How to Start an LLC in South Dakota | 2024 Guide

Start a LLC in South Dakota

How to Start an LLC in South Dakota: If you’re looking to launch a business in South Dakota, starting a Limited Liability Company (LLC) may be the right choice for you. An LLC provides personal liability protection for its owners while giving them flexibility in managing and taxing the business. This guide provides a step-by-step process for starting an LLC in South Dakota. From choosing a unique name to registering with the state and obtaining necessary licenses and permits, Webinarcare Editorial Team will walk you through setting up your new business entity. So grab a pen and paper, and let’s get started!

What is a Limited Liability Company?

A Limited Liability Company (LLC) is a type of business entity that combines a corporation’s limited liability protection with a partnership’s tax benefits. LLCs are popular among small business owners for their flexibility and ease of formation. In South Dakota, an LLC must have a unique name and file Articles of Organization with the Secretary of State. Depending on their business needs, LLCs may also elect to be taxed as a corporation or an S-corp. Owners of an LLC, called members, are not personally liable for the company’s debts and losses, and the company’s profits and losses are passed through to the member’s personal tax returns. This makes an LLC an attractive option for those seeking personal liability protection and simplified taxation.

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Steps on How to Start an LLC in South Dakota

To form an LLC for your business, you must follow the guidelines that include naming your LLC, hiring a Registered Agent, filing your Articles of Organization, creating your LLC operating agreement, getting an employer identification number, opening a bank account and getting business licenses and permits.

Step 1: Name your LLC in South Dakota

After you have decided on the idea to form an LLC in South Dakota, deciding the name for your LLC is significant. There is a complete guide on LLC name guidelines for you to have a proper LLC business name. Here are some regulations you must follow while naming your LLC,

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In South Dakota, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 120 days. You must file a name reservation application in South Dakota Secretary of State to keep the name.

Recommended: We recommend a professional service that can offer you unlimited name search, trademark and copyright registration at a reasonable price. We recommend using –

LegalZoom($0 + State Fees for LLC Formation)

You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for filing South Dakota DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in two methods, by mail and in person. However, before filing a DBA, you should know that you need to renew your DBA from up to five years, which costs around $10.

Step 2: Hire a Registered Agent in South Dakota

Hiring a Registered Agent in South Dakota is a must since a Registered Agent is a person or business entity responsible for receiving important legal documents on behalf of your South Dakota LLC. Most states require you to designate a Registered Agent when forming your LLC.

The qualifications of a Registered Agent vary depending on the jurisdiction. Still, generally, a Registered Agent must meet the following criteria:

  • Availability: A Registered Agent must be available during regular business hours to receive and process legal documents and official correspondence.
  • Physical Address: A Registered Agent must have a physical street address within the state where the LLC is registered. This address, known as the registered office, cannot be a P.O. Box.
  • Residency or Authorization: For individuals serving as Registered Agent, they must be residents of the South Dakota where the LLC was formed. A business entity acting as a Registered Agent must be authorized to do business within that state.
  • Age: A Registered Agent must be at least 18 years old.
  • Good standing: A Registered Agent should not have any legal or financial issues that impede their ability to fulfill their duties.

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. Some businesses use professional Registered Agent services to ensure compliance and proper handling of legal matters.

However, if you would like to have an easier process in filing the necessary documents, you can get South Dakota Registered Agent Services.

Step 3: File your Articles of Organization in South Dakota

The Articles of Organization for an LLC is an important document to start your limited liability company (LLC). South Dakota Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization.

Here are the guidelines and specific requirements in filing your Articles of Organization in South Dakota.

1. Obtain the Necessary Forms: Visit the South Dakota’s business filing office website, usually the South Dakota Secretary of State’s office, to download the required forms or file online.

2. Provide the Required Information: Fill in the necessary details in the form, which typically include:

  • The name of your LLC (must include an LLC designator such as “LLC,” “L.L.C.,” or “Limited Liability Company”)
  • The purpose of your LLC (a general statement or specific business activities)
  • The address of your LLC’s principal place of business
  • The name and address of your registered agent (the person or business entity responsible for receiving legal documents on behalf of your LLC)
  • The management structure of your LLC (member-managed or manager-managed)
  • The duration of your LLC, if not perpetual
  • The names and addresses of the LLC’s organizers or members

3. Sign and File the Form: Submit the completed form in the {state} state office, either by mail, in person, or online. You may mail it at Secretary of State Office, 500 E Capitol Ave, Pierre, SD 57501.

4. Pay the Filing Fee: When you submit your Articles of Organization, you’ll need to pay a filing fee of $150. Make sure to check and include the correct payment with your submission.

5. Receive Confirmation: After your Articles of Organization have been filed and processed, you’ll receive a confirmation from South Dakota, typically a stamped and approved copy of the document or a Articles of Organization.

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Once you have successfully filed your Articles of Organization and it has been approved, your South Dakota LLC is officially formed. However, remember to complete additional steps, such as creating an Operating Agreement, obtaining an EIN, and registering for any required licenses and permits.

Step 4: Create Your South Dakota Operating Agreement

An operating agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in most states is not required. Yet, having one as an internal document is strongly advised. An operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

To understand how an operating agreement works, you should check out how to create an operating agreement in South Dakota.

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LegalZoom($0 + State Fee for LLC formation)

Step 5: Get an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN) in South Dakota. An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in South Dakota 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 the 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.

In obtaining an EIN for your LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom($0 + State Fee for LLC formation)

Step 6: Open a Bank Account and Prepare for Taxes

After you have filed for and received your Employer Identification Number, you should open a bank account because you will use this account for yourself, your clients, and your employees.

Your business dealings in South Dakota might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, having an EIN makes tax preparation easier. You can anticipate paying employment and corporate taxes with South Dakota LLC.

Opening a bank account is necessary for South Dakota business. If you are still wondering where to open an account in your South Dakota, you should check the Best Bank for Small Business in South Dakota.

Step 7: Get a Business and License Permit

You must get a business license in South Dakota before establishing your LLC. A business license is a legal document granted by a state government body that permits you to conduct business within the area under its jurisdiction. The price of business licenses and permits in South Dakota ranges from $50 – $300. If there is a requirement for a specific license or city-based permit, you must inquire with the South Dakota Secretary of State.

Cost to Form an LLC in South Dakota

Even if you have a business name and structure in mind, you should consider whether you can afford the costs of forming an LLC in South Dakota. Articles of Organization costs around $150. The initial filing fee is $165 (by mail and $150 online), and the annual fee is $50.

If you forget to pay the annual fee for your South Dakota LLC, you will have a penalty of $50. However, you can check the South Dakota LLC Cost for additional information.

Advantages of Creating South Dakota LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via LLC in South Dakota. Important benefits will help you set up an LLC in South Dakota.

  • Pass-Through Taxation: The pass-through structure will make the company not pay twice the tax. Most start-ups and entrepreneurs in South Dakota apply for an LLC because of this structure. Pass-through taxation refers to how income and losses from an LLC (Limited Liability Company) are passed through to its members (owners) for tax purposes rather than being taxed at the business entity level. This means the LLC does not pay federal income taxes; the members’ profits and losses are allocated based on their interests. Each member then reports their share of the LLC’s income or losses on their personal tax returns and pays taxes at their individual tax rates.
  • Ownership Flexibility: If you need sole and primary control over your company’s operations, a sole proprietorship will allow you to do so. If you apply for an LLC in South Dakota with flexibility, you will have default rules set by law and need an operating agreement.
  • Personal Liability Protection: Personal Liability Protection protects your business from damage, debts, or legal obligations. In personal liability protection, the company’s profits and earnings will stay as is even if your company is about to be sued. This protection of having an LLC in South Dakota can also be extended to the company’s properties and assets. Many start-up companies will benefit from this since most are starting to build a company. Even if liability exists, the LLC in South Dakota will protect its assets.

FAQs

What are the benefits of starting an LLC in South Dakota?
South Dakota offers unique tax advantages, including no state income tax, no personal property tax, and no inventory tax, making it an appealing location for businesses.
How do I form an LLC in South Dakota?
You can file Articles of Organization with the South Dakota Secretary of State and pay a filing fee to register your LLC.
How much does it cost to start an LLC in South Dakota?
The filing fee to register an LLC in South Dakota is $150.
Do I have to be a resident of South Dakota to start an LLC there?
No, you do not have to be a resident of South Dakota to start an LLC there.
How long does it take to form an LLC in South Dakota?
The processing time for forming an LLC in South Dakota is typically two days.
Are there any annual fees associated with maintaining an LLC in South Dakota?
Yes, there is an annual report fee of $50 for LLCs in South Dakota.
What are the naming requirements for an LLC in South Dakota?
The name of your LLC must include the words “Limited Liability Company” or “LLC” and must be distinguishable from any other entity on record with the South Dakota Secretary of State.
Can I reserve a name for my LLC in South Dakota?
Yes, you can reserve a name for your LLC for 120 days by filing an Application for Reservation of Name with the South Dakota Secretary of State and paying a filing fee.
Do I need an operating agreement for my LLC in South Dakota?
While an operating agreement is not required by South Dakota law, it is highly recommended to establish operating procedures and guidelines for your LLC.
How many members can an LLC have in South Dakota?
An LLC in South Dakota can have one or more members.
Do I need to have a registered agent for my LLC in South Dakota?
Yes, your LLC must have a registered agent in South Dakota. The registered agent must have a physical address in the state and be available during business hours.
Can I be my own registered agent for my LLC in South Dakota?
Yes, you can be your own registered agent for your LLC in South Dakota.
Can I form an LLC online in South Dakota?
Yes, you can file Articles of Organization online with the South Dakota Secretary of State.
What is the difference between an LLC and a corporation in South Dakota?
An LLC offers more flexibility in terms of management and taxation and typically has less formalities and requirements compared to a corporation.
Are there any tax advantages to forming an LLC in South Dakota?
South Dakota has no state income tax, no personal property tax, and no inventory tax, making it an appealing location for businesses.
Can a foreign LLC do business in South Dakota?
Yes, a foreign LLC can do business in South Dakota as a Foreign LLC.
What is the South Dakota LLC Act?
The South Dakota Limited Liability Company Act is a set of laws governing the creation and operation of LLCs in South Dakota.
How do I dissolve my LLC in South Dakota?
You can dissolve your LLC in South Dakota by filing Articles of Dissolution with the Secretary of State and paying a filing fee.
What do I do if I change my registered agent in South Dakota?
You must file a Change of Registered Agent form with the South Dakota Secretary of State and pay a fee.
Can I convert my LLC to a corporation in South Dakota?
Yes, you can convert your LLC to a corporation or vice versa by filing the appropriate paperwork with the South Dakota Secretary of State.
Can I reserve a name for my LLC before I’m ready to file Articles of Organization in South Dakota?
Yes, you can reserve a name for your LLC for 120 days by filing an Application for Reservation of Name with the South Dakota Secretary of State and paying a filing fee.
What happens if I don’t file my LLC annual report in South Dakota?
Failure to file your LLC annual report in South Dakota can result in the revocation of your LLC’s authority to do business in the state.
Can I operate my LLC in South Dakota without registering with the state?
No, you must register your LLC with the South Dakota Secretary of State before conducting business in the state.
How do I change my LLC’s name in South Dakota?
You must file Articles of Amendment with the South Dakota Secretary of State and pay a filing fee.
How do I obtain a business license in South Dakota?
Business licenses in South Dakota are typically issued at the local level by the city or county where the business is located.
Can I have a single-member LLC in South Dakota?
Yes, South Dakota allows for single-member LLCs.
Are there any residency requirements for LLC members in South Dakota?
No, there are no residency requirements for LLC members in South Dakota.
Are LLCs required to file a tax return in South Dakota?
LLCs in South Dakota are disregarded as entities for tax purposes by the state, so the income and expenses of the LLC are reported on the individual income tax returns of the members.
Are there any guidelines for LLC names in South Dakota?
LLC names in South Dakota must contain the words “Limited Liability Company” or “LLC,” and they cannot contain words that imply the LLC is a government agency or affiliated with a government agency. The name also cannot be confusingly similar to an existing business in the state.
Are there any restrictions on who can be a member of an LLC in South Dakota?
There are no restrictions on who can be a member of an LLC in South Dakota.

Also Read

How Fast Can I Form an LLC in South Dakota

One of the most appealing aspects of forming an LLC in South Dakota is the speed at which the process can be completed. The state has one of the fastest turnaround times for LLC formation in the country, making it an attractive option for those looking to start their businesses without delay.

The process of forming an LLC in South Dakota is streamlined and efficient. Entrepreneurs can file their Articles of Organization online or by mail, and the state typically processes these submissions quickly. Once the Articles of Organization are approved, the LLC is officially formed and ready to conduct business.

In addition to the quick processing times, South Dakota also offers a user-friendly website that guides entrepreneurs through the steps of forming an LLC. The website provides easy-to-follow instructions and helpful resources to ensure that the process is as smooth as possible.

South Dakota also has a low filing fee for LLC formation, making it an affordable option for entrepreneurs. The state’s low cost of living and business-friendly policies make it an attractive destination for small business owners looking to establish their companies without breaking the bank.

Another advantage of forming an LLC in South Dakota is the state’s lack of a corporate income tax. This can result in significant savings for LLC owners, allowing them to invest more resources back into their businesses and fuel growth.

Overall, the speed at which an LLC can be formed in South Dakota is a major draw for entrepreneurs looking to hit the ground running with their businesses. The state’s efficient process, low filing fees, and lack of corporate income tax make it an ideal location for those looking to establish their companies quickly and cost-effectively.

In conclusion, South Dakota’s fast LLC formation process sets it apart as a top destination for entrepreneurs looking to start their businesses with minimal hassle and expense. From its streamlined online filing system to its lack of corporate income tax, the state offers a business-friendly environment that can help entrepreneurs succeed from day one.

Conclusion

In conclusion, starting an LLC in South Dakota is a strategic choice for entrepreneurs seeking a flexible, straightforward business structure with limited liability protection. By following the essential steps, including choosing a business name, filing Articles of Organization, appointing a Registered Agent, creating an Operating Agreement, obtaining an EIN, and securing the necessary licenses and permits, you can successfully establish your LLC. This business structure offers numerous advantages, such as pass-through taxation and ownership flexibility, making it an attractive option for small business owners looking to grow and protect their ventures. As always, consult legal and business professionals for guidance specific to your situation and state requirements.

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