Cost to form an LLC in South Dakota - Online filing - $150, Mailed in filings - $165
Recurring Fees - $50 Annual Report Fee
Filing Time - It normally takes around 1 week for the LLC paperwork to be approved in South Dakota when filing by mail and is processed immediately when filing online.
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The Limited Liability Company (LLC) is a popular business entity choice structure for many businesses starting in South Dakota. The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in South Dakota without an attorney.
Unlike a sole proprietorship or partnership where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting for the business owner’s personal assets.
Related: How Does an LLC Protect You?
Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration and management flexibility.
Forming an LLC in South Dakota is fairly straightforward, but it’s nice to have some support in case you have questions or get stuck. IncFile and Inc Authority provide LLC formation guidance for only the cost of the state fees!
To form a Limited Liability Company in South Dakota, file the Articles of Organization with the South Dakota Secretary of State. The LLC filing fee is $150 for online filings or $165 for filings made by mail.
Approval for the LLC is immediate when filing online and around one week when filing by mail.
HOW TO FILE THE ARTICLES OF ORGANIZATION AND FORM A SOUTH DAKOTA LLC
The steps for filing online or by mail are largely the same. The screenshots show how to file online.
- Begin by visiting the South Dakota Secretary of State’s website. If you prefer to fill out and mail the application, download the Articles of Organization Form.
- Click on “Start a New Business”.
- In the “Choose a Business Entity Type” drop-down menu select “(Domestic) Limited Liability Company”. The brief difference between domestic and foreign is that if your LLC is based in South Dakota, it is domestic. If the LLC was formed in another state and wanting to do business in South Dakota, then it would be foreign.
Step 1: Name the LLC
Enter the name you want for the LLC. The name of the LLC also has to differ from other entity names registered with the Secretary of State. Before choosing a name, check on available LLC names in South Dakota before going through the filing process to be sure the one you want is available.
The name of the LLC must also include a designator at the end of the business name. A designator describes what type of business entity it is. Available designators include:
- Limited Liability Company
- Limited Liability Co.
- Ltd. Liability Company
- Ltd. Liability Co.
A comma may be used after the business name and before the designator. “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.
Enter the name along with the designator you would like to use twice to confirm the name you want was entered correctly.
Before settling on a name, you may want to do a domain name search to try and match your business name and website address.
Next, the optional field for “Professional Type” may need attention. Most LLCs will skip this section, but if your business requires licensing before providing services, select they type of licensing.
Step 2: Principal Address
In this section, enter the street address, city, state and zip code of the initial principal office. This address can be the physical address of the LLC or it can be the address where the business records are stored. You may not use a PO Box for the designated office. There are also fields for a phone number and email address. Many people do not provide the phone number as it becomes public record. The email is required and is the address where the Secretary of State will send notifications when annual reports are due.
A mailing address is needed and it can be the same as the principal address. If the records of the LLC will be sent to a different address, enter that information in the Mailing Address Section. If the address is the same as the principal office, click on the “Use this address as the Mailing Address also” box to copy the Principal Address address.
Step 3: Select a Registered Agent
To have an LLC in South Dakota, a Registered Agent must be identified. The Registered Agent can either be a resident or business entity that is registered in South Dakota (Select “Noncommercial Registered Agent”) or a Registered Agent service (Select “Commercial Registered Agent”) who has registered with the Secretary of State. The agent must have a physical address in the state (PO Boxes are not allowed) and act as a point of contact to receive legal documents, tax notices, summons, subpoenas, etc on behalf of the LLC.
If you selected Noncommercial Registered Agent, it is likely the name of that person isn’t listed, so you will enter their name, address and email in the contact fields.
Even though the business owner can be the registered agent, their name and address become public record and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when they are doing business from home.
Step 4: Organizer(s)
An LLC Organizer is someone involved with the formation of the Articles of Organization. The Organizer may or may not become a member, such as a mentor, attorney or accountant, but any of the initial members can be listed as an organizer.
For most LLCs, the members will also be the organizers.
At least one organizer is required. Enter the name and address for each organizer and click add.
Step 5: Additional Details – Period of Duration & Delayed Effective Date
Period of Duration – In this section, you can indicate how long the LLC will remain in existence. Most LLCs will choose a Perpetual duration, however some businesses (usually investment related) will have a specific closure date.
Delayed Effective Date – If you want the LLC to start immediately, leave this field blank. If you want the LLC to start later, enter a date less than 90 days in the future. The main reason for delaying the LLC start date is when the filing is being done close to the end of a calendar year and the business isn’t going to have any activity until the start of the year. By delaying until the following year they will reduce the number of end-of-year filings.
Step 6: Management
This section asks if the LLC is Member-Managed or Manager-Managed.
- Member-Managed LLCs have an active involvement in the management and have authority to act on behalf of the LLC.
- Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation. This is generally used when there are passive members in the LLC and the members do not actively manage or operate in the affairs of the business.
Most LLCs are Member-Managed.
Select Member-Managed or Manager-Managed in the “Managed by” drop-down menu.
Next, select “Yes” or “No” to the question whether one or more of the members will be liable for the debts and obligations of the LLC. Most filers are going to choose “No”.
Step 7: Beneficial Owner(s)
This is an optional section and each member of the LLC is typically considered a beneficial owner. Entering their names with the LLC filing puts their names and address on public record.
Step 8 – Add Additional Articles
This is an optional section and not used by most LLCs. Here you would include additional rules for the operation of the LLC.
Step 9 – Recipient(s)
Another optional section and isn’t used by most filers. If the filings need to be mailed to an attorney or formation company once the entity is formed, enter their information here.
Step 10: Review
Review that all the information is correct. If there are no corrections, click “Next”
Step 11: Signature
Have an individual forming the LLC to sign and accept the terms and conditions. Click the “Next” button to save the information and proceed.
Step 12: Pay and File
Pay and file the Articles of Organization.
Professional services like IncFile and IncAuthority help guide you to make sure it’s done right and you only pay the normal state fees.
Check out our reviews of popular LLC formation services to learn more.
Tasks After Forming Your LLC
Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.
Prepare an Operating Agreement
The operating agreement is a document that governs the framework of an LLC. This document covers items like ownership rights, member responsibilities, how profits and losses are distributed and more.
Most states do not require an LLC to have an operating agreement but it is still worth considering. Without an operating agreement:
- The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit
- Member’s personal liability protection may be diminished
- Members may not have a full understanding of their roles and responsibilities which could lead to costly disputes in the future
Obtain an EIN
The EIN or Employer Identification Number is a unique 9-digit number for a business. Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.
The EIN will be needed in order to open a bank account, register for business licenses and permits, file tax returns, pay payroll taxes and more.
Related: How to Apply for an EIN
Open an LLC Bank Account
Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.
Several documents will be needed to open a business bank account such as:
- A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
- Copies of the original formation paperwork from the state showing the creation of the LLC.
- Driver’s licenses of the members.
- Depending on the age of the LLC, a South Dakota Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.
Apply for Business Licenses and Permits
Depending on what your business does and where it is located, there will likely be a variety of business licenses and permits to register for before starting. Some common registrations include:
- Business License – Some cities require businesses to obtain licensing before they can start. In some cases, even home-based businesses must have licensing in order to legally operate.
- Professional License – Certain services such as barbershops, accountants, salons and others must be licensed.
- Sales Tax License – In order to sell products and certain services, registration with the South Dakota Department of Revenue will be necessary.
File Annual Reports
LLCs are required to file an annual report with the South Dakota Secretary of State. The annual report updates ownership information and other details.