How to Start an LLC in South Dakota (Step-by-Step) 2023 Guide

It costs $150 to start an LLC in South Dakota.

And then it costs $50 per year.

What are these fees for?

• The $150 is to file the Articles of Organization – the document that creates an LLC.
• The $50 per year is for your Annual Report – a mandatory filing that keeps your LLC in good standing.

To learn more about LLC Costs, see LLC Costs in South Dakota.

If you file your LLC by mail, it will be approved in 1-2 business days (plus mail time).

But if you file online, your LLC will be approved immediately.

Please see How long does it take to get an LLC in South Dakota to check for any delays.

Getting an EIN Number from the IRS is completely free.

If you apply online, it takes 15 minutes to get an EIN from the IRS website.

If you apply by mail or fax, it can take 1-3 months.

You’ll want to open a business bank account for your LLC.

This makes accounting and record-keeping much easier for your business finances.

Having a separate business bank account also maintains your personal liability protection. This is because it keeps your business entity finances separate from your personal finances.

Good news, South Dakota doesn’t have a state general business license.

However, depending on where your LLC is located, you may need a local business license or permit.

For example, if you want to start a daycare, you may need a business license from the city or county.

You can learn more on our South Dakota Business License page.

All South Dakota LLCs must file an Annual Report every year.

This filing keeps your LLC in good standing, and you file it with the South Dakota Secretary of State.

How much does a South Dakota LLC Annual Report cost?

The Annual Report filing fee is $50 per year.

When is the Annual Report due?

Your LLC’s report is due by the last day of your LLC’s anniversary month.

And your LLC is required to file this report every year.

For example, if your LLC was approved on April 12, 2023, your Annual Report is due by April 30, 2024.

Then, your LLC Annual Report will be due by the same date every year after that.

When is my first Annual Report due?

Your first Annual Report is due the year after your LLC was approved.

For example, if your LLC was approved on May 15, 2023, your first Annual Report is due by May 31, 2024.

And then, your LLC Annual Report will be due by the same date every year after that.

How do I file my LLC Annual Report?

You can file your LLC’s Annual Report online or by mail. We recommend the online filing because it’s easier to complete.

Follow our step-by-step guide here: South Dakota LLC Annual Report.

LLCs don’t pay federal income tax. Instead, the LLC Members pay the taxes for the LLC.

Said another way, the owners pay taxes for the LLC as a part of their personal tax return.

How will my LLC be taxed?

By default, a South Dakota LLC is taxed by the IRS based on the number of owners your LLC has:

• A Single-Member LLC is taxed like a Sole Proprietorship.
• A Multi-Member LLC is taxed like a Partnership.

Alternatively, you can ask the IRS to tax your LLC like a C-Corporation or S-Corporation.

Besides federal taxes, there are also state and local taxes – like sales tax.

Learn more in South Dakota LLC Taxes.

Yes, you can file your LLC online in South Dakota. The Articles of Organization filing fee is $150.

When you start your LLC online, it will be approved immediately.

The first benefit of an LLC is protecting your personal assets. Meaning, if your business is sued, your personal assets – like your home, cars, and bank accounts – are protected.

This protection applies to all LLC owners (called LLC Members). It doesn’t matter if you have a Single-Member LLC or Multi-Member LLC. All of the LLC owners are protected from the business debts and liabilities.

This type of protection wouldn’t apply if you operate as a Sole Proprietorship or Partnership. With these types of informal business structures, the owners aren’t protected in the event of a lawsuit. For that reason, Limited Liability Companies (LLCs) are a much more popular business structure.

Another benefit is LLC pass-through taxation. This means the LLC itself doesn’t pay federal income taxes. Instead, the profits “pass through” to the LLC Members. And the Members pay the taxes on their personal tax return.

To learn more, please see How are LLCs taxed.

Whether South Dakota is a good state to start an LLC depends on where you live – and where you’re doing business.

Meaning, if you live in or do business in South Dakota, then you should start your LLC in South Dakota. While many websites talk about tax rates and advantages of certain states, none of that applies if it’s not the state where you live and do business.

For example, if you form an LLC in Delaware, but live in and conduct business in South Dakota, you’ll also need to register your Delaware LLC in South Dakota (and pay extra fees). And you’ll end up paying South Dakota taxes anyway. This ends up leading to more costs and more headaches with no advantages.

In summary, if you live in and conduct business in South Dakota, then yes, South Dakota is a good state to start a business. If you don’t live in and do business in South Dakota, then no, South Dakota isn’t a good state to start a business.

Real estate exception: If you’re purchasing real estate outside of South Dakota, you should form your LLC in the state where the property is located.

For more information, please see Best State to Form an LLC.