Start an LLC in South Dakota with these Five Easy Steps
Starting an LLC in South Dakota is Easy
To start a Limited Liability Company in South Dakota you will need to file the Articles of Organization with the South Dakota Secretary of State, with a starting fee of $150 to file. You can apply online or by mail. The Articles of Organization is the legal document that officially creates your South Dakota LLC.
Follow the steps below to form your South Dakota LLC today and get your business up and running.
STEP 1: Name your South Dakota LLC
Choosing a company name is the first and most important step of forming an LLC in South Dakota. Be sure to choose a name that complies with South Dakota naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines for a South Dakota LLC:
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
For a complete list of naming rules in South Dakota, you can read South Dakota's Legislature guidelines.
2. Is the name available in South Dakota? Make sure the name you want isn't already taken by doing a South Dakota LLC name search on the State's website.
3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to start a business website today, you may want to buy the URL in order to prevent others from acquiring it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
FAQ: Naming a South Dakota LLC
Do I need to get a DBA or Trade Name for my business?
Most LLCs do not need a DBA. The name of the LLC can serve as your company’s brand name and you can accept checks and other payments under that name as well. However, you may wish to register a DBA if you would like to conduct business under another name.
To Learn more about DBAs in your state, read our How to File a DBA guide.
STEP 2: Choose a South Dakota Registered Agent
You are required to nominate a South Dakota registered agent for your LLC.
What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. Think of your registered agent as your business' point of contact with the state.
Who can be a Registered Agent? a Registered Agent must be a resident of South Dakota or a corporation, such as a registered agent service, authorized to conduct business in the state of South Dakota. You may elect an individual within the company including yourself.
TIPRecommended: ZenBusiness provides the first year of registered agent service free with LLC formation ($39 + State Fees)
FAQ: Nominating a South Dakota Registered Agent
Can I be my own Registered Agent?
Yes. You or anyone else in your company can serve as the registered agent for your LLC.
Read more about being your own registered agent.
Is a Registered Agent service worth it?
Using a professional Registered Agent service is an affordable way to manage government filings for your LLC. For most businesses, the advantages of using a professional service significantly outweigh the annual costs.
For more information, read our article on South Dakota registered agents.
STEP 3: File the South Dakota LLC Articles of Organization
To register your South Dakota LLC, you will need to file the Articles of Organization with the South Dakota Secretary of State. You can apply online or by mail. Some states refer to the Articles of Organization as the Certificate of Formation or Certificate of Organization.
The South Dakota Articles of Organization for an LLC (limited liability company) is a legal document to officially form your business. You’ll be expected to include the name of your LLC, choose a registered agent, list the services your LLC will offer, and pay the state filing fee. We also recommend you obtain an Employer Identification Number (EIN) if you plan to hire employees and open a business bank account.
When filing your Articles of Organization, you will need to state whether your South Dakota LLC will be member-managed or manager-managed. Before you file, read our member-managed vs manager-managed guide to help you choose the best management structure for your LLC.
File the Articles of Organization
If you’re expanding your existing LLC to the State of South Dakota, you will need to form a Foreign LLC.
FAQ: Filing South Dakota LLC Documents
What is the processing time to form my South Dakota LLC?
Immediately after payment is received online, 1 to 2 business days by mail.
What is the difference between a domestic LLC and foreign LLC?
An LLC is referred to as a "domestic LLC" when it conducts business in the state where it was formed. Normally when we refer to an LLC we are actually referring to a domestic LLC. A foreign LLC must be formed when an existing LLC wishes to expand its business to another state.
Read our What Is a Foreign LLC article to learn more.
STEP 4: Create Your South Dakota LLC Operating Agreement
An operating agreement isn’t required for forming an LLC in South Dakota, but it’s a good practice to have one.
What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.
Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.
For more information on operating agreements, read our South Dakota LLC operating agreement guide.
Recommended: Download a template or create a Free Operating Agreement using our tool.
FAQ: Creating a South Dakota Operating Agreement
Do I need to file my operating agreement with the state?
No. The operating agreement is an internal document that you should keep on file for future reference. However, many states do legally require LLCs to have an operating agreement in place.
STEP 5: Get an EIN for Your South Dakota LLC
What is an EIN? The Employer Identification Number (EIN), Federal Employer Identification Number (FEIN), or Federal Tax Identification Number (FTIN), is a nine-digit number issued by the Internal Revenue System (IRS); an Employer ID Number is used to identify a business entity and keep track of a business’s tax reporting. It is essentially a social security number (SSN) for the company.
Why do I need an EIN? An EIN number is required for the following:
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.
FOR INTERNATIONAL APPLICANTS: you do not need an SSN to obtain an EIN. For more information, read our guide on how to obtain an EIN as a foreign LLC.
FAQ: Getting an EIN
What tax structure should I choose for my LLC?
When you obtain an EIN, you will be informed of the different tax classification options that are available. Most LLCs elect the default tax status.
However, some LLCs can reduce their federal tax obligation by choosing S corporation status. We recommend consulting with a local accountant to find out which option is best for you.
Considering Using an LLC Formation Service?
We reviewed and ranked the top 5 LLC formation companies.
Find out which is best LLC service for you.
Protect Your Business & Personal Assets
Business Banking for Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your South Dakota LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Recommended: Learn more about the best small business credit cards.
Get Business Insurance
Business insurance helps you manage risks and focus on growing your LLC. The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths.In South Dakota, businesses with one or more employees, including LLC members and corporate officers, are required by law to have workers compensation insurance. Get a free quote with ADP.
How much will the right insurance cost you? Click here to find out.
Properly Sign Legal Documents
Improperly signing a legal document as yourself and not as a representative of the business can leave you open to personal liability. When signing legal documents on behalf of your South Dakota LLC, you could follow this formula to avoid problems:
- Formal name of your business
- Your signature
- Your name
- Your position in the business as its authorized representative
See the image below for an example.
This ensures that you are signing on behalf of your South Dakota LLC and not as yourself.
Learn more on how to protect your business & personal assets by reading our article - How to Maintain your LLC Corporate Veil.
Keep Your Company Compliant
South Dakota Business Permits and Licenses
To operate your South Dakota LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.
The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.
Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.
Find out how to obtain necessary South Dakota business licenses and permits for your LLC business or have a professional service do it for you:
- Federal: Use the U.S. Small Business Administration (SBA) guide.
- State: Use the South Dakota Department of Labor & Regulation website.
- Local: Contact your local county clerk and ask about local business licenses and permits.
Recommended: If you are a first-time entrepreneur, consider having a professional service research your business’ licensing requirements. Our friends at Startup Savant have reviewed and ranked the top five license research services.
South Dakota LLC Tax
Depending on the nature of your business, you may be required to register for one or more forms of state tax:
If you are selling a physical product, you’ll typically need to register for a sellers permit through the South Dakota Department of Revenue website.
This certificate allows a business to collect sales tax on taxable sales.
Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Read our sales tax guide to find out more.
If you have employees in South Dakota, you will have to register for Unemployment Insurance Tax on South Dakota's State website.
Federal LLC Tax Requirements
Most LLCs will need to report their income to the IRS each year using:
- Form 1065 Partnership Return (most multi-member LLCs use this form)
- Form 1040 Schedule C (most single-member LLCs use this form)
Read our LLC Tax Guide to learn more about federal income taxes for LLCs.
File Your South Dakota LLC Annual Report
South Dakota requires all LLCs to file an annual report with the Secretary of State. This form can be submitted online.
File your Annual Report
File Online with the Secretary of State
Fee: $50 for online filing; $65 for paper filings (Nonrefundable)
Note: You will need your business ID to file. LLC business IDs can be searched here:
Due Date: Due November 15 each year. The first annual report is due the year following LLC formation.
Late Filings: South Dakota charges a $50 penalty for failure to file on time. In addition, South Dakota can revoke an LLC’s business registration after 60 days for failure to file an annual report.
Avoid Automatic Dissolution
LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk the loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.
Recommended: ZenBusiness offers a reliable registered agent service and excellent customer support.
Get Help Starting a Business in South Dakota
We understand that creating an LLC in South Dakota and getting your business up and running comes with many challenges. To help you succeed, we compiled the best local resources in every major metro area in South Dakota. You can get free assistance in the following areas:
Make Running Your Business Easier
After starting a business, two of the most important things you can do are get professional accounting and hire the right employees. Streamlining these processes can save you time and money as your business grows.
If you plan to hire employees for your South Dakota LLC, stay compliant with the law by following these steps:
- Verify that new employees are able to work in the US
- Report employees as "new hires" to the State
- Provide workers' compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your work space
Find more information at the South Dakota Department of Labor & Regulation.
Recommended: Check out our Hiring for your Small Business Guide for resources like sample job descriptions, payroll service reviews, and more.
FAQ: Hiring Employees
What is the minimum wage in South Dakota?
The minimum wage in South Dakota is $9.30 per hour.
How often do I need to pay employees?
South Dakota requires wages to be paid at least once per month on a regular schedule.
Accounting For Your LLC
It’s critical to get your books in order-- even if you haven’t officially opened for business. A well-managed accounting system will help you:
- Track your business finances, including bills, expenses, and income.
- Simplify your annual tax filings.
The right software makes accounting easy. Look for software that:
- Syncs with your bank automatically.
- Matches transactions to invoices, bills and purchase orders.
- Can be accessed from your phone.
Recommended: QuickBooks has all the accounting features your small business will need.
Try QuickBooks for free
Interfacing with Clients and Customers
In the day-to-day of running a business, it's hard to be readily available for new clients or customers who want to contact you. For service-based businesses that don’t already have a brick-and-mortar location, a virtual office can solve this problem. You can get a dedicated business mailing address and a business phone number with call-forwarding so that you never need to worry about losing a potential customer.
Recommended: Opus Virtual Office can set up your businesses with a live receptionist and all the perks of a virtual office for a great price of $99/month. Plus, as a visitor of HowToStartanLLC, you can save $200 today.
Women in Business Tools and Resources
If you have a woman-owned business, many resources are available to help you concentrate on your business’s growth:
- Funding - (ie. grants, investors, loans)
- Events - (ie. conferences, meetups)
- Guides - (ie. business formation, personal growth)
- Support - (ie. advice, communities, business strategies)
Our information and tools will provide educational sources, allow you to connect with other women entrepreneurs, and help you manage your business with ease.
TRUiC has created video guides to support and reinforce our on-page guides. These videos help to visualize the ideas and lessons that you need to know to create and run a successful business.
Check out our growing library of small business videos on the TRUiC YouTube channel.
Register a Foreign LLC in South Dakota
Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in South Dakota, you will need to register as a foreign LLC. This can be done by mail or online.
How to Obtain a Certificate of Good Standing
A Certificate of Good Standing verifies that your South Dakota LLC was legally formed and has been properly maintained. Several instances where you might need to get one include:
- Seeking funding from banks or other lenders
- Forming your business as a foreign LLC in another state
- Obtaining or renewing specific business licenses or permits
You can order a South Dakota Certificate of Good Standing online.
Order a Certificate of Good Standing
Request a Certificate of Good Standing Online
Fee: $20 (Nonrefundable)
Dissolve Your South Dakota LLC
If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your South Dakota LLC, there are two broad steps:
- Close your business tax accounts
- File the Articles of Dissolution
When you are ready to dissolve your LLC, follow the steps in our South Dakota LLC Dissolution Guide.