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 🙂
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 (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 2023. 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|
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.
Recommended: You can do name search, business domain, website, emails, and a lot more in one place by hiring a professional service. We recommend using –
ZenBusiness – ($0 for LLC Formation)
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.
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 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.
A person 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 is responsible for handling all the legal documents on the LLCs behalf.
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.
There are a few reasons why you shouldn’t be your own registered agent. The address of the registered agent is used to communicate with the SOS or for any legal activities. If you are your own registered agent, you might have to upload your personal address to the public forum. Besides, the registered agent must be at the address during business hours. It won’t be easy for you as you also have to take care of other things in your LLC. Hence, it is wiser to appoint a separate entity as your registered agent.
If an LLC is sued in South Dakota, in some cases, courts might decide to lift the corporate veil, which means the owners of the LLC will be personally liable for their business debts. They might have to forgo their personal assets to repay their business debts. This is called piercing the corporate veil, where personal and business assets are not separated anymore. Your personal assets can be protected if you have enough capital and all your LLC documents are properly filed.
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.
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: 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.
Recommended: Online LLC Formation service can provide all these documents way faster than usual time with lifetime customer support and 100% accuracy. We recommend using –
ZenBusiness – ($0 + State Fees) Online LLC Setup
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. 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.
Recommended: You can get a professionally made operating agreement for very less cost with ZenBusiness. You don’t need to worry about drafting it as they will take care of it on your behalf. We recommend using –
ZenBusiness – ($0 + State Fees) Online LLC Setup
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.
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 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
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 –
ZenBusiness – ($0 + 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.
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.
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.
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|
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 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.
One of the advantages of South Dakota is its minimal bureaucracy when it comes to business formation. The state has taken significant steps to create a business-friendly environment, recognizing the crucial role entrepreneurs play in driving economic growth. The South Dakota Secretary of State’s office has embraced technology, simplifying the entire LLC formation procedure. With a user-friendly website and easy-to-understand guidelines, entrepreneurs can navigate the process effortlessly, ensuring a swift start to their business venture.
The act of forming an LLC in South Dakota can be done entirely online, saving time and reducing administrative burdens. The Secretary of State’s website provides all the necessary information and forms required to initiate the registration process. Entrepreneurs can create an account, complete the online application, and pay the required fees swiftly. This digital approach removes the need for physical paperwork, allowing you to establish your LLC in South Dakota efficiently and without unnecessary delays.
Not only does South Dakota offer a streamlined online process, but it also boasts impressive processing times for LLC formation. Compared to many other states where the process can take weeks or even months, South Dakota prides itself on its expeditious formation times. Once an application is submitted, the Secretary of State’s office works diligently to process it promptly. This means that entrepreneurs won’t have to wait long to obtain the legal recognition needed to operate their business effectively.
Additionally, South Dakota offers a wide range of resources to aspiring business owners to assist them in setting up their LLC quickly and efficiently. These resources include comprehensive guides, frequently asked questions, and even access to professional assistance if required. By providing entrepreneurs with ample support and information, South Dakota ensures that they are empowered to navigate through the LLC formation process swiftly and accurately.
With its commitment to a business-friendly environment, efficient online processes, and prompt processing times, South Dakota proves to be an ideal state for entrepreneurs seeking a fast and hassle-free LLC formation. By minimizing red tape and adopting user-friendly digital platforms, the state’s Secretary of State’s office empowers business owners to start their LLC promptly and focus on their passion: running their business.
In conclusion, starting a business and establishing an LLC is an essential step towards success as an entrepreneur. Choosing the right state can greatly impact the speed and ease with which you can accomplish this critical task. South Dakota’s pro-business environment, user-friendly online platform, and swift processing times make it a top choice for entrepreneurs looking for a fast and efficient LLC formation process. By setting up your business in South Dakota, you can hit the ground running and embark on your entrepreneurial journey effectively.
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 TailorBrands 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.