How to Start an LLC in South Dakota (SD LLC 2024)

How to Start an LLC in South Dakota: If you’re looking to start a South Dakota LLC, you’ve come to the right page. Setting up an LLC is easy and cost-effective. To form an LLC, you must follow a few steps that include naming your LLC, hiring a registered agent, filing your formation documents, doing the operating agreement, and finally obtaining the EIN. You can easily set up your LLC at a very low cost in South Dakota. Though, you must pay the mandatory state filing fee. These fees and charges can be tax deductible, making the LLC formation cost almost negligible.

On this page, You’ll find all the steps that must be taken to ensure that your South Dakota LLC has been correctly formed. We recommend you read the whole article very carefully, word by word, don’t miss anything 🙂

How to Start an LLC in South Dakota

An LLC (aka 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. For an LLC, members’ personal assets are not affected by business debts. However, in some cases, if the LLC is sued for business debts, courts might pierce the corporate veil and use the owner’s personal assets to meet their corporate liabilities.

If you wish to start an LLC in South Dakota, you must file your Articles of Organization with the State and pay a filing fee of $150. While it’s the most important step, it’s not the only one. There are 4 other crucial steps to follow to get your LLC formed in South Dakota. Below are all 5 steps that explain everything you need to do to start a South Dakota LLC in 2024. Let’s get started! You can always hire a professional LLC formation service in South Dakota to set up your LLC instead of doing it alone; a Pro service will ensure everything is done properly.

Step 1: Decide a Name for Your South Dakota LLC

The first step while forming a limited liability company 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 must 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. ZenBusiness offers unlimited business name searches without any hassle.
• “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 Capitol Building 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 on, then you can reserve your LLC name for 120 days. To keep the name, you must 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.

Apart from LLC formation, ZenBusiness offers customized website templates and business emails at a very reasonable price. 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 “.io”, “.company”, “.xyz,” etc. Here you can get everything you need for your business in one dashboard.

Step 2: Assign a Registered Agent in South Dakota

The second step to forming an LLC in South Dakota is to appoint a Registered Agent. A registered agent is a person or business entity working 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. This address will be used as the principal address of your LLC to receive any legal documents. Most LLC formation companies also provide registered agent services. Below are two great LLC formation services; even if you buy their cheapest plan (normally $0), you also get registered agent service and other services at a very reasonable price.

These two are our top recommendations for registered agent service, as they are competent and authorized to conduct business in South Dakota. Some LLC formation services also offer standalone South Dakota registered agent services. You can purchase only Registered Agent services without purchasing any other LLC formation services. This standalone service might become handy if you are doing it yourself and don’t want to disclose your home address or you don’t want to pierce the corporate veil.

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 Articles of Organization. This South Dakota Articles of Organization is a legal document that is required to register your business with the South Dakota Secretary of State. It costs $150 (online and $165 by mail) to file your formation certificate in South Dakota.

The Articles of Organization include details like the name of the LLC, the registered agent’s name, address, employees’ details, and the company’s structure (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) in other states to South Dakota, you must register as a South Dakota Foreign LLC.

Processing Time: Normally, it takes around 2 business days (approx) to get your LLC formed in South Dakota. The processing time for online filing might be a little faster than offline filing. With an additional cost, you can get expedited filing as well. However, the document processing time can be changed due to various factors.

Every LLC owner has to pay the filing fees to register their business in South Dakota. This fee is mandatory but also tax deductible. If you’re doing it yourself (filing on your own), it will not cost you any additional service fee. However, it is not feasible to do that as the DIY process might be delayed, complicated, and messy, especially if you’re a novice entrepreneur. Hence, it is recommended to get professional guidance to get your LLC formed in South Dakota.

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. If you’re starting an LLC with your spouse, you must need an operating agreement for that. 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 that helps in taking future business decisions, especially if you decide to dissolve South Dakota LLC later. Hence, having an operating agreement may not be necessary, but it is surely ideal.

The operating agreement draft can be created for free if you don’t hire a professional. However, there is an advantage to appointing a proficient person/service. You will get a businesslike quality operating agreement at a very cheap fee, which will help you in the future. Hiring a professional service means you can sleep well at night 🙂

Step 5: Filing a South Dakota LLC EIN

The Employer Identification Number (aka EIN) 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.

An EIN number in South Dakota 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 must 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 to help you with the process.

Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999

Fax: (855) 641-6935 | Fee: Free

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.

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Congratulations, you are now done with all the necessary steps to form your Limited Liability Company in South Dakota. If you do it yourself, it should take you a long time to understand and do all the steps properly.

However, if you use ZenBusiness, it should be way faster. You will always have a live chat option and phone support with experts for any help you need. Their worry-free service will make things easier for you.

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After Starting Your South Dakota LLC

After forming your LLC, there are still some things that you will need. The most important thing is to separate your business and personal assets. LLCs have limited liability protection that protects your personal assets from business liability. This is called a corporate veil. However, the corporate veil can be lifted or pierced by the court if the LLC is sued. In that case, the owners of the LLC become personally liable for their corporate debts. A few things like appointing a legit registered agent, having enough capital, and filing all the major documents with the state can save the LLCs from being pierced into the corporate veil.

Apart from that, there are a few things you need to take note of,

• 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.

The LLC formation processing time in South Dakota is 1-2 business days if filing offline (by mail). The process starts immediately if filed online. Check how long it takes to form an LLC to know about the tentative timelines.

Cost of South Dakota LLC

LLCs can be formed by spending very less price. Apart from the mandatory state filing fees, you don’t have to bear additional service charges if you do it yourself. Following are the fees and taxes LLCs in South Dakota must pay to register and run a business in the state. Forming an LLC is no doubt cost-effective compared to other business structures. However, the fees and charges (tax-deductible) that you must pay to the state, such as name reservation fee, name filing fee, LLC filing fee, and Franchise Tax & Sales Tax (If applicable). Here are the main fees and taxes you must pay while forming your limited liability company 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
Sales Tax	4.5%

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 (along with having an LLC pass-through tax structure) 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.

Agriculture-related services

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.

Manufacturing industry

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

F.A.Qs

In Conclusion

When it comes to forming an LLC in South Dakota, it is much simpler than other business structures. In South Dakota, starting a small business or a start-up is easy because of its diverse resources. For small budget holders, forming a limited liability company is desirable. The steps explained in this article are generic steps for starting a business in South Dakota. It is recommended to consult an attorney or service provider.

In South Dakota, while establishing an LLC, make sure you check with the local bodies like the city council and district office to get updated with local regulations. We recommend ZenBusiness, one of the best LLC services that offers LLC formation at $0 (+ state filing fees). Hiring a professional service would make things easier. From having a registered agent to complying with the local and state government, everything will be smoother than doing things all by yourself.