Forming an LLC in South Dakota

If you plan to form an LLC in South Dakota, you will need to choose your LLC name, designate a registered agent and submit the Articles of Organization.

There are a few more steps that you need to take once your LLC has been registered and approved by the South Dakota Secretary of State.



Here is a detailed step-by-step guide for a South Dakota LLC formation. 

How to Form a South Dakota LLC

  1. LLC Name
  2. Registered Agent
  3. Articles of Organization
  4. Operating Agreement
  5. EIN And Bank Account
  6. Tax Requirements
  7. Annual Report

LLC Name

Your South Dakota LLC formation process begins by choosing a name for your LLC that must be distinguishable from other LLC names that are already registered with the Secretary of State.

Name Compliance

There are certain rules for a South Dakota LLC name that you need to take care of.

  • Name must have the words ‘Limited Liability Company’ or ‘Limited Company’
  • Abbreviations for Limited Liability Company can be: ‘LLC’, ‘L.L.C.’, ‘LC’, or ‘L.C.’
  • Abbreviation for ‘Limited’ can be: ‘Ltd.’
  • Abbreviation for ‘Company’ can be ‘Co.’
  • LLC name should be easily distinguishable from other LLC names registered with South Dakota Secretary of State
  • Name should not have the words that represent a government institution (for example FBI, State Department, CIA, etc.)
  • Words like ‘Bank’, ‘School’ or ‘Attorney’ may require additional documents and a professional in the relevant field (for example a banker, teacher, lawyer, etc.)
  • Name can be reserved for up to 120 days after submitting an application via mail only.

You can check the availability of a business name at the South Dakota state’s official name database.



Registered Agent

Designating a registered agent is mandatory as per South Dakota LLC law. A registered agent is an individual or a company that receives legal documents on behalf of the LLC. The individual or the company can either be a South Dakota resident or have the license to do business in the state.

As per the law, the registered agent must have a physical street address in the state of South Dakota (not just PO Box). 

You can view the list of commercial registered agents authorized to work in South Dakota at the Secretary of State website.

Articles of Organization

The  final step in forming an LLC in South Dakota is to file the Articles of Organization with the Secretary of State.

Following information is required to be submitted in the articles:

  • Name of LLC
  • Purpose of LLC
  • Name and address of the designated registered agent
  • Name and address of LLC’s members
  • LLC’s duration (perpetual or time-based)
  • LLC type (member-managed or manager-managed)
  • LLC debt liability status (if one member will be liable or more than one)
  • Signature of the organizer (could be anyone who submits the articles)

You can file the articles using the online portal or via mail at the following address:

Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501

A non-refundable filing fee of $150 will be charged if filed online, and $165 if filed via mail.

Registering a Foreign LLC

If you have an existing LLC in another state(s) and you want to operate in South Dakota, you will need to file as a foreign LLC.

You can file online or via mail at the aforementioned address. A non-refundable filing fee of $750 will be charged if filed online, and a filing of $765 will be charged if filed via mail.

At this point, you are done with all the legal requirements for a South Dakota LLC formation. Below are some other important steps that you need to take once your LLC is approved.

Operating Agreement

An operating agreement is not a legal requirement for a South Dakota LLC formation. However, it is advised that you prepare this internal document for better business transparency and consensus between the members in the long run.

This document mentions the operating structure of an LLC and details about the ownership. An operating agreement can assist in future business decisions or avoid conflicts.

Get an EIN And A Bank Account

EIN

EIN (Employee Identification Number) is a unique 9-digit number assigned by the IRA (Internal Revenue Service). This number acts as a business ID and is mainly used for tax purposes. It may also be used for opening a bank account or hiring employees.

You can either apply for an EIN online or via mail at the following address:

Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999

You can also fax the application at (855) 641-6935. 

There are no charges for obtaining an EIN.

Bank Account

One of the major steps to take as soon as the LLC is approved is to open a separate LLC bank account. This protects your personal assets and liabilities, and also eases the process of tax filing.

Moreover, it is advised to apply for a business credit card. It helps in separating your personal and business expenses. And also, it assists in building your company’s credit history.

It is a good idea to get a separate phone number as well for the LLC.

Tax Requirements

One or more than one form of taxes might be applicable to your LLC, depending on the nature of your business.

Sales Tax

For selling physical products in South Dakota, you will be required to register with the Department of Revenue of South Dakota. Once registered, the LLC will be permitted to collect sales tax on taxable sales.

Employer Tax

If your South Dakota LLC has employees, you will be required to register for Reemployment Assistance Tax (formerly Unemployment Insurance Tax).

Federal Tax

You will need to report your LLC’s income to the IRS using either Form 1065 (for a multi-member LLC) or Form 1040 (for a single-member LLC)

Annual Report

Filing of an annual report with the Secretary of State is mandatory for an LLC based in South Dakota. 

The annual report is due on November 15th each year. The first report is due the year that follows after the LLC formation (for example, if you registered in August 2021, the first annual report will be due on November 15, 2022).

Your business ID will be required for filing the annual report. You can access the LLC business ID database to find yours.

Late Filing Penalty

If you do not submit the annual report within the due date, a $50 late filing penalty will be charged.

If you fail to submit the annual report within 60 days, the South Dakota Secretary of State has the right to revoke your LLC’s registration.