Start an LLC In South Dakota 2023: The Real Guide

Start An LLC In South Dakota

You may wish to know how to create an LLC in South Dakota for tax advantages or restricted liability. If that describes you, then you’ve come to the correct place.

There’s a lot of information below on the procedures you need to take, what to do after formation, and the charges involved. We also cover how long the process will take and even what to do if you decide to dissolve the LLC.

Let’s first see how South Dakota compares to its neighboring states as a place to start an LLC.

State	South Dakota	North Dakota	Nebraska	Minnesota	US Average
Population	886,667	779,094	1,961,504	5,707,390	6,619,825
LLC Filing Fee	$150	$135	$105	$155	$130.38
LLC Annual/Biennial Fee	$50 (every year)	$50 (every year)	$10 (every 2 years)	$0 (however, an information report must be filed every year)	$89.34 (every year)
Corporate Tax Rate	0%*	1.41-4.31%	5.58-7.50%	9.80%	5.60%
Nominal GDP per capita	$68,357	$81,795	$76,584	$72,187	$64, 773.08

Before You Set Up An LLC In South Dakota

Before you put things together, it helps to have a general idea of what you are looking at, so you can get your affairs together.

First, it’s recommended that you consider the nature of the business that you are in. There may be specific requirements outside of the general six-step process. Find those if that’s the case and take care of them first if possible.

The general process that is synonymous with forming an LLC in South Dakota is as follows:

Choose your LLC’s name
Hire or appoint a registered agent
Filing your Articles of Organization
Compiling any other required documentation
Put in your operating agreement together
Getting an EIN

How Much Does It Cost To Start An LLC In South Dakota?

If you’re wondering how to start an LLC in South Dakota for free, it’s not possible. The closest you can get is doing the process without the aid of any external consultants and choosing a registered agent in-house.

In any case, this section is a quick breakdown of the costs associated with the process.

First, there is the most important fee of them all, which is the filing fee for your South Dakota LLC, which is going to cost you $150 online and $165 by mail.

Alternatively, you may be forming a foreign LLC, as it’s already registered in another state. If that is the case, you are instead looking at $750 if you apply online and $765 if you apply by mail.

Another mandatory cost depending on the path you choose is that of your registered agent. This can run anywhere from $50 to $300. To avoid this fee, you may elect to become your own registered agent or nominate someone else in-house. Note that while you can do this, you give up the compliance and monitoring functions that external registered agents bring to the table.

Now, there are the optional costs. First, some businesses require licenses or permits, which may have a price tag associated with them. Remember to find out what the requirements are for the nature of your business to act on them accordingly.

You can choose to reserve the name you want for your LLC up to 120 days before formation, which is going to cost you $25.

If you find that your foreign LLC name is not available in South Dakota, you can apply to register a new name, which attracts a filing fee of $25.

Feel free to register a “Doing Business As” (DBA) name with the Secretary of State for $10, which allows you to conduct business under a name other than your legal one.

The Secretary of State can also provide you with certified copies of your documents, which has a base cost of $15 with an additional $2 for each page.

Finally, there is the South Dakota certificate of good standing, which is typically required by banks and lending institutions. It comes with a cost of $20.

In total, your lowest theoretical cost is going to be $150, which assumes you file online, you use none of the optional services, no business permits with a charge are required, and your registered agent is in-house. If this is not the case, simply add any of the relevant costs to the main filing fee to get a projection of your total.

Steps To Start An LLC In South Dakota

Now it’s time to get a little more specific so you can get started with forming an LLC in South Dakota. This is a more detailed description of the typical procedure.

Pick a Name for Your LLC – As you can imagine, you need to choose a fitting name for your business. However, you do need to factor in the state’s requirements as you do so. For example, there is the requirement to include “limited liability company” or an abbreviation such as “LLC” in your company name. You are encouraged to review the full list of stipulations before you continue.

Next, check the state’s website to ensure that the name you want isn’t already taken. At this point, it doesn’t hurt to ensure that you can get a desirable domain name for your eventual web presence.

Find a Registered Agent in South Dakota – There is a legal requirement in South Dakota to have a registered agent. Its purpose is to receive important tax forms, lawsuit notices, government correspondence, and other legal documentation on behalf of your LLC.

You or another internal employee can do this since the only requirements are that you must be at least 18 years old, have a physical address in South Dakota, and be linked with your company.

Nevertheless, considering the benefits that come with proactive monitoring, it’s best to leave this function in the hands of professional registered agent services.

ZenBusiness – $49 + state fees to register your LLC (read review)

Incfile – $0 + $50 state fees to register your LLC (read review)

Articles of Organization – The next order of business is filing your Articles of Organization with the South Dakota Secretary of State. This process can be handled either online or by mail. The former costs $150, while the latter costs $165.

A foreign LLC instead requires an application for a Certificate of Authority, which can also be filed online or by mail for $750 or $765, respectively.

Other Required Documents – There may not be any other mandatory documents for you to consider. It all depends on the nature of your business.

You should do a search to find out what the requirements may be. For example, if you are going into the restaurant industry, you would need to complete a food license application with the South Dakota Department of Health.

Operating Agreement – Forming an LLC in South Dakota does not require that you have an operating agreement. However, having this legal statement of operating procedures and ownership keeps all the LLC members in check. Therefore, even if there should be a dispute on the matter in the future, the document can help solve it.

Get an EIN – The final piece of the puzzle is your Employer Identification Number, or EIN, which is a nine-digit number assigned by the IRS to identify businesses for tax purposes. Alternatively, you may hear it being called a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).

Note that having one also allows you to hire employees, file and manage any state and federal taxes, and open a business bank account. You get your EIN for free by applying to the IRS either online or via mail/fax.

The Forms You Need To Register An LLC In South Dakota

The mandatory forms that you need when creating an LLC in South Dakota are as follows:

Optional forms include the following:

Did You Know?
While other states also use different prices for domestic and foreign LLC applications, South Dakota’s foreign application is one of the most expensive, being five times the cost of its domestic counterpart. The additional $15 for filing Articles of Organization by mail is not a typical charge across the board for the United States. South Dakota is unlike many other states in that online filing for Articles of Organization offers an immediate approval response.

LLC Taxes In South Dakota

At the federal level, the LLC can be treated as a pass-through entity as it is by default. Therefore, while a yearly filing that specifies the amount each member invests or receives is required, taxation is done at the individual level. Of course, as is typically the case, the LLC can opt to be taxed as a C Corp or S Corp.

South Dakota takes are far different approach from almost every other state where personal income tax is concerned. There is simply none. Therefore, you as an employer do not need to withhold state tax from employee wages.

Nevertheless, employees do need to fill out a W-4 form to ensure that federal taxes are adequately taken care of.

Note that municipal tax, as well as a standard sales and use tax of 4.5%, is remitted on a single form, and LLCs in the state are susceptible to both.

How Long To Form An LLC In South Dakota

The duration for forming your LLC in South Dakota depends on the filing process that you use. Assuming that you’re successful, an online application means that the process is immediate, while filing by mail has a three to five-business-day lead time.

How Much Does It Cost To Run An LLC In South Dakota?

As far as annual costs go, there is your South Dakota LLC report is required, which costs $50 to file. Potentially, this could be your only annual cost.

However, if there are licensing and permit requirements with annual charges and if your registered agent is an external service, then the costs associated with these would need to be added to the $50 to yield your yearly total.

What To Do After Formation

Forming your LLC is only the beginning. You’re going to need to do what is necessary to keep the wheels turning and generate interest from customers.

Create a logo – Your logo needs to be indistinguishable, grab the attention of those who see it, and instantly allow people to make an association with your business. Consider getting a professional to design this.
Build a website/eCommerce store – You need an eCommerce store for your product or service. Even if you don’t sell in the traditional sense, at least a website is needed, as surviving in today’s business landscape without a web presence is all but impossible.
Bank account – We recommend you have a day-to-day account for typical operational expenses.
Business insurance – General liability insurance is a good start. However, think about all the specifics of your business to ensure you’re adequately covered. For example, you may need insurance for workers’ compensation to cover your employees.
Annual reports – Ensure that your annual reports are filed on time. They are due November 15th each year. Not only is there a $50 fine for late filings, but not doing so within 60 days can lead to the revocation of your LLC registration.

Resources To Start A Successful LLC In South Dakota

Here are the resources you need to give yourself the best chance of a successful start:

Start Marketing Your LLC In South Dakota

This is another important puzzle piece in keeping your LLC afloat because it helps to generate interest in your company. The four “Ps” of marketing are product, pricing, place, and promotion, and all four must be managed well.

Market research, client profiling, and the use of targeted campaigns are all advised. Assign this task to an internal marketing team or an outside marketing consultancy.

How To Dissolve An LLC In South Dakota

It’s exciting to start an LLC in South Dakota, but sometimes, the company needs to be dissolved. If this is the case, your operating agreement typically outlines the internal procedures that you must follow.

From a legal standpoint, you need to close all your tax accounts, followed by the filing of Articles of Dissolution.

Conclusion

If you wish to form a limited liability company in South Dakota, you must first handle the costs and file the necessary paperwork. Of course, you’ll need to be aware of the various government resources and external registered agent firms available to help you through the procedure.

All of this was mentioned above, so you should be well on your way to establishing an LLC.

How To Start An LLC In South Dakota