South Dakota LLC
Everything You Need to Know About South Dakota LLCs:
South Dakota LLC Formation Options
Do It Yourself
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How to Start an LLC in South Dakota
To start an LLC in South Dakota, you’ll need to do three things: appoint a registered agent, choose a name for your business, and file Articles of Organization with the Secretary of State. You can file the document online, by mail, or in person. The articles cost $150 to file online ($165 with a paper form). Once filed with the state, this document formally creates your South Dakota LLC.
According to SD Codified L § 47-34A-203 (2019), every South Dakota LLC must appoint a registered agent upon formation. You don’t need to hire a registered agent, but if you do, make sure your registered agent will list their address on your articles wherever possible to ensure maximum privacy.
If you’re starting a new business, you probably already know what you want to name your LLC. But you’ll need to know if your preferred name is available. To find out, visit https://sosenterprise.sd.gov/BusinessServices/Business/NameAvailability.aspx and search until you find the perfect name for your LLC.
Once you know who your registered agent will be and what your LLC name is, you’re ready to file your South Dakota Articles of Organization. Follow along with our filing instructions below:
Filing the South Dakota LLC Articles of Organization
Learn more about each Articles of Organization requirement below. Note that the information you provide becomes part of the public record—permanently.
Or skip the form entirely and hire us to form your South Dakota LLC. We provide a free business address to list whenever possible throughout the filing to better keep your personal address private.
1. Company Name
Your name must include “Limited Liability Company,” “Limited Company,” or an abbreviation. Most businesses keep it simple with “LLC.”
This section is optional, and only on the paper filing. Basically you can include that your LLC has a general business purpose for any lawful business in the state of South Dakota.
3. Initial Designated Office
This is your official address, which much be a street address (no PO Boxes). Hire Northwest and you can list our South Dakota address throughout your articles. An email address is optional (and will be part of the public record if you include one).
4. Registered Agent
For your South Dakota registered agent, you can either list a noncommercial agent (such as yourself) or a commercial registered agent (like us). If you list a noncommercial agent, the South Dakota street address where the agent will be available will become part of the permanent public record of your South Dakota LLC. Prefer a commercial agent? Hire us, and our name and CRA number will go here.
5. List South Dakota LLC Organizers
Your organizer is just the person who signs and submits your Articles of Organization. It doesn’t have to be anyone in the LLC, but your organizer does have to include their name and address. Hire Northwest, and we’ll be your organizer.
If you don’t want a specific end date for your LLC, skip this section. Otherwise, write the length of time you want your business to exist.
You’ll need to indicate whether your company will be member or manager-managed. In a member-managed LLC, members share decision-making power. In a manager-managed LLC, members give these powers to one or more managers. If the company is manager-managed, you’ll need to include the name and address of each manager.
8. Optional Provisions
Per SD Codified L § 47-34A-203 (2019), you can list anything you could put in an operating agreement or any other matter not inconsistent with law. For instance, you could address issues such as membership transfer in the articles or in your operating agreement.
Why Have a Registered Agent Form Your South Dakota LLC?
Professionals in South Dakota hire registered agent services like Northwest Registered Agent to start an LLC—but why?
Standard filing companies don’t have employees or offices in every state. But as a national registered agent, it’s a requirement for us, which is a benefit for our clients. Our office is located in Watertown, SD. We’re on a first name basis with the people who work in South Dakota’s Secretary of State. We know all the fastest filing methods, which translates to fast, professional service—without extra fees.
As your registered agent, we list our Watertown registered office address on your LLC’s formation documents. Why? If you’re starting a business from your apartment in Sioux Falls, do you really want your apartment address as your business address? (Hint: the answer is no.) We’ll list our address, so you don’t have to list yours. Plus, we never sell your data. We don’t list your personal information on filings if we don’t have to. It’s all standard and part of our commitment to Privacy by Default®.
Free Mail Forwarding and Business Address
We already accept your legal mail—so why not take it a step further? In every state, we include limited digital mail forwarding for your regular mail too (5 pieces of regular mail a year; $15 a doc after that). Plus, you can list our address as your business address. That means you can have all business mail routed through our office. With both mail forwarding and a business address included, you get a level of security unmatched in the formation industry.
We know the in’s and out’s of each state—and we use this knowledge to help you when you need it most. Our team of Corporate Guides® has over 200 local business experts. You can call or email us for answers to all your questions about your LLC in South Dakota. Our Corporate Guides are dedicated solely to helping you with your business—not selling you services or meeting quotas.
What Do I Do After My South Dakota LLC Is Formed?
After your South Dakota Articles of Organization are approved, you still have a few more important steps to take, including getting an EIN, drafting an operating agreement, opening a bank account, funding the LLC and learning about state reporting and tax requirements.
Get an EIN
An EIN (“Employer Identification Number”) is a federal tax ID assigned to your business by the IRS. The IRS uses your EIN to easily identify your business on tax filings.
Does a South Dakota LLC need an EIN?
Almost certainly. Your impulse may be to think that with so few tax requirements in South Dakota, an EIN may be unnecessary, but there are plenty of reasons why you might need (or just want) an EIN. On the federal level, you’re required to have an EIN if you have employees or if you file certain federal excise returns. If you have to pay sales, use or other common state taxes, you’ll need to fill out a South Dakota Tax Application with the Department of Revenue. The application—you guessed it—requires your EIN. Just opening a bank account typically requires an EIN as well.
How do I get an EIN for my LLC?
You can apply for an EIN directly from the IRS at no cost. Most businesses are able to apply online, but if you don’t have a social security number, you’ll need to apply with a paper form. Want one less thing to do? Add on EIN service when you hire us, and we’ll get your EIN for you. Or choose our VIP service—an EIN is included.
Write an LLC Operating Agreement
Operating agreements put into writing how your business actually operates—how much each member invested, how profits and losses will be allocated, how voting works, and what happens if there’s a dispute or if the whole business (knock on wood) falls apart.
Do I need an operating agreement for a South Dakota LLC?
South Dakota doesn’t legally require an operating agreement. According to SD Codified L § 47-34A-103 (2019), members MAY enter into an operating agreement—but the law doesn’t declare that they must.
That said, an operating agreement isn’t just annoying paperwork. It’s one of your LLC’s most important internal documents, and creating one can help your LLC with everything from opening a bank account to handling major events from mergers to dissolution.
What should be in an operating agreement?
An operating agreement should explain how the business will handle “big picture” situations—everything from allocating profits and losses to dissolving the business. Below is a list of common topics that operating agreements should cover.
- Initial investments
- Profits, losses, and distributions
- Voting rights, decision-making powers, and management
- Transfer of membership interest
- Dissolving the business
Your operating agreement can cover pretty much anything as long as it isn’t contrary to South Dakota law. Topics not allowed to be changed in the operating agreement are listed in SD Codified L § 47-34A-103 (2019), which forbids varying the reasons for expelling a member, nor can it eliminate the obligation of good faith and fair dealing under South Dakota law.
How do I write an operating agreement?
To write an operating agreement, you need to address how your business will handle money, members, votes, management, and more. Not sure how to get started? At Northwest, we’re here to help your LLC get off on the right foot. When you hire us, we provide your business with a free LLC operating agreement, specific to your management style. We’ve spent years developing these agreements and other free LLC forms—which have been used by over a million LLCs.
Open an LLC Bank Account
Your LLC needs its own bank account. Why? An LLC gets its limited liability from being a distinct entity, separate from its members. If you mix personal and business finances, you could lose your liability protections.
How do I open a bank account for my South Dakota LLC?
To open a bank account for your South Dakota LLC, you will need to bring the following with you to the bank:
A copy of the South Dakota LLC Articles of Organization
The LLC operating agreement
The LLC’s EIN
If there are multiple members in the LLC, you may also want to bring an LLC resolution to open a bank account that states that the person going to the bank is authorized by the members to open the account in the name of the LLC. Northwest can help with this as well—LLC bank resolutions are one of the many free legal forms we provide to ensure you can get your LLC started fast.
Fund the LLC
Time to put some money in that new LLC bank account. What money? For starters, your initial contributions to your LLC’s capital. LLC members are owners, and each owner needs to pay for their membership interest to fund the LLC.
What is membership interest?
Membership interest is your percentage of ownership of the LLC. Membership interest is normally proportionate to your investment. So how does this work?
Imagine your LLC has 5 members. 4 members each invest $1,000 in the business. One member invests $6,000. The total contribution of all members is $10,000. The 4 members each own 10% of the business. The moneybags member who shelled out $6,000 owns 60% of the business.
Typically, this also means that the 4 members would each get 10% of any profits, and moneybags would get 60%. Exactly how profits and losses are allocated, however, can be adjusted in the operating agreement as long as changes are in line with IRS requirements and South Dakota laws.
File South Dakota Reports & Taxes
South Dakota LLCs are required to file a state report each year. This report is basically an information update you file so the state knows who currently runs things and how to contact your business. South Dakota LLCs are also subject to state tax filing requirements.
How much is the South Dakota Annual Report fee?
Your South Dakota LLC Annual Report is a form you submit each year to the Secretary of State to confirm your current contact and ownership information. The cost is $50 to file online, or $65 to file a paper report.
When is the South Dakota Annual Report due?
Your South Dakota Annual Report is due at the end of your “anniversary month” (the month you first registered your business), which can make it hard to remember. And just like your wedding anniversary, there are penalties if you forget. In this case, you’ll see your fee double as the state tacks on an additional $50 late fee.
Late fees are annoying and expensive. When you sign up for Northwest, we send you reminders for your annual report due dates. Want one less thing to worry about? With our business renewal service, we can complete and submit your annual report for you for $100 plus the state fee.
What should I know about South Dakota LLC taxes?
South Dakota is one of seven states without a personal income tax. It gets even better—there’s also no corporate income tax, personal property tax or even franchise tax (with the exception of financial institutions).
The state’s sales tax is also among the lowest in the country at 4.5%. City sales taxes and specialty rates can increase the sales tax total, making the average total rate around 5%.
One area where South Dakota taxes are a bit less desirable is property taxes. The average effective property tax of 1.32%, which is above the national average. Considering that the state keeps its hands out of your pockets in all other ways, the property tax shouldn’t scare you away from starting a South Dakota LLC. If you do decide to invest in South Dakota property, your attorney will likely advise creating an LLC to protect your personal assets. At Northwest, we can form your South Dakota LLC for as low as $375. Or, pay just $39 out the door with our VIP monthly payment option.
Do LLCs have to register with the South Dakota Department Of Revenue?
Even though there is no state income tax, any business with a physical presence in South Dakota is required to be licensed for sales tax collection. If your LLC is going to collect and pay sales tax, then you’ll need to register with South Dakota’s with Department of Revenue and make periodic sales tax payments.
South Dakota LLC FAQs
How can I submit the South Dakota LLC Articles of Organization?
You can file South Dakota articles online, by mail or in person. Paper filings must be submitted to the following address:
Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501
How much does it cost to start a South Dakota LLC?
The filing fee for your South Dakota LLC Articles of Organization is $150 if you file online. If you file with a paper form, they add a $15 processing fee and it will take longer.
Hire Northwest for a one-time fee of $375, including state filing fees, a year of registered agent service, limited mail forwarding and loads of useful forms and tools to help get your South Dakota LLC up and running. Or, pay just $39 out the door with our VIP monthly payment option.
How long does it take to start a South Dakota LLC?
Your filing is processed right away if you file online. If you mail your filing, it’ll not only take longer (3-5 days), it’ll cost you $15 more. It’s a lot more work for the Secretary of State Office to decipher and enter all your data by hand, so they discourage paper filings with extra fees. Unless you have to pay by check, there’s really no reason to file by mail.
If you hire Northwest to start your LLC, we file online and typically have your expedited South Dakota LLC formed within 24 hours.
Does a South Dakota LLC need a business license?
South Dakota doesn’t have a general statewide business license. Most businesses will need a South Dakota Tax License, however, which you can get from the Department of Revenue. Cities and counties often have licensing requirements for specific activities as well, from dealing secondhand goods to operating a movie theater.
Need an EIN or a certified copy of your formation docs for your license applications? Northwest can help. You can easily add on these items to your LLC formation order.
Can a South Dakota LLC help me live more privately?
Yes, a South Dakota LLC can help you reduce your public footprint. For example, you can maintain a significant degree of address privacy by listing our address on public docs instead of your own. Check out our page on living privately with an LLC to learn more.
What is a foreign South Dakota LLC?
A foreign South Dakota LLC is any LLC formed outside of South Dakota but registered to do business in the state. For example, if you formed an LLC in Montana but wanted to conduct business in South Dakota as well, you would register as a foreign LLC in South Dakota by filing an Application for Certificate of Authority with the South Dakota Secretary of State. Online filings cost $750. File by mail and you can add a $15 processing fee. Not cheap at all. Like domestic LLCs, foreign LLCs in the state have to file annual South Dakota annual reports. Northwest can register your foreign South Dakota LLC for you today!
How to Order LLC Formation Service
Our South Dakota LLC formation service is designed to be fast and easy—signing up takes just a couple minutes. Here’s how it works:
With Northwest, we give you flexibility on how to pay. You can pay all the fees up front (this includes one full year of registered agent service). Or, pay just $39 out the door with our VIP monthly payment option. With our VIP option, we also include an EIN. Just choose one of the buttons below, answer a few easy questions about your business and submit your payment.
We’ll prepare your South Dakota Articles of Organization and send them to the Secretary of State, for approval. In the meantime, you’ll have immediate access to your online account, where you can find useful state forms, pre-populated with your business information.
Once the South Dakota Secretary of State has approved your filing, we notify you that your South Dakota LLC has been legally formed. You can now take any necessary next steps, like getting an EIN and opening a bank account.