How to Start a Limited Liability Partnership in South Dakota | 2024 Guide

Start a Limited Liability Partnership in South Dakota

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in South Dakota. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in South Dakota, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your South Dakota LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in South Dakota, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and South Dakota General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in South Dakota

To form a limited liability partnership in South Dakota, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Registered Agent, filing for Articles of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in South Dakota, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the South Dakota business registry. Ensure that your chosen name follows South Dakota naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with South Dakota Secretary of State if desired.

Here are some guidelines you must follow while naming your LLP in South Dakota- 

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the South Dakota Secretary of State business name database and South Dakota Business Name Search. If the name is available, you may choose to reserve it for a specific period of 120 days by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $25. If your LLP plans to operate under a name other than its legal name, you may also need to register a fictitious or “Doing Business As” (DBA) name. 

The DBA filing can be done by two methods, by mail and in person, which costs around $10. In addition, the DBA’s validity in South Dakota is five years, which you can file in the South Dakota Secretary of State.

You can check out how to file a DBA in South Dakota for clearer understanding.

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Step 3: Designate a Registered Agent

In South Dakota, you’ll need to designate a Registered Agent for your LLP. The Registered Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or South Dakota Registered Agent Services to serve as your LLP’s Registered Agent, ensuring that they meet South Dakota requirements.

However, If you plan to become a Registered Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the South Dakota Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the South Dakota Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with South Dakota laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of South Dakota. The default laws in South Dakota might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain South Dakota Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain South Dakota Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in South Dakota.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your South Dakota LLP. Additionally, obtain the necessary South Dakota Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in South Dakota to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the South Dakota Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, South Dakota, and local levels.

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Advantages of Forming a Limited Liability Partnership in South Dakota

While the specific advantages of forming an LLP in South Dakota can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in South Dakota:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in South Dakota.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in South Dakota may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in South Dakota.

Cost of Forming an LLP in South Dakota

The cost of forming an LLP in South Dakota may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as South Dakota Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in South Dakota instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership in South Dakota?
A limited liability partnership in South Dakota is a type of business structure that provides liability protections to business partners.
Do I need to file formation documents to start a limited liability partnership in South Dakota?
Yes, you must file a Certificate of Limited Partnership with the South Dakota Secretary of State.
Can I start a limited liability partnership alone?
No, South Dakota requires at least two partners to form a limited liability partnership.
What are the advantages of starting a limited liability partnership in South Dakota?
Some advantages of starting a limited liability partnership in South Dakota include limited liability, flexible management structure, and tax benefits.
What are the requirements for creating a valid limited liability partnership agreement in South Dakota?
The partnership agreement must be in writing, signed by all partners, and must state the purpose, amount of contribution, and profit sharing of each partner.
How much does it cost to form a limited liability partnership in South Dakota?
You must pay a fee of $100 to file a Certificate of Limited Partnership with the South Dakota Secretary of State.
How long does it take to form a limited liability partnership in South Dakota?
The processing time for filing a Certificate of Limited Partnership with South Dakota Secretary of State is 24 to 48 hours.
How do I know if a name for my limited liability partnership is available in South Dakota?
You can search for available business names on the South Dakota Secretary of State website.
Do I need to file a separate tax return for my limited liability partnership in South Dakota?
No, limited liability partnerships are typically taxed as pass-through entities, which means that income is reported on personal tax returns.
Do I need to obtain any permits or licenses to operate a limited liability partnership in South Dakota?
It depends on the nature of your business. Check with the South Dakota state agency to determine whether you need any permits or licenses.
Can I register my limited liability partnership in South Dakota if I already have it registered in another state?
Yes, limited liability partnerships can register as foreign businesses in South Dakota.
What is a limited liability limited partnership in South Dakota?
A limited liability limited partnership is a type of limited partnership that provides liability protections to all partners.
What is the difference between a limited partnership and a limited liability partnership in South Dakota?
The main difference between limited partnerships and limited liability partnerships in South Dakota is that all partners in a limited liability partnership are shielded from personal liability, while general partners in a limited partnership may be personally liable for partnership debts.
Can a limited liability partnership in South Dakota change its structure to another business structure later on?
Yes, limited liability partnerships can be converted into other business structures in South Dakota provided the requirements are met.
Do I need to file annual reports for my limited liability partnership in South Dakota?
Yes, by law, limited liability partnerships in South Dakota must file annual reports.
What happen if I don’t comply with the annual report filing requirements for my limited liability partnership in South Dakota?
If your limited liability partnership in South Dakota fails to file annual reports, it can be canceled by the Secretary of State’s office.
What are the on-going formalities of maintaining a limited liability partnership in South Dakota?
On-going formalities may include annual report filings, maintaining up to date business records and accounts, paying recurring franchise tax obligations, and complying with the South Dakota Uniform Partnership Act.
Can non-US citizens start a limited liability partnership in South Dakota?
Yes, non-US citizens can form a limited liability partnership in South Dakota if requirements are satisfied.
Can a limited liability partnership have a silent partner in South Dakota?
Yes, a limited liability partnership can have a silent partner, meaning that they contribute capital but are not involved in the management of the partnership.
What happens to my limited liability partnership in South Dakota if a partner dies?
The partnership assets typically transfer to the surviving partner(s) or a representative of the deceased partner’s estate.
What is the difference between a general partner and a limited partner in South Dakota?
A general partner typically has more management authority over a limited partnership, while a limited partner typically has less control over the partnership.
Can a limited partner be held liable for the partnership’s obligations in South Dakota?
No, a limited partner is typically not held liable for the partnership’s obligations in South Dakota, provided they do not engage in active management of the business.
Does South Dakota require limited liability partnerships to carry workers’ compensation insurance?
Yes, South Dakota requires limited liability partnerships to carry workers’ compensation insurance if they have one or more employees.
Can I have a foreign address on my limited liability partnership’s business registration in South Dakota?
Yes, you can use a foreign mailing address on your limited liability partnership’s business registration in South Dakota.
Are limited liability partnerships registered in South Dakota required to have resident agents in South Dakota?
No, limited liability partnerships with a registered office or agent in South Dakota do not require person-to-person resident agents.
What is the franchise tax obligation of limited liability partnerships in South Dakota?
South Dakota’s annual state business tax takes on multiple forms. Fees vary depending on the entity type—the most active entity-formed in this state approaches an amount equal to civic nonprofits.
If I want to take on employees, will I need to register for Unemployment Insurance in South Dakota?
Depending on what company, depending on cash compensation and other specifics including company spending reimbursement may affect employee exemption eligibility- however, South Dakota’s Unemployment Insurance Act claims that employers with one or more workers ought to remit tax quarterly and report relevant wages information every quarter, with additional uses if a “base period” is applicable or not.
Are banks liable to pay broadcast transmission public service tax of the interest paid to certificate holder on time certificates of deposit in South Dakota?
Yes, a financial institution in South Dakota is liable to pay broadcast transmission public service tax on the interest paid to the holder of time certificates.
What is a limited liability partnership?
A limited liability partnership (LLP) is a type of legal entity that provides limited liability protection to its owners while allowing them to participate in management and decision-making.
Why would I choose to form an LLP in South Dakota?
South Dakota’s LLP laws provide a favorable business environment and tax incentives for small businesses.
How many members are required to form an LLP in South Dakota?
In South Dakota, there is no minimum or maximum number of members required to form an LLP.
What is the process for registering an LLP in South Dakota?
To register an LLP in South Dakota, you must file Articles of Organization with the Secretary of State’s Office, pay the required fee, and publish your intent to form the partnership in a local newspaper.
Are there any residency requirements for forming an LLP in South Dakota?
There are no specific residency requirements for forming an LLP in South Dakota.
What is the liability protection offered by an LLP in South Dakota?
An LLP provides its owners with limited liability, meaning their personal assets are protected from business debts and liabilities.
Can an LLP formed in South Dakota do business in other states?
An LLP formed in South Dakota can typically do business in other states, but must register as a foreign LLP in those states.
Is a minimum amount of capital required to form an LLP in South Dakota?
There is no minimum amount of capital required to form an LLP in South Dakota.
Can an LLP be taxed as a partnership in South Dakota?
Yes, an LLP may choose to be taxed as a partnership in South Dakota.
What are the advantages of forming an LLP instead of a corporation in South Dakota?
The advantages of forming an LLP over a corporation in South Dakota include simplicity and flexibility in governance, management, and taxation.
What is the difference between an LLP and a general partnership in South Dakota?
The key difference between an LLP and a general partnership in South Dakota is that an LLP typically provides limited liability protection to its owners, while a general partnership does not.
Are professional services such as accounting or law firms allowed to form LLPs in South Dakota?
Yes, professional services firms such as accounting or law firms are allowed to form LLPs in South Dakota.
What are the tax benefits of forming an LLP in South Dakota?
South Dakota does not have a personal income tax or a state capital gains tax, which can be beneficial for small business owners.
Can an LLP in South Dakota elect Board of Directors?
Yes, an LLP in South Dakota can elect a Board of Directors.
Does South Dakota require an LLP to maintain a partnership agreement?
While South Dakota does not require an LLP to maintain a partnership agreement, it is generally recommended for legal and financial reasons.
Are there any business naming requirements for an LLP in South Dakota?
An LLP in South Dakota must have a unique name that is not already in use by another business entity in South Dakota.
How long does the registration process take for an LLP in South Dakota?
The registration process for an LLP in South Dakota typically takes one to four weeks.
Are there any annual reporting requirements for an LLP in South Dakota?
Yes, an LLP in South Dakota is required to file an annual report with the Secretary of State’s Office and to pay a fee.
Can an LLP operate under a trade name in South Dakota?
Yes, an LLP can operate under a trade name in South Dakota, but it must be registered with the Secretary of State’s Office.
Is a business license required for an LLP to operate in South Dakota?
Depending on the business activities of the LLP, a business license may be required at the state or local level.
Can an LLP in South Dakota issue stock or sell ownership interests through securities offerings?
No, an LLP in South Dakota cannot issue stock or sell ownership interests through securities offerings.
Can a partner in an LLP also be an employee of the partnership in South Dakota?
Yes, a partner in an LLP in South Dakota can also be an employee of the partnership.
What is the cost to form an LLP in South Dakota?
The cost to form an LLP in South Dakota is currently $150.
Are there any restrictions on the types of businesses that can form LLPs in South Dakota?
Businesses in any industry or profession can form LLPs in South Dakota, but certain businesses such as insurance and banking may have additional regulatory requirements.
Can an LLP in South Dakota convert to a different business entity type in the future?
Yes, an LLP in South Dakota can convert to a different business entity type such as an LLC or a corporation.
What should I consider before choosing to form an LLP in South Dakota?
Before forming an LLP in South Dakota, it is important to consider factors such as liability protection, tax implications, regulatory requirements, and management structure.
Can I form an LLP in South Dakota online?
Yes, you can complete the registration process for an LLP in South Dakota online through the Secretary of State’s website.
Is it recommended to seek legal advice before forming an LLP in South Dakota?
Yes, it is generally recommended to seek the advice of an attorney when forming an LLP in South Dakota to ensure compliance with laws and regulations and to protect your personal assets.

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Conclusion

Starting an LLP in South Dakota may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in South Dakota.

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