How to Start a Nonprofit Organization in South Dakota 2024

Establishing a nonprofit is kind of similar to forming a corporation in South Dakota. You can easily start a nonprofit in South Dakota as a limited liability company, a corporation, or any other type of business structure. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues than profit-oriented businesses.

This article will guide you through the Dos and Don’ts of starting a nonprofit in South Dakota. LLCBuddy editors explain all the steps you must follow to form a corporation for your nonprofit organization. It must be noted that this page shared generalized steps to form a nonprofit in South Dakota. It is recommended to consult an attorney or hire a professional service.

What is a Nonprofit in South Dakota

Nonprofit organizations are legal entities that operate to serve public benefits and address community issues. Unlike for-profit organizations, nonprofits do not aim to generate any profit. The Internal Revenue Service (IRS) generally exempts nonprofit organizations from tax. However, based on the business entity structure, you will receive tax exemptions as a nonprofit.

In South Dakota, ensure you have a community issue to address before forming your nonprofit. It can generally be education, religion, charity, social service, or other social issues. Nonprofits do not pay taxes on the money they receive through fundraising programs, donations, or any charitable funding.

Types of Nonprofits in South Dakota

The first thing one has to decide is what type of nonprofit structure one wants. There are several types of nonprofits one can start. Here is a list of nonprofit types one can choose from-

Nonprofit LLC
Nonprofit Corporation
Unincorporated Nonprofit

BOI Report Filing

According to the Corporate Transparency Act, every LLC, corporation, and other type of business that is registered with the South Dakota SOS or similar authority, must file the BOI report with FinCEN. From January 1, 2024, it is mandatory to file a BOI report for every business entity. In this report, LLCs have to share information about the beneficial owners (having equal or more than 25% share). LLC owners can file BOI reports online or offline.

Businesses in South Dakota that are created before January 1, 2024, should file their BOI report by January 1, 2025. Businesses that are created in 2024, must file the BOI report within 90 business days of finishing the formation process. Missing out on filing the BOI report may lead to a monetary penalty of $500/day.

How to Start a Nonprofit in South Dakota

Nonprofits are certainly different from for-profit organizations. The main focus of the organization is on social values rather than profit. The process of having a nonprofit in South Dakota is similar to forming any corporation in South Dakota. However, there are a few additional steps to follow.

Step 1: Develop Your Mission and Vision

Before you get into legal details, you need to define the purpose and goal of your organization clearly; this will go a long way in guiding your decisions as well as making it easy for you to explain your mission statement.

Pick out what specific cause or issue you want to address;
Define who you will target or help reach particular goals;
List down both what people should do within a short period and what they should achieve in the long term perspective;
Write a captivating mission statement.

Step 2: Name Your Nonprofit in South Dakota

Naming a business in South Dakota has a handful of regulations. If you start a corporation or an LLC in South Dakota, you must follow those regulations to name your nonprofit. The most important rule is to check if the name is available in South Dakota to use.

If you’re forming an LLC in South Dakota for your nonprofit organization, check out LLC naming guidelines in South Dakota. For the corporation regulations, read on how to start a corporation in South Dakota. As soon as the name is decided, you can reserve it with the South Dakota Secretary of State. You can also file DBA in South Dakota before you establish your nonprofit organization. DBA can be filed in two methods, by mail and in person.. The DBA filing fee in South Dakota is $10.

Online DBA Filing: There is no online filing available
Offline DBA Filing: For filing offline in South Dakota, you must send the accomplished DBA filing form to the South Dakota Secretary of State, 500 East Capitol Avenue, Pierre, SD 57501 or drop it off in person at the same address.
DBA Renew Time in South Dakota: five years

Step 3: Appoint Initial Board Members

If you’re forming a corporation for your South Dakota nonprofit, it is required to appoint the initial board members. In South Dakota, you need at least Three unrelated directors to start the organization. If you don’t choose a minimum of Three directors, it will automatically become a member-managed corporation.

Step 4: Get South Dakota Registered Agent

This is a very important step for any business in South Dakota. The Registered Agent in South Dakota is a person who conducts all types of documentation between the State and your nonprofit organization. The Registered Agent must be from South Dakota, above 18 years of age, and must have legal rights to conduct business in the state. Several professional and business formation services offer registered agent services in all the states in the USA. It is better to hire a professional rather than being your own Registered Agent in South Dakota.

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Step 5: File Articles of Incorporation with South Dakota SOS

This is the most important step in forming a nonprofit corporation in South Dakota. File your Articles of Incorporation with the South Dakota Secretary of State. You can file your nonprofit corporation through two methods, online and by mail. Submit the details of your nonprofit corporation, like the name of the nonprofit, address, name and address of the registered agent, operation dates, directors’ details, and more information related to your company.

Online Incorporation: Create an account/Log in to the SOS site, get the online form, fill it, and submit online
Offline Incorporation: Send the form by mail to Secretary of State Office, 500 E Capitol Ave, Pierre, SD 57501
Incorporation Fee in South Dakota: $150 for online filing, and $165 for filing by mail

Hiring a professional service might be a wise idea here. Having a corporation is much more complex than forming an LLC. We recommend ZenBusiness as they are one of the top business service providers currently. They offer LLC formation at $0 in South Dakota.

Step 5.1: Write Company Bylaws

As soon as you file the formation documents, it is time for the company bylaws. The directors and board members must decide how the meetings, elections, voting, and other corporate activities will be held. These bylaws must comply with the South Dakota state law. It is similar to an LLC operating agreement in South Dakota for the LLC owners.

Step 6: Get an EIN in South Dakota

The next step is to obtain the EIN in South Dakota. The employer identification number (EIN) is required to conduct business in South Dakota. You will need to acquire the South Dakota EIN from the official IRS website. To obtain the EIN, submit your application to the IRS office either by mail or through their online platform. There is no associated cost for this process.

Step 7: Tax Exemptions for Your Nonprofit

When you start a nonprofit in South Dakota, you enjoy tax exemptions. As the nonprofits are not profit-oriented, they get a huge tax exemption from Federal and State authorities.

Federal Tax Exemption

You must submit Form 1023 to the IRS to file for federal tax exemption. This form, titled “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is required for all nonprofit corporations. Smaller nonprofits have the option to file Form 1023-EZ instead. You will be prompted to provide details about your organization upon obtaining the relevant form. Complete the form with the necessary information and submit it. The filing fees are $600 for Form 1023 and $275 for Form 1023-EZ.

State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In South Dakota, you must apply for the tax exemption to the South Dakota Department of Revenue. Get the form, fill it up with the correct details, and send it to the office. You may need to pay a fee along with the form and supportive documents to apply for the State Tax Exemption. You need an Exemption Certificate to apply for the state tax exemption. Read South Dakota classification of taxes to learn more about the South Dakota tax structure.

Can I form an LLC for my Nonprofit in South Dakota?

Yes, you can form an LLC in South Dakota to run a nonprofit. Establishing an LLC nonprofit in South Dakota requires similar documents and paperwork. Except for tax exemption applications that one must file with the state tax and revenue department. LLCs must file Form 1023 with the South Dakota Department of Revenue to get the tax exemption.

After You Form a Nonprofit Corporation in South Dakota

Once your nonprofit is formed, there are additional steps to complete:

Get necessary licenses: As soon as your corporation or an LLC for your Nonprofit in South Dakota will be established, get necessary licenses and permits. Check with the local authority/government to get the local permits.
Get Insurance for the South Dakota Nonprofit: You must get workers’ compensation and unemployment insurance if you have employees. Based on your nonprofit structure, you might need general liability insurance, property, vehicle, auto insurance, etc.
Get a Business Bank Account: You must get a business account for all types of business-related transactions in South Dakota. You may need different documents based on the bank and place of business. Check with the bank for it.
File Nonprofit as Charity: This is optional. Your nonprofit is either for charity purposes or any purpose that meets your community’s needs. If your organization is for charity purposes, then you can file your nonprofit as a charity to enjoy tax exemptions.
Other Business Compliances: You may need additional compliances based on your nonprofit type. Check with your attorney or local authority for more information.
Evaluating And Improving Performance: To evaluate the performance of your non-profit organization, it is necessary to; establish performance metrics also tied to the mission; and implement continuous improvement strategies.
Staying Current With Nonprofit Trends And Best Practices: To stay up-to-date on trends and best practices in the non-profit world you should join nonprofit associations plus networks.

Common Challenges And How To Address Them

Funding Sustainability

For funding sustainability issues you need to focus on diversifying funding sources and developing strong relationships with donors. Also, implementing efficient financial management, exploring earned income opportunities for sustainability, and such should be on focus.

Volunteer Management

The challenges faced in volunteer management can be resolved by creating clear roles plus expectations for volunteers, and providing adequate training also support. Recognize and appreciate volunteer contributions while implementing volunteer retention strategies such as offering regular appreciation events or awards. Provide trainers’ placement services too.

Mission Drift

This problem can be solved by several mechanisms such as regular review and reaffirmation of your organizational mission–this will ensure that all activities are aligned with the core purpose. Educate board members and staff about the importance of the mission and make them understand how this works out in practice. Implement a strategic planning process and explain to the board why it is important for their organizations to have a well-defined mission.

Regulatory Compliance

To remain compliant with the law, you need to: keep track of changing laws and regulations all the time; conduct regular compliance audits; seek professional advice when in doubt; and implement comprehensive record-keeping systems.

Names of Nonprofit Corporations in South Dakota

Following are some of the Nonprofit Organizations in South Dakota. The contact information of these organizations can be found on South Dakota Secretary of State portal.

Rosholt Charities
Salem Charities
Scotland Charities
Sioux Falls Charities
Sisseton Charities
Spearfish Charities
Springfield Charities
Stickney Charities.

FAQs

What are the steps to starting a nonprofit in South Dakota?

The steps include filing articles of incorporation with the South Dakota Secretary of State, obtaining an Employer Identification Number (EIN) from the IRS, and applying for tax-exempt status with the IRS.

How long does it take to start a nonprofit in South Dakota?

The timeline can vary, but it typically takes a few months to complete all the necessary paperwork and receive tax-exempt status from the IRS.

Can I operate a nonprofit from my home in South Dakota?

Yes, you can operate a nonprofit from your home in South Dakota, as long as you comply with any applicable zoning laws and regulations.

Do I need a board of directors to start a nonprofit in South Dakota?

Yes, you need to have a board of directors with a minimum of three members to start a nonprofit in South Dakota.

How do I choose a name for my nonprofit in South Dakota?

You will need to choose a unique name that is not already in use by another organization in South Dakota, and it must comply with state regulations for nonprofit names.

Can I pay myself a salary from a nonprofit in South Dakota?

Yes, you can receive a reasonable salary for your work with a nonprofit in South Dakota, but the compensation must be approved by your board of directors and comply with IRS regulations.

What are the reporting requirements for nonprofits in South Dakota?

Nonprofits in South Dakota are required to file annual reports with the Secretary of State and must also comply with federal reporting requirements to maintain their tax-exempt status.

Are there specific fundraising regulations for nonprofits in South Dakota?

Yes, nonprofits in South Dakota must comply with state laws related to charitable solicitations, including registration requirements for certain types of fundraising activities.

Can a nonprofit in South Dakota make a profit?

Nonprofits in South Dakota can generate revenue through programs and services, but any profits must be reinvested in the organization’s mission and cannot be distributed to private individuals.

Is it difficult to get tax-exempt status for a nonprofit in South Dakota?

The process of applying for tax-exempt status with the IRS can be complex, but with proper documentation and a clear mission statement, many nonprofits in South Dakota are successful in obtaining tax-exempt status.

Are there grants available for nonprofits in South Dakota?

Yes, there are a variety of grants available to nonprofits in South Dakota from government agencies, foundations, and other sources. Nonprofits must research and apply for grants that align with their mission and goals.

What are the advantages of starting a nonprofit in South Dakota?

Starting a nonprofit in South Dakota can provide tax benefits, access to grants and donations, and the opportunity to make a meaningful impact on your community.

Can a nonprofit in South Dakota engage in political activities?

Nonprofits in South Dakota are permitted to engage in limited lobbying activities, but they are prohibited from endorsing political candidates or engaging in partisan political campaigns.

Are there workshops or resources available to help start a nonprofit in South Dakota?

Yes, there are workshops, online resources, and nonprofit support organizations in South Dakota that can provide guidance and assistance to individuals looking to start a nonprofit.

What are the key elements of a successful nonprofit in South Dakota?

A successful nonprofit in South Dakota typically has a clear mission and vision, a strong board of directors, effective leadership, sound financial management, and active community support.

Can I convert an existing for-profit business into a nonprofit in South Dakota?

Yes, it is possible to convert an existing for-profit business into a nonprofit in South Dakota, but the process can be complex and may require legal assistance.

How can I raise awareness about my nonprofit in South Dakota?

You can raise awareness about your nonprofit in South Dakota by utilizing social media, hosting events, collaborating with other organizations, and reaching out to local media outlets.

Are there specific regulations for starting a religious nonprofit in South Dakota?

Religious nonprofits in South Dakota are subject to the same regulations as secular nonprofits, but they may have additional considerations related to religious practices, tax exemptions, and reporting requirements.

Can I start a nonprofit in South Dakota if I have a criminal record?

Having a criminal record does not necessarily disqualify you from starting a nonprofit in South Dakota, but it may impact your ability to serve on the board of directors or handle financial matters.

How can I attract donors to support my nonprofit in South Dakota?

To attract donors to support your nonprofit in South Dakota, you can create compelling fundraising campaigns, tell your organization’s story effectively, and demonstrate the impact of your programs and services.

What are the governance requirements for nonprofits in South Dakota?

Nonprofits in South Dakota are required to have a board of directors that meets regularly, follows the organization’s bylaws, and acts in the best interests of the organization and its mission.

Can I start a nonprofit in South Dakota if I am not a resident of the state?

Yes, you do not need to be a resident of South Dakota to start a nonprofit in the state, but you will need to comply with state regulations for incorporating and operating a nonprofit organization.

Are there specific insurance requirements for nonprofits in South Dakota?

Nonprofits in South Dakota are not legally required to have insurance, but it is recommended to protect the organization and its assets from potential liabilities.

How can I recruit volunteers for my nonprofit in South Dakota?

You can recruit volunteers for your nonprofit in South Dakota by promoting volunteer opportunities through your website, social media, community events, and local volunteer organizations.

Can a nonprofit in South Dakota engage in fundraising events?

Yes, nonprofits in South Dakota can engage in fundraising events, such as galas, auctions, and walkathons, to raise funds and awareness for their organization.

What are the benefits of incorporating as a nonprofit in South Dakota?

By incorporating as a nonprofit in South Dakota, you can protect your personal assets from liabilities, attract more donors and grants, and establish your organization as a credible and trustworthy entity.

Are there specific regulations for starting a youth-focused nonprofit in South Dakota?

Youth-focused nonprofits in South Dakota may have additional regulations related to working with minors, background checks for volunteers, and compliance with child protection laws.

How can I create a business plan for my nonprofit in South Dakota?

You can create a business plan for your nonprofit in South Dakota by defining your mission and goals, outlining your programs and services, conducting a market analysis, developing a budget, and setting objectives for growth.

What is the process for starting a nonprofit in South Dakota?

To start a nonprofit in South Dakota, you need to file articles of incorporation with the Secretary of State, obtain an Employer Identification Number (EIN) from the IRS, and apply for tax-exempt status with the IRS.

What are the initial filing fees for starting a nonprofit in South Dakota?

The initial filing fees for starting a nonprofit in South Dakota include the cost of filing articles of incorporation with the Secretary of State, which is currently $30.

In Conclusion

Starting a Nonprofit corporation in the South Dakota takes careful thought, dedication, and detailing. Follow the steps detailed in this guide while addressing common challenges so that your organization can be built on solid ground and make a long-lasting impact on your cause. Remember also that running a nonprofit organization in South Dakota is a perpetual learning, adapting, and growing process.

As you continue your journey, you may need professional help. Having a professional or experienced person, or attorneys while you run your nonprofit in South Dakota can make the journey much simpler in the long run. Since forming a nonprofit involves tax exemptions, the government takes additional care to verify your background.

Donations, charity, and several community services are the most desirable ways to evade tax. Hence, many people get involved in nonprofit organizations. It is recommended to consult a legal professional, accountants, and service providers like ZenBusiness for the paperwork and formation process. With persistence, passion, and proper management structure everything is possible hence changing positively your community as far as Non-Profit corporations are concerned.