Perhaps you are hoping to form a South Dakota LLC. People assume that starting an LLC is difficult and costly. However, it’s generally not difficult, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in South Dakota.
On this page, you’ll learn about the following:
- South Dakota LLC Cost of Filing
- Taxes payable to the South Dakota Department of Revenue
- Cost Comparison Between States
- Other Costs
South Dakota LLC Cost of Filing
Here are the costs involved in forming an LLC in South Dakota.
Cost of Filing Formation Certificates
The South Dakota Certificate of Formation is responsible for the majority of the cost, which could also vary depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the South Dakota Secretary of State.
South Dakota Domestic LLC
- Online Filing costs $150.
- Annual Report filing costs $50
- Name Reservation fee costs $25
- By Mail: Fill out the application form, and send it to Secretary of State Office, 500 E Capitol Ave, Pierre, SD 57501. Costs $165.
South Dakota Foreign LLC
- Online Filing costs $750.
- Annual Report filing costs $50
- Name Reservation fee costs $25
- By Mail: Fill out the application form, and send it to Secretary of State Office, 500 E Capitol Ave, Pierre, SD 57501. Costs $765.
Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.
South Dakota LLC Formation Service or Registered Agent Fee
You need a registered agent to form an LLC in South Dakota, hence, added costs for service fees. Here are three of the best LLC services on our list that will provide you with registered agents to ease your worries.
Business Permits and Licenses
The business licenses depend on your business’s activity and location and are renewed yearly. As such, the cost will vary. Check the South Dakota Department of Revenue for regulatory boards or agencies requiring licensing.
Taxes payable to the South Dakota Department of Revenue
An LLC in South Dakota has to pay several State as well as Federal Taxes at the stage of formation & during its operation. Read this article to know more about these taxes. The South Dakota State Department of Revenue charges several taxes on an LLC. The two main State Taxes are:
State Income Tax
The state of South Dakota does not charge any State Income Tax on the earnings made by an LLC. Which means more savings on all the income you draw through your LLC.
State Sales & Use Tax
Every LLC which is a service provider or is a seller of tangible goods is bound to the sales & use tax in South Dakota. The LLC has to collect taxes & then pay those to the South Dakota Department of Revenue. The Sales & Use Tax is different in different regions, counties, & cities. The current state sales & use tax rate on LLC in South Dakota is 4.5%
Federal Self-Employment Tax
As the name suggests, Federal Self-Employment Tax is paid by all the LLC Business members or managers. This kind of tax applies to all the earnings a member withdraws from the business.
The Federal self-employment tax rate in South Dakota is 15.3 percent.
Federal Income Tax
The Federal Income Tax is calculated on the basis of the earnings, the income tax bracket your LLC falls, the deductions, & the manner/ mode of filing.
Federal Income Tax is levied on all the profits your LLC makes minus the deductions & allowances such as Healthcare or Retirement Plans.
Employee & Employer Taxes
If you have several employees who draw monthly salaries, there will be some added Employee-Employer taxes. These tax implications vary, depending on various factors, e.g., the amount, number of employees, etc.
Cost Comparison Between States
South Dakota is surrounded by many states, namely Nebraska, Wyoming, Montana, North Dakota, etc. Each of these states has a different rate of taxes levied on LLCs. Let us take a look at this comparative chart.
|States||Filing Fee||Annual/Biennial Fee||Sales Tax|
Based on the kind of industry you LLC operated in, your LLC will be liable to some other taxes & duties. For Example, if your LLC is in the sector of import & export, you have to pay the import-export duty. You should consult with a professional to verify the tax rates or business costs of registering an LLC in South Dakota.
- South Dakota Name Reservation: $25 by mail
- Doing Business As (DBA): $10 for online filling
- Certified Document Copies: $15 + $2 per page.
- Certified of Good Standing: $20
- Business Domain Name and Website: depend on your preference, but domain name could be as low as $2.99/yr at NameCheap, and web hosting is at least $30/mo at Kinsta.
- Online workspace: at least $4.20/mo for GSuite.
- Business Insurance: would vary depending on insurance type–whether general liability insurance or professional liability insurance–and coverage.
- Dissolution of South Dakota LLC: $10
How Much Does It Cost to Maintain an LLC in South Dakota
To maintain an LLC in South Dakota you will need to pay an annual fee of $50 along with state sales & use tax at 4.5% and federal taxes.
When you establish a South Dakota LLC, you must file an annual report with the Secretary of State. This report should contain certain information about the LLC, including the business ID number, the official business name, the registered agent’s contact information, and the names and addresses of the LLC’s managers. The filing fee for the annual report is $50. You can also request changes to your LLC’s name and address.
The South Dakota Office of Economic Development provides an LLC start-up packet. Certain towns and counties in South Dakota may also require a license or permit for your LLC to operate. If you aren’t sure what these requirements are, IncFile can help you obtain them. In addition to a general business license, South Dakota LLCs are pass-through entities for federal tax purposes, which means profits pass through to the owners’ personal tax returns.
An LLC in South Dakota is a small-to-medium-sized business. Its ease of formation and management makes it a good choice for startups and small businesses. A South Dakota LLC is simple to form and manage, and it offers strong flexibility and limited liability protection, along with the lowest taxes and annual maintenance. However, you should be aware of the many pitfalls of forming a company in South Dakota.
As part of your South Dakota business registration, you’ll have to appoint a registered agent. The registered agent will act as your primary point of contact with the state and will accept service of process in case of a lawsuit. You can sign up for this service at ZenBusiness and receive a free year of registration. A good practice is to create an operating agreement with your LLC, which will define ownership and operating procedures.
In addition to the initial startup costs, LLC owners must also budget for recurring annual fees. These include state report filing fees, taxes, and any other additional fees that may be incurred. Failure to file these reports and fees could result in legal penalties and fines. To avoid these legal penalties, it’s important to prepare for annual reports well in advance. For instance, you’ll have to file a report with the Secretary of State before your company’s anniversary date. The filing fee for this report can range from $50 to $200.
When you form an LLC in South Dakota, you’ll need to designate one or more managers. These managers can be yourself or an outside professional. The more complicated your company is, the more likely you’ll need a manager to handle all of the details. So, if you’re unsure about whether to appoint a manager, you’ll be better off doing so.
The federal government doesn’t charge any taxes on South Dakota LLCs because they are pass-through entities. As such, owners report their income to their personal tax returns. Therefore, there are no personal income taxes in South Dakota, corporate income taxes, or franchise taxes. Foreign LLCs need to register as a foreign entity and pay an additional $25 to reserve a business name. Then, the company will have to pay annual reporting fees to the South Dakota Secretary of State.
It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.
It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.
The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.
The cost of South Dakota is much lower compared to other forms of business. Apart from the state filing fees and annual taxes, you might bear the cost of the registered agent. Compare the price of professional LLC services and choose the most affordable one.