LLC Cost in South Dakota | How Much Does It Cost to Start an LLC

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LLC Costs in South Dakota

Forming a Limited Liability Company (LLC) in South Dakota is a popular choice for entrepreneurs and small business owners who want to protect their personal assets and enjoy flexibility in their business operations. LLC formation costs vary from state to state, and it is essential to understand the costs involved in forming and maintaining an LLC in South Dakota.

If you would like to know more about the South Dakota LLC Cost, read the whole article until the end. Webinarcare Editorial Team will help you gain knowledge on how much an LLC Costs in South Dakota. You must be guided by all the factors gathered in this article.

How to Start an LLC?

Before we dive into the LLC Cost in South Dakota, you should know the step-by-step process of starting an LLC, including selecting a unique business name, appointing a Registered Agent, filing the necessary documents, and fulfilling any additional requirements, such as obtaining licenses or permits that are specific to your industry or location.

Here are the steps in starting an LLC in South Dakota:

  • Step 1: Choose a Unique Business Name
    The first step in starting an LLC in South Dakota is to select a unique business name for your company. The name should be distinguishable from any other registered businesses in the state. You can check the availability of your desired business name by searching the state’s business name database. Once you’ve found an available name, you may need to include “LLC” or “Limited Liability Company” at the end of the name to comply with state requirements.
  • Step 2: Appoint a Registered Agent
    A Registered Agent is someone who will receive official legal and tax documents on behalf of your LLC. The Registered Agent must have a physical address in South Dakota and be available during normal business hours. You have the option to appoint yourself as the registered agent or hire a professional registered agent service.
  • Step 3: File the Articles of Organization
    To officially form your LLC, you need to file the Articles of Organization with the South Dakota Secretary of State or the appropriate state agency. The Articles of Organization typically requires basic information about your LLC, such as its name, address, Registered Agent details, and the name and address of the LLC’s members or managers.
  • Step 4: Create an Operating Agreement
    Once your LLC is formed, it’s highly recommended to create an operating agreement in South Dakota. Although not required by South Dakota law, an operating agreement is a crucial internal document that outlines the ownership, management, and operating procedures of your LLC. It helps establish clear guidelines and expectations among members, and it can be especially useful in the event of disputes or disagreements in the future. The operating agreement can be customized to fit the specific needs and goals of your LLC.
  • Step 5: Obtain Required Licenses and Permits
    Depending on the nature of your business, you may need to obtain specific licenses or permits at the federal, state, or local level. Research the licensing requirements in South Dakota and apply for business licenses in South Dakota related to your industry or activities. Common examples include professional licenses, health or safety permits, and sales tax permits.
  • Step 6: File for an Employer Identification Number (EIN)
    An Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) that is used to identify your LLC for tax purposes. Even if you don’t have employees, obtaining an EIN is typically required if you plan to open a business bank account, hire contractors, or file certain tax forms. You can easily apply for an EIN in South Dakota through the IRS website.
  • Step 7: Comply with Ongoing Requirements
    Once your LLC is established in South Dakota, it’s important to stay in compliance with any ongoing requirements. This may include filing periodic reports, paying Annual Report fees, and renewing licenses or permits. Familiarize yourself with the specific obligations for maintaining your LLC’s good standing in South Dakota.

Remember, starting an LLC in South Dakota involves some specific steps and requirements that may differ from other states. It’s advisable to hire an LLC Services in South Dakota that specializes in business formation to ensure that you follow all the necessary procedures accurately and efficiently. We reviewed the Best LLC Services for you to check out.

LLC Cost in South Dakota

It is crucial to consider the costs associated with the formation and maintenance of your business. The costs of establishing and operating an LLC in South Dakota can vary based on several factors, including the initial formation fees, ongoing compliance requirements, and optional expenses.

Initial LLC Costs

When starting a limited liability company (LLC), knowing the initial costs associated with forming and registering your new business entity is essential. Understanding and preparing for these expenses can help you budget effectively and set your South Dakota business on a path to success. Some common initial costs associated with forming an LLC include Articles of Organization filing fees, Registered Agent fees, and additional services, such as business name reservation fees. 

Articles of Organization Filing Fee

The first step in forming an LLC in South Dakota is to file the South Dakota Articles of Organization with the South Dakota Secretary of State. This document officially creates the LLC and includes essential information about the business, such as its name, address, and Registered Agent. 

This document includes essential information about your LLC, such as:

  • The name of your LLC
  • The address of your LLC’s principal office
  • The name and address of your Registered Agent
  • The purpose of your LLC (optional in some states)

You can typically file the Articles of Organization online, by mail, or in person. A filing fee is associated with this process, which costs around $150. You can also file by mailing it to South Dakota Secretary of State, which is located at Secretary of State Office, 500 E Capitol Ave, Pierre, SD 57501.

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Registered Agent Fee

An LLC in South Dakota must designate a Registered Agent who will be responsible for receiving legal and government documents on behalf of the business. You can act as your own Registered Agent or appoint someone you know. Professional Registered Agent in South Dakota typically charge an annual fee ranging from $50 – $150.

 In South Dakota, your Registered Agent must:

  • Be a resident of South Dakota or a business entity authorized to do business in the state.
  • Have a physical address in South Dakota (P.O. boxes are not acceptable)

Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

We reviewed some of the Best Registered Agent Services in South Dakota and provided features as an add-on with their packages for you to check out.

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Business Name Reservation Fee

If you have a specific business name in mind and want to ensure it is available when you are ready to file your Articles of Organization, you can reserve the business name with the South Dakota Secretary of State. 

In South Dakota, your LLC name must:

  • Include the words “Limited Liability Company,” “LLC,” or “L.L.C.
  • Not contain any words or phrases that are prohibited by state law
  • Be distinguishable from the names of other businesses registered in the state

However, 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 the South Dakota Secretary of State to keep the name. 

The online name reservation fee is disclosed, while the mail name reservation fee is $25. 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 a DBA (doing business as). If you have decided to file for a DBA, you can file it in two methods, by mail and in person. However, before filing South Dakota DBA, you should know that you need to renew your DBA for up to five years, which cost $10.

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Ongoing LLC Costs

After you know the initial costs of forming an LLC in South Dakota, you should also know the ongoing costs once you have filed for an LLC. Here are the involved costs that you need to know.

Annual Report Filing Fee

To keep your LLC in good standing, you must file Annual Report with the South Dakota Secretary of State. The Annual Report provides updated information about your LLC, such as changes in address, members, or Registered Agent. 

In South Dakota, the Annual Report fee costs $50 which can be paid every 1 year (first day of the anniversary month).

Franchise Tax or Annual LLC Tax

Some states require LLCs to pay an annual franchise or LLC tax, separate from the Annual Report filing fee. Franchise tax, or annual tax, is a fee imposed by South Dakota on businesses, including LLCs and South Dakota Corporations, for the privilege of operating within their jurisdiction. This tax is separate from income taxes and is usually based on factors such as the company’s net worth, assets, capital, or a fixed dollar amount, depending on the South Dakota‚Äôs specific tax regulations. 

South Dakota LLC Taxes To Be Paid

The State of South Dakota is one of those rarest states in the United States that does not levy any personal income tax on businesses. However, the business LLCs must file other taxes with the State authorities.

  • Sales Tax: A sales tax is a government-imposed tax on the sale of goods and services. It is generally added to the price of a product or service at the point of sale and paid by the consumer. The tax is collected by the retailer or service provider, who then remits the collected tax amount to the relevant government authority. In South Dakota, the sales tax rate is 4.50%. 
  • State Income Tax: Considering other taxes in South Dakota, you should pay for the state income tax, with a rate of 0%; South Dakota has no state corporate income tax. 
  • LLC Federal Self-Employment Tax: Federal self-employment tax rates are the same across all states. Self-employment taxes are imposed on self-employed individuals or members of a Limited Liability Company (LLC) taxed as a sole proprietorship or partnership.
  • Property Tax: The property tax is fixed at 1.28% of industrial, commercial, residential, agricultural, and all other properties.

Business Licenses and Permits

Depending on the nature of your South Dakota business and the location of your operations, you may need to obtain permits and business licenses in South Dakota. The costs of these licenses and permits will vary based on your specific business and location. In South Dakota, the business license ranges from $50 – $300. However, research the requirements for your LLC in South Dakota and budget for these expenses accordingly.

Optional LLC Costs

Here are the optional costs you must consider if you will form an operating agreement or hire a professional service.

Operating Agreement

Although not required by law, it is highly recommended that LLCs create an operating agreement in South Dakota. This document outlines the LLC’s ownership structure, management, and operating procedures. Hiring a business attorney to draft an operating agreement can cost anywhere from $500 to $2,000, or you can use online resources and templates to create one yourself.

Professional Services

You may hire professionals such as attorneys, accountants, or business consultants to help you establish and run your South Dakota LLC. These services can provide valuable expertise and guidance but come at an additional cost. Consider the potential benefits and weigh them against the costs when hiring professional assistance.

You may check out the Best Business Attorney Services in South Dakota that offer their professional services to form your business.

Can I Set Up an LLC For Free?

It’s impossible to set up an LLC entirely for free, as state filing fees and other costs are associated with establishing an LLC. However, you can save money by handling the formation process instead of hiring a professional service. Here are some steps to help you minimize the cost of setting up an LLC:

  • Choose your LLC’s name and check for availability in your state. This can generally be done through the Secretary of State’s website.
  • Prepare and file the Articles of Organization yourself. South Dakota offer an online filing option or downloadable forms on their websites. By completing this process independently, you can avoid paying additional fees for a professional service.
  • Act as your own Registered Agent if permitted within South Dakota. It allows the business owner to serve as the Registered Agent, saving you the cost of hiring a professional registered agent service.
  • Create your own Operating Agreement using online resources and templates. Although not required in every state, an Operating Agreement is highly recommended to outline your LLC’s ownership structure and management. By drafting this document yourself, you can save on legal fees.
  • Research and apply for any required licenses and permits on your own. Depending on your business type and location, you may need specific permits or licenses. These costs can vary, but handling the application process yourself can save you the expense of hiring a professional service.

While you can’t set up an LLC for free, taking a do-it-yourself approach and minimizing the use of professional services can help you save money during the formation process. However, handling these tasks requires time and effort, and there may be additional legal or financial risks if mistakes occur.

FAQs

What are the filing fees for setting up an LLC in South Dakota?
The filing fees for setting up an LLC in South Dakota are $150.
How much does it cost to file annual reports in South Dakota for an LLC?
It costs $50 to file annual reports for an LLC in South Dakota.
Is there a franchise tax for LLCs in South Dakota?
No, South Dakota does not charge a franchise tax for LLCs.
Are there any additional costs for hiring a registered agent in South Dakota?
Yes, you will need to pay a fee to your registered agent in South Dakota, which can vary depending on the agent you choose.
Can I use a PO box as a business address for my LLC in South Dakota?
No, the state of South Dakota does not allow the use of PO boxes as business addresses for LLCs.
Does South Dakota require a state tax ID for LLCs?
Yes, LLCs in South Dakota are required to obtain a state tax ID.
Do I need to obtain any special permits or licenses before starting an LLC in South Dakota?
It depends on the nature of your business. Some businesses require specific permits or licenses in South Dakota, while others do not.
How long does it take to form an LLC in South Dakota?
It typically takes between 1 and 3 days to form an LLC in South Dakota.
Is there a minimum age requirement for forming an LLC in South Dakota?
No, there is no minimum age requirement for forming an LLC in South Dakota.
What is the cost of a name reservation for an LLC in South Dakota?
The cost of a name reservation for an LLC in South Dakota is $25.
How long is a name reservation for an LLC valid in South Dakota?
A name reservation for an LLC in South Dakota is valid for 120 days.
Can I change the name of my LLC after it has been formed in South Dakota?
Yes, you can change the name of your LLC after it has been formed in South Dakota by filing a name change amendment.
Are there additional fees for expedited LLC processing in South Dakota?
Yes, there is an additional fee for expedited LLC processing in South Dakota, which varies depending on the requested processing time.
Can I form an LLC in South Dakota if I am not a resident of the state?
Yes, you can form an LLC in South Dakota even if you are not a resident of the state.
Do I need to hire a lawyer to form an LLC in South Dakota?
No, you do not need to hire a lawyer to form an LLC in South Dakota, but consulting with one is suggested.
Are there any annual fees for maintaining an LLC in South Dakota?
There is an annual report filing fee of $50 for maintaining an LLC in South Dakota.
Can an LLC in South Dakota be taxed as an S corporation?
Yes, an LLC in South Dakota can elect to be taxed as an S corporation.
What is the cost of a certified copy of an LLC document in South Dakota?
The cost of a certified copy of an LLC document in South Dakota is $15.
Is there a fee for changing the registered agent for my LLC in South Dakota?
No, there is no fee for changing the registered agent for your LLC in South Dakota.
Do I need to file a separate state tax return for my LLC in South Dakota?
Yes, you need to file a separate state tax return for your LLC in South Dakota.
What is the cost of an LLC formation kit in South Dakota?
The cost of an LLC formation kit in South Dakota ranges from $50 to $500 depending on the service provider.
Is there a publication requirement for LLCs formed in South Dakota?
No, there’s no publication requirement for LLCs formed in South Dakota.
Do I have to register my foreign LLC in South Dakota to conduct business in the state?
Yes, you must register a foreign LLC in South Dakota to conduct business within the state.
Can I file my LLC paperwork online in South Dakota?
Yes, you can file your LLC paperwork for South Dakota online at the Secretary of State’s website.
What is the fee to register a foreign LLC in South Dakota?
The fee to register a foreign LLC in South Dakota is $750.
What happens if I miss the deadline for filing an annual report in South Dakota?
If you miss the deadline for filing an annual report in South Dakota, you will need to pay a $50 late fee and may face additional consequences for excessive lateness.
Can I convert my LLC to a corporation in South Dakota?
Yes, you can convert your LLC to a corporation in South Dakota by following the necessary procedures and requirements set by the State.
Is a written agreement required for forming an LLC in South Dakota?
No, a written agreement is not required for forming an LLC in South Dakota.
What is the filing fee for South Dakota LLC?
The filing fee for South Dakota LLC is $150.
Is there any publication requirement to form LLC in South Dakota?
No, there is no publication requirement to form LLC in South Dakota.
What is the minimum annual fee for an LLC in South Dakota?
The minimum annual fee for an LLC in South Dakota is $50.
Can I form an LLC online in South Dakota?
Yes, you can form an LLC online in South Dakota through the Secretary of State’s website.
What is the processing time for an LLC in South Dakota?
The processing time for an LLC in South Dakota is usually 5-7 business days.
Can I reserve a name for my LLC in South Dakota?
Yes, you can reserve a name for your LLC in South Dakota by filing a name reservation application and paying a $25 fee.
Do I need a registered agent for my LLC in South Dakota?
Yes, you need a registered agent for your LLC in South Dakota, and the agent must have a physical address in the state.
Are there any residency requirements to form an LLC in South Dakota?
No, there are no residency requirements to form an LLC in South Dakota.
Can I make changes to my LLC’s articles of organization in South Dakota?
Yes, you can make changes to your LLC’s articles of organization in South Dakota by filing articles of amendment with the Secretary of State and paying a $25 fee.
Do I need an operating agreement for my LLC in South Dakota?
No, an operating agreement is not required for LLCs in South Dakota but is highly recommended.
How many members can an LLC have in South Dakota?
LLCs in South Dakota can have one or more members.
Do I need a business license to operate an LLC in South Dakota?
Depending on your business activities, you may need to obtain a business license in South Dakota.
Can an LLC be taxed as an S-Corporation in South Dakota?
Yes, an LLC can be taxed as an S-Corporation in South Dakota by filing Form 2553 with the IRS.
Can I convert my sole proprietorship to an LLC in South Dakota?
Yes, you can convert your sole proprietorship to an LLC in South Dakota by filing articles of organization with the Secretary of State.
Is there a separate business inventory tax in South Dakota?
No, there is no separate business inventory tax in South Dakota.
What is the initial report fee for LLCs in South Dakota?
The initial report fee for LLCs in South Dakota is $50.
Can I form a single-member LLC in South Dakota?
Yes, you can form a single-member LLC in South Dakota.
How long does an LLC last in South Dakota?
LLCs in South Dakota have perpetual existence.
Can an LLC be dissolved in South Dakota?
Yes, an LLC can be dissolved in South Dakota by filing articles of dissolution with the Secretary of State.
What is the name availability check fee for LLCs in South Dakota?
The name availability check fee for LLCs in South Dakota is $10.
Are there any annual reporting requirements for LLCs in South Dakota?
Yes, LLCs in South Dakota must file an annual report with the Secretary of State and pay a fee of $50.
What is the minimum required capital to start an LLC in South Dakota?
There is no minimum required capital to start an LLC in South Dakota.
Is an LLC required to have a board of directors in South Dakota?
No, LLCs in South Dakota are not required to have a board of directors.
Is there a business personal property tax in South Dakota?
Yes, there is a business personal property tax in South Dakota.
Can LLC members be held liable for the company’s debts in South Dakota?
Generally, LLC members are not personally liable for the company’s debts in South Dakota.
Do LLCs have to pay taxes in South Dakota?
Yes, LLCs have to pay taxes in South Dakota and are classified as pass-through entities for tax purposes.
Can an LLC be converted to a corporation in South Dakota?
Yes, an LLC can be converted to a corporation in South Dakota by filing articles of incorporation with the Secretary of State.
Is a publication required for LLC formation in South Dakota?
No, a publication is not required for LLC formation in South Dakota.

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Conclusion

Forming and maintaining an LLC in South Dakota involves various costs, including initial filing fees, ongoing annual report fees, and taxes. Understanding and planning for these costs is essential when establishing your LLC. Additionally, consider any optional expenses, such as hiring professional services or drafting an operating agreement, to ensure the success and longevity of your LLC in South Dakota.

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