dakota or has a physical street address. Their business address or the principal address should be in South Dakota. Most LLC formation companies also provide registered agent services. Below are two great LLC setup services, even if you buy their cheapest plan (normally $49/year) you also get registered agent service and other services at a reasonable price.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in South Dakota. Some LLC formation services offer standalone South Dakota registered agent services. You can purchase only Registered Agent services from them without purchasing any other LLC formation services.
A person who is above 18 years of age and has a physical address in the state of South Dakota can be a Registered Agent. A Registered Agent can be an independent person or can be a business entity. One who is responsible for handling all the legal documents.
Yes, you can be your own registered agent if you are a resident of the state of South Dakota and you are above 18 years of age. To become a registered agent you must have the authority to conduct any type of business in South Dakota.
Registered Agent Consent Application
In South Dakota, there is no separate Consent Letter to be produced to the Secretary of State. At the time of change of Registered Agent (or the name or address), the new Registered Agent has to sign the consent letter. It comes with the Application form to Change the Registered Agent. The filing fee of $10 should be paid for it. For more information on the same, read our guide on South Dakota Registered Agent.
Step 3: File Articles of Organization in South Dakota
The third and most important step in forming a South Dakota LLC is to file the Certificate of Formation. This South Dakota Articles of Organization is a legal document needed to officially register your business with the Secretary of State. It costs $150 (online and $165 by mail) to file your formation certificate in South Dakota. (Read more on LLC cost in South Dakota).
The Certificate of Formation includes details like the name of the LLC, registered agent’s name, address, employees’ details, and structure of the company (member-managed or manager-managed). Before hiring employees in South Dakota LLC, one should know about the rules and regulations thoroughly. Also if you are expanding your existing business (an LLC) to South Dakota then you need to register as a South Dakota Foreign LLC.
How to File Online
Go to the Secretary of State Online Service. You will get the online service page. It does not require logging in or signing up to file your LLC online. You can directly start filing your LLC by clicking on the “Online Filing” button below. Read more about the South Dakota Articles of Organization for online registration.
How to File by Mail
If you prefer filing real-life forms for your South Dakota LLC registration, then you can download Domestic LLC Formation Form. Read the form thoroughly, fill it out, and mail it to the following address,
Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501
Processing Time: It takes no time (immediately) to get a South Dakota LLC if you file it online. For the mail filing, it takes 1 to 2 business days to get an LLC. By paying an additional fee, it can be expedited.
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Tailor Brands – ($49 + State Fees) Online LLC Setup
Step 4: Create Your South Dakota LLC Operating Agreement
Moving on to the fourth step, filing your operating agreement. An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC. This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to filing a South Dakota LLC Operating Agreement, the state does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all the details of your business operation. Like South Dakota, there are other states that do not have a mandatory rule to file operating agreements. But, this document would be useful if you decide to dissolve South Dakota LLC later. Hence, having an operating agreement may not be necessary but it is definitely ideal.
Recommended: You can get operating agreement templates at only $29 with TailorBrands. You don’t need to worry about drafting it as they will take care of it on your behalf. We recommend using –
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Step 5: Filing a South Dakota LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify the type of business for tax purposes and taxes in general. The EIN is necessary for any active business or any form of business for that matter.
EIN is needed when the LLC hires employees. Hiring employees in South Dakota LLC requires following specific rules and regulations. On the other side, EIN for South Dakota foreign LLC should be obtained if your LLC is based in other states.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Enter details of your LLC, and finally complete the form and send it to the address given. You can also get an EIN Assistant who can help you with the process.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Recommended: This hassle will be reduced when you hire an LLC formation service. They take care of obtaining EIN and all other things for your LLC. We recommend using –
Tailor Brands – ($49 + State Fees) Online LLC Setup
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
Congratulation, you are now done with all the necessary steps to form your South Dakota LLC. If you do it yourself it should take you a long time to properly understand and do all the steps.
However, if you use TailorBrands it should take fewer hours and you always have live chat with expert support for any help you need.
After Starting Your South Dakota LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File South Dakota business permits & licenses
- Get general liability insurance and professional liability insurance with coverage for employees
- File a South Dakota LLC annual report or biennial report
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Cost of South Dakota LLC
Forming an LLC in South Dakota is no doubt more cost-effective than other structures of a business. There are some fees and charges one has to bear to form a South Dakota LLC. LLCs have pass-through taxation. Hence, your South Dakota LLC won’t bring you a massive tax burden. Here are some of the fees and taxes are needed to be paid while forming an LLC in South Dakota,
|Fees/Tax||Amount to be Paid|
|Name Reservation Fee (online)||$25|
|Certificate of Formation Fee||$165 (by mail and $150 online)|
|LLC Annual Fee||$50|
In South Dakota, an LLC name reservation is not mandatory. You can register your LLC name at the time of registering your LLC. If you wish to hold the name for some time without registering your LLC, then you can do that online. Your LLC name will be reserved for 120 days without registering your LLC. It can be done by paying $25.
In South Dakota, an Annual Report has to be produced every year. It costs $50. Also, the State of South Dakota requires LLCs to pay a Sales Tax of 4.5% every year to the state. Read our guide on LLC costs in South Dakota for more information.
South Dakota Foreign LLC
If you are interested in forming a Foreign LLC in South Dakota then you need to file the Certificate of Foreign LLC to the South Dakota Secretary of State. Foreign LLCs allow you to operate your business in more than one state. Along with the Certificate of Foreign LLC, you need to submit some more documents like the Certificate of Good Standing, etc. to the South Dakota SOS to form your foreign LLC in South Dakota. To know more in detail, check out our guide on South Dakota Foreign LLC.
Reasons to Start an LLC in South Dakota
If an entrepreneur is looking forward to starting an LLC and looking for the best incentive programs, they should choose to go for LLC in South Dakota. The main reason for that is a reduction in different tax liabilities and diverse business funding options. Read more on South Dakota’s classification of LLC tax. There are several benefits that the state is offering to the new start-ups that are discussed below.
Privacy of the trust documents
Many trust documents are signed and preserved by the state government when a new LLC is built. They ought to be kept private, but all the states cannot provide the same level of privacy and protection to those documents. Still, some states like South Dakota where the rules regarding privacy are the best in the states. Here the documents are not required to be submitted publically.
Only the information filed in front of the court during the starting of South Dakota LLC, which has proceedings to modify, can be sealed.
South Dakota Reinvestment payment Program
When a business is thinking of upgrading their business or relocating it from one place to another, then they can take the help of a reinvestment program. In this program, a business entity can get a reinvestment incentive from the government. The amount of less than or equal to the payment LLC will be paying as sales and use tax for the particular reinvestment project is provided. The Board of Economic Development is openly taking the application of relocation of LLCs.
Variety Benefits Program of South Dakota
If entrepreneurs start an LLC in South Dakota, then they get eligible for various types of benefit programs offered by the government. Some of them are discussed in detail below.
- The first incentive is related to job applications and hiring. An LLC hires a candidate who belongs to a high–need category or belongs to high-demanding areas. The government will bear half the cost of hiring that particular employee.
- Those start-ups are thinking of purchasing new machinery for their business. The government issued tax-exempt bonds, which an entity should file if they want to get credit out of their money-incentive project.
- A fixed amount of working capital is required by an LLC to keep its business running. The South Dakota WORKS program can provide this capital under which the cost of payrolls, start-up, and construction of buildings can be covered.
Top Businesses in South Dakota
Before an entrepreneur forms an LLC in South Dakota, it is advised that they should learn the details about the state’s economy. They should go through the top businesses formed in the state and their contribution to the state. An overview of it is discussed below in brief.
Finance and Service sector
Most of the population of the state is working in the service sector of the state. The service sectors mainly include financial services like taxation and advisory, tour and travel services, educational services, and healthcare. The service sector has helped in generating employment in the state after the great depression and is now accountable for contributing around $8.2 billion to the state.
The state’s agriculture focuses on corn, rye, wheat, flaxseed, and soybean. Apart from these crops, there is a flourishing industry of high-quality wool production in the state. People have high-quality machinery that they use for the rearing of wool and later sell them.
Also, there is a small fisheries market in the state which is established near the Missouri River. The overall contribution of the agriculture sector to the GDP of South Dakota is nearly $5 billion.
State manufacturing is dependent only on raw agricultural materials. The primary industry that is found in the state is wool processing and its textiles. Other than that, there are businesses of wooden products and furniture making and food processing. There are a few numbers of an industry that makes computers or light machinery in the state. The total income of the manufacturing sector of the state is $4.52 billion.
There is a huge scope of small businesses in the state due to its small size. Some of the best ideas that are working well in the state are:-
- Cattle Ranch
- Account Consultancy
- Well water drilling
South Dakota LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming an LLC in South Dakota. Click on the steps in this list to read the full detail.
- Name your South Dakota LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a Registered Agent
In South Dakota, it is mandatory to select a registered agent for your LLC. Get a professional Registered Agent from LLC formation services like NorthWest Registered Agent to get things done hassle-free.
- File a Formation Certificate
Filing a formation certificate is necessary when forming an LLC in South Dakota. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create an Operating Agreement
An operating agreement is not a strict requirement in South Dakota but something encouraged when you start an LLC to avoid future conflicts.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
How Fast Can I Form an LLC in South Dakota
The online filing of LLC in South Dakota will be completed instantly after the payment is received. In-person filing may take about 1 to 2 business days.
If you’re wondering “How fast can I form an LLC in South Dakota?” then you’ve come to the right place. If you’re thinking about forming an LLC, you probably don’t want to wait weeks to get started. In South Dakota, however, you can form an LLC as quickly as two business days. This process is called Articles of Organization, and there are several steps you must follow to complete it.
After you’ve decided to establish an LLC, you’ll need to file articles of organization with the Secretary of State. These documents can be filed online or in person. Both methods require a fee of $150 for the online method, and $165 for the paper form. Keep in mind that the information you submit in your articles of organization will become public record, so make sure you’re comfortable sharing it. There are also specific requirements for submitting annual reports.
The name of your South Dakota LLC is crucial, as it must be distinguishable from other businesses in the state. Using the Business Name Availability search tool from the South Dakota Secretary of State will help you decide if the name you’ve chosen is available. If you’re unsure of the availability of a name, you can reserve it for 120 days by filling out an Application for Reservation of Name. You’ll also have to pay a $25 fee to reserve a name.
After completing the paperwork, the next step will be obtaining the federal tax ID number (EIN). This is like the social security number of an LLC. This number is used for tax purposes by the Internal Revenue Service (IRS). You’ll need to file an annual report with the Secretary of State in South Dakota. This report can be filed online or through paper. There are filing fees of $50 and $65 for the paper version.
After you’ve registered the name and address of the business, you’ll have to choose an operating agreement (O.A.), which will outline the rules and procedures for the LLC. An operating agreement will also protect your business assets from litigation and legal disputes. In short, an Operating Agreement serves as the LLC’s constitution, and will help you run your business efficiently and smoothly. In South Dakota, the words “Limited Liability Company” and “Limited Company” are required for your LLC’s name.
The LLC is an ideal choice for small and midsize businesses because it offers the benefits of a corporation with the flexibility of a partnership. Limited liability protection, low annual maintenance, and easy management make it a great choice for South Dakota business owners. The LLC is also one of the cheapest forms of entity structure available. So, if you’re planning on starting a business in South Dakota, it’s worth giving it a try.
The fastest way to form an LLC in South Dakota is to file online. This method allows you to avoid lengthy wait times at the state government office. The cost of filing an LLC in South Dakota will vary between $40 and $500. This includes the filing fee, processing, and any additional paperwork that’s necessary. If you’re worried about how fast your LLC will process, you can always go through an online provider and pay a flat fee for the service.
If you are a resident of South Dakota, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $150 (domestic LLC) and $765 (foreign LLC), LLC costs in South Dakota include $50 for Annual Reports every year. LLCs are liable to pay sales tax of 4.5% every year.
It takes no time (immediately) to get a South Dakota LLC if you file it online. For the mail filing, it takes 1 to 2 business days to get an LLC. If you hire a professional LLC service, then it might take less than that. We recommend Tailor Brands which has impeccable turnaround time.
Every year all the LLCs have to submit an Annual Report and pay $50 to the South Dakota Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens. Read more on the South Dakota Classification of LLC Tax.
LLCs are easier to establish than other business structures. Small businesses, especially start-ups can easily start their LLCs in South Dakota at a bare minimum cost. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. The formation of limited liability companies requires much lesser documents and legal processes. Share your queries with us, and leave a comment below.