LLC in SD: If you want to start a South Dakota LLC online or by mail, you need to submit the Articles of Organization with the South Dakota Secretary of State for $150-165. For details, follow the 7 steps given in this article.
An LLC in South Dakota basically links an organization’s limited liability with the pliability and shortage of formalities. All these are offered by any sole proprietorship or association.
We would recommend setting up an LLC in SD for any entrepreneur whose objective is to restrict liability for professional lawsuits and debts.
Not from South Dakota? Learn to Start an LLC in any other State.
Tip of the Day: South Dakota LLC formation by yourself is mostly hectic and time taking. Hiring a reliable LLC formation service is not only a good choice, but saves you from overspending. Therefore we recommend you to:
Now, what is an LLC? A Limited Liability Company (LLC) unites the best of partnerships, sole ownerships, and corporations into one organizational entity providing full protection to liabilities, tax incentives or flexible business structures, etc.
It only costs almost 150-165 USD to initiate an LLC in South Dakota.
All you’ve to do is to submit a certificate of your new business with the State Minister. An entrepreneur can either apply online, drop a mail, or visit the office in person to build a new LLC.
Important Statistics: When You Start an LLC in South Dakota!
- Corporate tax rate: 0 percent
- Individual income tax rate: 0 percent
- Sales tax rate: 4.50 percent
- Average effective property tax rate: 1.32 percent
- Unemployment: 3.2 percent
In this article, we will explain the LLC formation method in South Dakota. So let’s get started!
Outlining the LLC Formation Process
- Pick a Name for Your South Dakota LLC
- Find a Registered Agent for Your LLC
- Submit the Articles of Organization
- Establish an LLC Operating Agreement
- Follow the Tax and Other Administrative Requirements
- Fulfill Your State Tax Commitments
- Submit Annual Reports
Next, we are going to discuss the steps one by one to make it clear for all of the viewers and new entrepreneurs.
#1: Pick an LLC Name
The first and foremost part of building an LLC in SD is to pick up the right company name. Try to select a name that corresponds to South Dakota standards and is conveniently accessed by prospective customers.
What Instructions Should Be Followed While Naming an LLC?
- Every business owner should include “Limited Liability Company” to his new company or the abbreviation of it, LLC.
- Avoid using words that can mystify your LLC name with the government agencies, such as State Organizations, Treasury, FBI, etc.
- Make sure to choose a unique name from other corporations, South Dakota LLCs, or limited liability parties.
- If you want to fit in a few confined words like an attorney, bank, university, etc., it might demand hiring a licensed lawyer or doctor for additional documentation.
The next step is to verify access to your chosen name in South Dakota. Make sure if the name is still available or utilized by another entity.
You can visit South Dakota’s official state website to check on Business Registry Search. Furthermore, one can also generate a name through an LLC Name Generator online.
#2: Find a Registered Agent
Another vital step is to find a reliable Registered Agent to form an LLC in SD.
There are some limitations when choosing a registered agent in South Dakota. The person should be a South Dakota inhabitant who would be able to perform your business tasks from within the state.
You may also nominate yourself for the official documentation, but we personally recommend going for ZenBusiness. Besides offering a free first year of their registered agent services, the company will form your South Dakota LLC only for $49 plus state filing fee.
#3 File an Articles of Organization
During the formation of an LLC in SD, it’s crucial to submit your articles of organization linked with the Secretary of State. A general article should cover the following:
- Name and web address of your LLC’s planner
- The official name and address of South Dakota LLC
- Details of your LLCs registered entity
- Details of your company members
- The official LLC emails
- Entrepreneur’s signature
DIY Cost of Forming an LLC in South Dakota ($150-$165)
The main LLC formation cost through the DIY route is the state filing fee of your Article of Organization. Currently, the state of South Dakota charges you $150 for filing your LLC online and $165 for paper filings. These fees may be subjected to revision by the state.
#4: Establish an LLC Operating Agreement
An LLC operating agreement is constitutional paperwork that sketches the rules and regulations for a new company and also outlines the entrepreneur’s operating procedures to form a new LLC in SD.
Although not necessary, creating an operating agreement will benefit a company for sure.
This legal agreement guarantees all entrepreneurs to remain on the same boat, which ultimately lessens further business clashes.
#5: Follow the Similar Tax and Other Administrative Requirements
A few extra taxes and other administrative requirements might implement in your new LLC that includes:
Employer Identification Number (EIN) – It is just like a Social Security Number, so if your company has more than one employee, you can get this EIN by paying extra. This nine-digit code will check into your tax issues and assist you in creating a new bank account, hiring new staff, etc. One can submit an online form at the IRS website to get an EIN for his company.
Official Licenses – Sometimes, your new LLC in South Dakota might demand official state licenses or other approvals, depending on the business type and its location. So, there are Economic Resource Units in South Dakota leading you to authorities to guarantee proper licensing, registration, or permissions within the state.
#6: Fulfill Your State Tax Commitments
After getting a South Dakota LLC, there are several responsibilities of a business entity that should be fulfilled. For instance, in a few cases, one has to check with the South Dakota Department of Revenue (SDDOR) for selling products or assembling sales tax, etc.
For your convenience, SDDOR has an online platform, so you can register yourself from there through Business Taxes Registration Application. For more information, you can review detailed LLC articles on our website.
#7: Responsibly Submit Annual Reports
All limited liability companies in South Dakota, after their creation, are obliged to submit their annual (or biennial) reports. For more details on how to file an annual report or state-specific fee, read our article on LLC annual (or biennial) report.
Due Date: In South Dakota, you need to submit your annual report with $50 online or $65 by mail due every year on the first day of the month when you initially registered your LLC with the state.
Late Filings: In case you are unable to submit the required annual report after the due date will result in a $50 late fee. Failure to file an annual report may result in the dissolution of your LLC in South Dakota.
Additional Information on LLC in South Dakota
Register a Foreign LLC in South Dakota
Entrepreneurs often form an LLC in a state other than the state of their residence to have some tax benefits and reduce LLC formation costs. Moreover, some business owners have their LLC franchises in multiple states. In such cases, they register their LLCs or franchises as foreign LLCs in all states where they operate their business.
If you have an LLC in any other state and wish to open a franchise in South Dakota or want to form an LLC in South Dakota while you are a non-South Dakota resident, you can form a foreign LLC online or download a foreign LLC application and mail it to:
Secretary of State Office,
500 E Capitol Ave,
Pierre, SD 57501.
South Dakota Foreign LLC Filing Fee: ($750 Online or $765 by Mail – nonrefundable)
Hiring Employees in South Dakota
To run your business in a compliant manner, you have to follow the State of South Dakota’s Department of Labor & Regulation guidelines while hiring employees for your existing business or new LLC. Some of the major points are stated below;
- Verify the employment status of individuals, such as whether the potential employee is a US resident; if not then are they permitted to work in the US, are they of a certain age to work for that particular job, etc
- Report new hiring to the state
- File quarterly reports on wages and taxes
- Report job refusal
Acquire Relevant Business Licenses and Permits to Operate in South Dakota
To successfully operate your LLC in South Dakota, you must acquire permits and license to comply with federal, state, and local government regulations. For instance, to operate a pest control business, you need to acquire a license from the department of agriculture and fulfill the state’s certification requirements, etc
The requirements and fees for business licenses and permits vary from state to state. Work thoroughly on prerequisites and compliance-related information for your business before officially filing your LLC with the state. However, the following resources may help;
- Hire a reliable, professional service like ZenBusiness to do a license and permit search for you. Many LLC formation services do this as a part of their LLC formation packages.
- Visit the US Small Business Administration (SBA) guide for federal license and permit information.
- South Dakota Department of Labor & Regulation website’s find a form section helps you learn the state’s license requirements.
- Visit your local county clerk’s office and seek information about local licenses and permits.
Obtaining a Certificate of Good Standing in South Dakota ($20- nonrefundable)
A Certificate of Good Standing, aka Certificate of Compliance in South Dakota, verifies that your LLC has been legally formed and is being operated and maintained in a compliant fashion. This document is needed for;
- Filing your business as a foreign LLC
- Seeking funding and investments from banks or other people
- Acquiring or renewing relevant business licenses or permits
You can request the certificate of good standing online from South Dakota’s Secretary of State’s official website.
Dissolving Your LLC in South Dakota
In case you no longer wish to continue your LLC in South Dakota at any point in the future, you must officially dissolve it; otherwise, you may face tax liabilities, penalties, and legal troubles.
South Dakota LLC Dissolution Fee: ($10 – nonrefundable)
In South Dakota, you can dissolve your LLC by following 3 basic steps:
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We hope this article has helped you in every aspect of forming an LLC in South Dakota. If you still have any questions or confusion, please ask in the comment section.
Alfie Wilson, Esq., is a legal content writer with expertise in business formation, criminal law, veterans disability, family law, DUI law, personal injury, animal welfare, and legal writing. He holds a J.D. from Emory University School of Law and has experience in appellate advocacy and regulatory matters. Alfie’s passion lies in breaking down complex legal topics for a non-lawyer audience. He currently writes for law firms and non-profits on various issues and resides in Arlington, Virginia.