Starting a South Dakota LLC
A South Dakota LLC (Limited Liability Company) is a hybrid legal entity that possesses certain characteristics of a Sole Proprietorship/Partnership and Corporation.
Like a Corporation, an LLC can do business and hold assets on its own just like a real person. Members, managers and officers of the LLC also enjoy personal liability protection.
Like a Sole Proprietorship/Partnership, an LLC is easy to run and manage. There is also no double taxation, as any profits/losses of the LLC flow through to the personal income tax return of its members.
In case your LLC is sued, only the assets of the business (and not your personal assets) can be used to pay off any debts or judgments.
Because it offers personal liability protection and is easy to operate, an LLC is a popular option for most people running a business, or even for those who just want to keep their assets safe.
In South Dakota, you can form an LLC to run a business, or you can use it to buy and hold assets like real estate, vehicles, boats or aircraft.
1. South Dakota LLC Name
Before filing the necessary paperwork to create your LLC, you need to make sure your desired South Dakota LLC name is available with the South Dakota Secretary of State.
The name of your South Dakota LLC must also be distinguishable upon the records of the Secretary of State. This means it must be unique when compared to the names of existing businesses in the South Dakota corporate database.
South Dakota LLC Name Search:
LLC Designator: Under South Dakota law (47-34A-105 of the Uniform LLC Act), LLCs must end with a proper designator. Acceptable designators include the following:
- LLC (most popular)
- Ltd. Liability Co.
- Ltd. Liability Company
- Limited Liability Co.
- Limited Liability Company
Your South Dakota LLC name cannot include a designator that makes it sounds like a different type of legal entity: Corporation, Corp., Inc., Incorporated, Limited Partnership, LP, L.P., or Trust.
2. South Dakota Registered Agent
A South Dakota Registered Agent is a person or company who agrees to be served lawsuits, legal notices, and other documents (called Service of Process) on behalf of your LLC.
You must maintain a Registered Agent for your South Dakota LLC in order to remain in compliance with state laws. Electing a Registered Agent for your LLC helps ensure the US court and legal system operate smoothly.
If you don’t maintain a Registered Agent, then the South Dakota Secretary of State may administratively revoke your LLC, and you won’t be able to do business in the state.
Your South Dakota LLC’s Registered Agent must have a physical address within the state where legal documents can be delivered. PO boxes are not allowed.
Your South Dakota LLC’s Registered Agent also needs to be available during normal office hours from 9am to 5pm, Monday through Friday.
Who can be your LLC’s Registered Agent in South Dakota?
In South Dakota, the following can be your LLC’s Registered Agent:
- You can be your own Registered Agent
- A friend or family member
- A Commercial Registered Agent
Note: If you, a friend or family member will be your LLC’s Registered Agent, then the following requirements (aside from having a street address in South Dakota) also apply: must be at least 18 years of age, and must be a resident of South Dakota.
Commercial Registered Agent Recommendation: If you need to hire a Commercial Registered Agent, we recommend Northwest Registered Agent ($125 per year).
Northwest has been in the business for over 20 years and they have great customer support. Any mail that is sent to your LLC will be scanned by them and uploaded to your online account.
Special offer: If you hire Northwest to form your LLC ($39 + state fee), they’ll include their Registered Agent service free for the 1st year.
3. South Dakota Articles of Organization
The LLC filing form is officially known as the South Dakota Articles of Organization. If you file this form online, the LLC filing fee is $150. If you file this form by mail, the filing fee is $165.
Approval times: If you file your South Dakota LLC online, it will be approved immediately. If you file your South Dakota LLC by mail, it will be approved in 3-5 business days.
Note: Filing times may take longer due to the current global situation and government delays. Please see how long does it take to get an LLC in South Dakota.
File your LLC online (recommended method):
South Dakota Secretary of State: Start a New Business
File your LLC by mail:
South Dakota LLC Articles of Organization
- Pay by check or money order and make payable to the “Secretary of State”. Mail your completed Articles of Organization (one original and one copy) and filing fee to: Secretary of State, 500 East Capitol Avenue, Pierre, SD 57501-5070.
You can also hand-deliver your Articles of Organization if your live near Pierre or are up for making the drive. The filing fee is more expensive ($210), but your LLC will be approved that same-day while you wait. Bring your Articles of Organization (one original and one copy) and $210 filing fee to the State Capitol building. The address and suite number are the same as listed one paragraph above.
What your LLC approval will look like: Once the South Dakota Secretary of State processes and approves your LLC, you will receive a stamped and approved Certificate of Organization.
If for some reason, you don’t get this form (or can’t find it), you can download the form online by searching your LLC here. Click into your LLC’s online record, then look under the “History” section.
4. LLC Operating Agreement
A South Dakota LLC Operating Agreement lists the rules of your LLC’s operations, as well as the rights and obligations of the members, managers, and other officers to each other, and to the business. Having an Operating Agreement clearly defines the role of the LLC’s member(s), manager(s) and officer(s), and makes the day-to-day operations of the business easier.
Examples of rules include the day-to-day operations, ownership stakes, and how profits/losses are divided. Think of your Operating Agreement as the “Constitution” of your South Dakota LLC.
Having an Operating Agreement is strongly recommended, regardless if your LLC only has one member or several members. Your Operating Agreement helps prove that your South Dakota LLC is a “separate legal entity”, which helps protect and maintain the personal liability protection of the members.
You don’t need to send your LLC’s Operating Agreement to the South Dakota Secretary of State since this is an “internal document”. Just give a copy to each member and keep yours with your LLC’s business records.
5. Federal Tax ID Number (EIN) for your LLC
A South Dakota EIN Number is like your LLC’s “social security number”. It is used by the IRS to identify your LLC for tax purposes. You’ll also use your EIN when opening a bank account, getting credit cards, applying for business licenses, and other financial matters.
Other names: Employer Identification Number, Federal Tax ID Number, Federal Employer Identification Number, FEIN, and Federal Tax Number. They are all referring to the same thing.
Wait for your LLC to be approved: To save yourself the trouble of having a Federal Tax ID Number attached to a non-existent LLC (in case the Secretary of State rejects your filing), apply for your EIN only after the South Dakota Secretary of State approves your LLC.
EINs are Free ($0): Applying for an EIN from the IRS will cost you absolutely nothing.
We recommend applying online as your EIN gets approved immediately, as opposed to filing by fax (four days) or filing by mail (four weeks).
If you can’t file online, then download Form SS-4 from the IRS, fill it out with your new LLC’s information, and you can either mail or fax it. The mailing address is Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. Their fax number is 855-641-6935.
Don’t have an SSN? (Non US Residents): Those without SSNs (which usually applies to foreigners) can still get an EIN from the IRS, but only by fax or mail. In this case, we recommend filing by fax because the approval time is faster.
Tip for non US Residents: Foreigners applying for an EIN should write “Foreign” on line 7b where it asks for an SSN.
LLC owned by an existing company: Company-owned LLCs also cannot get an EIN via the online application. You’ll have to file Form SS-4 by mail or by fax.
6. South Dakota LLC Annual Report
All South Dakota LLCs – regardless of income or activity – are required to file a South Dakota LLC Annual Report every year.
The Annual Report fee is $50 if you file it online, or $65 if you file it by mail.
Due date: Your first Annual Report is due by the last day of your LLC’s anniversary month, following the year it was formed. Your following Annual Reports will be due by the same date every year after that.
For example: If you formed your LLC on May 15th 2022, then your first Annual Report will be due by May 31st 2023. In 2024, it will also be due by May 31st. And so on for every year after that.
How to file: You can file the Annual Report online or by mail. We recommend the online filing since it’s easier and the processing time is much faster.
If filing South Dakota Annual Report online: File an Annual Report Online
If filing South Dakota Annual Report by mail: Download the Annual Report Form (PDF)
- Mail Annual Report form and filing fee to Secretary of State, 500 East Capitol Avenue, Pierre, SD 57501-5070.
- Send a check or money order made payable to “Secretary of State”.
Penalty for late filings: If you don’t file your South Dakota LLC’s Annual Report on time, your LLC will lose it’s good standing status and be marked “delinquent”. This means that your LLC will not be able to transact business in the state. In order to do business again, you must reinstate your LLC’s good standing status by filing all delinquent Annual Reports, paying the outstanding filing fee(s), plus a $50 penalty for each late Annual Report.
7. South Dakota Bank Account for your LLC
In order to keep your personal liability protection you should open a bank account in the name of your LLC. This will keep the business assets separate from personal assets.
You’ll need your South Dakota Certificate of Organization and Federal Tax ID Number in order to open an LLC bank account. We also recommend bringing your Operating Agreement, and any other corporate documents. The bank likely won’t need them, but it’s best to be safe and bring all documents with you. Also bring your driver’s license or passport and we recommend calling the bank ahead of time to see what they’ll need.
Opening up an LLC bank account account also helps make bookkeeping, accounting, and taxes much easier.
All LLC Members who want to be on the account must be physically present. They cannot be added by phone or email due to US banking regulations.
Shop around: Many banks charge monthly maintenance fees if your balance drops below a certain level. Call around and ask for details on the bank’s simplest form of business checking account. There are still a handful of banks which have no fees at all for LLC bank accounts.
Debit card: The bank will give you a debit card when you open the account.
Credit card: You can also get a business credit card to earn points, miles, and other rewards.
8. Business Licenses and Permits
After you start your LLC, you should check whether you need a South Dakota Business License or other permits to operate.
South Dakota does not have a statewide general business license. Instead, licenses and permits are regulated by your LLC’s industry and where your business is located.
You’ll need to reference this Start-up Business Packet from the South Dakota Office of Economic Development and you’ll need to call your county, township, and city to check for license and permit requirements.
Need to save time?: If you’d rather not make the phone calls and do the research to determine your LLC’s license and permit requirements, we recommend using IncFile.
9. South Dakota LLC Taxes
Every small business has a unique South Dakota LLC Taxes situation, but we can provide an overview of the requirements.
For federal tax purposes, LLCs are “pass-through entities”, meaning, the LLC does not file its profits/losses on its own federal tax return. Instead, the profits/losses “pass through” to the LLC owners’ personal income tax return (US Form 1040).
- Single-member South Dakota LLCs will have their income/losses reported on a Schedule C, or other schedule(s), depending on how the income is made. By default, single-member LLCs are taxed like a Sole Proprietorship with the IRS.
- Multi-member South Dakota LLCs will need to file an “information return” with the IRS (Partnership 1065 Form), and the owner’s income/losses will be reported on a K-1, which then flows down to their personal income tax return. By default, multi-member LLCs are taxed like a Partnership with the IRS.
- Alternatively, an LLC can be taxed as an S-Corp (by filing Form 2553) or a C-Corp (by filing Form 8832), but you’ll need to speak with a competent accountant (or a few) about the pros and cons that will be unique to your business.
South Dakota does not have any of the following taxes: Corporate income tax, Personal income tax, Personal property tax, Business inventory tax, or Inheritance tax.
South Dakota imposes the following taxes: Sales tax, Use tax, Real property tax (real estate tax), Unemployment insurance tax, Motor fuel tax, and other Special taxes.
Recommendation: Trying to DIY with your taxes often leads to screwing things up (and can be quite time consuming). We strongly recommend working with a South Dakota accountant to make sure you are meeting all of your LLC’s tax obligations correctly. We recommend reading our how to find an accountant guide, and searching on Thumbtack and Yelp.
10. Business Phone
Instead of using your home telephone number or your cell phone, you can purchase an affordable “virtual business number” specifically for your South Dakota LLC. You can set this virtual business phone up to forward to your cell phone, go through voice prompts, or configure it any way you’d like.
We recommend using Phone.com as they have the cheapest plans and their customer service is excellent.
They offer local phone numbers as well as 1-800 toll-free numbers. You can easily setup call forwarding, pre-recorded prompts, and get voicemail messages forwarded to your email.
Getting a separate business phone number for your South Dakota LLC is also a good idea in order to keep your actual number private from those pesky “public record” websites.
South Dakota State Agencies
South Dakota Secretary of State
Hours: 8am to 5pm, Monday – Friday, Central Time