Looking to learn how to form an LLC in South Dakota? The Mount Rushmore state isn’t just home to one of the nation’s most famous tourist attractions; it’s also home to thousands of successful small businesses.
Could your business be next? Use our step-by-step guide to get your South Dakota business off the ground today.
Find a Name for Your South Dakota Business
Let’s start by giving your South Dakota LLC a name. You probably already have a name in mind, so just make sure it’s memorable and easy to pronounce. It’s also a good idea if it’s related to the service you provide.
It is also essential to comply with the LLC naming guidelines and rules in the United States, and specifically in South Dakota. These include the following:
- Your chosen name should include one of the following phrases: “LLC,” “L.L.C,” or “limited liability company.”
- Your South Dakota LLC name must be unique and distinguishable from other LLCs.
- Restricted words (such as Attorney, University, Bank, etc.) may need extra paperwork and a licensed professional (lawyer or doctor) to be part of your South Dakota LLC.
- The chosen South Dakota LLC name should not include words or phrases that may confuse your LLC with government agencies, such as Treasury, State Department, FBI, etc.
For a complete list of the South Dakota LLC naming requirements and guidelines, read the South Dakota Legislature guidelines.
You also need to ensure that the name for your LLC is available in South Dakota and not already taken by another business entity by doing a South Dakota LLC Name Search on the state website.
Finally, check if your South Dakota LLC name is available as a web domain. If it is, we recommend snapping it up immediately.
Hire a Registered Agent
In the state of South Dakota, all LLCs are required to nominate a registered agent. Your registered agent is a person or business entity designated to receive and forward official state documents and legal correspondence on your LLC’s behalf.
To qualify, a South Dakota registered agent must be 18+ years old, have a street address in South Dakota, and be available during regular business hours.
You can hire yourself or any other LLC member as your registered agent, but it’s not recommended. For example, you will need to share your private address and won’t have any flexibility in terms of working hours. That is why we recommend hiring a top registered agent company to represent your South Dakota LLC.
Here are our best three registered agent companies in South Dakota:
South Dakota Registered Agent
We picked South Dakota Registered Agent as our number one recommendation for the best registered agent service provider in South Dakota. This is primarily because of their incredibly affordable annual fee. For less than $50, you can unlock the essential registered agent services, such as:
- Online document storage
- Email notification
- Access to pre-filled state forms
- Annual report reminders
Sometimes, cheap services are associated with hidden costs and subscriptions. However, with the South Dakota Registered Agent company, you will never need to worry about encountering any extra cost other than their annual costs. You can find their South Dakota office in Watertown.
LegalZoom is our second recommendation for a registered service provider in South Dakota. They offer all the essential registered agent services, as well as unlimited cloud storage, $1M in identity theft protection, and annual report notifications.
If you are unsatisfied with your current service agent service provider, LegalZoom offers to change your existing registered agent company for free.
An annual fee for LegalZoom registered agent services is $299. However, you can get a discounted fee of $249 if you hire their LLC formation package.
Northwest is one of the US’s most reliable and comprehensive registered agent service providers.
One of the primary reasons it is featured in our list is its impeccable customer support. Their experienced and professional experts will help you with any issue or question related to compliance and registered agent services. Northwest also has an innovative Privacy by Default commitment that ensures your personal data is protected and never sold to third parties.
Northwest charges $125 for its registered agent fee. You can get a discounted fee of $100 if you hire their services in more than four states.
Register Your Business
Once you have chosen a name for your South Dakota LLC and hired a registered agent, you’ll need to register your business with the South Dakota Secretary of State.
The simplest way to register your LLC is by filing an Article of Organization online through the South Dakota Online Business Formation System. To do this, you will need to create an account using your email address, fill in the form and pay the state filing fee of $150.
If you do not wish to use the online filing system to register your South Dakota LLC, you can do it by mail by downloading and filling out the South Dakota LLC Articles of Organization Form. Mail the form together with a check for the $150 state filing fee to the following address:
Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501
Either way, your Article of Organization must include the following information:
- The name and street address of your LLC
- The name and address of the hired registered agent
- The purpose of your business
- The names, addresses, and signatures of the initial members of your LLC
Consider Writing an Operating Agreement
An Operating Agreement for your South Dakota LLC outlines the standard rules for operating your business. It puts all members on the same page about how the business should be run, how profits should be distributed and how the company should be dissolved. This makes it easier to resolve disputes and miscommunications.
While you are not legally obliged to create an Operating Agreement for your South Dakota LLC, we highly recommend drafting one.
Creating an Operating Agreement for your South Dakota LLC is straightforward. You only need to provide the following details:
- The management structure and rules
- Liability clauses
- LLC’s members’ responsibilities and rights
- The standard LLC operating rules
- Protocols for admitting new members, removing members, and dispute resolution.
- The succession plans when a member passes, retires, or leaves.
You can use an online template to create a written document or have your lawyer write one for you.
Obtain any Relevant Licenses and Permits
South Dakota state laws do not require LLCs to acquire a general business license. However, there is one primary business permit that you must obtain at the state level: the seller’s permit or sales tax license.
South Dakota may also need LLCs to acquire specific permits and licenses related to their occupation and industry.
Counties and cities in South Dakota may also impose additional licensing requirements. We recommend reaching out to county or municipality government offices where your LLC operates to ensure you obtain all the required licenses and permits.
Get Federal and State Tax IDs
The next step in forming your LLC in South Dakota is acquiring a Federal and State Tax ID. This is an Employer Identification Number that the IRS uses to identify your business entity for tax purposes.
You will also need it to file tax returns, hire employees, and open a business bank and credit account. Acquiring a Federal and State Tax ID in South Dakota is straightforward and free of charge. You only need to visit the IRS website and apply for one.
However, there are some situations where you may not need an EIN for your South Dakota LLC. For example, if you are a single-member LLC and do not plan to hire employees, you can use your personal Social Security Number instead.
Open a Business Bank Account
Even for the smallest LLC, opening a business bank and credit account is vital for managing finances and making tax seasons and accounting easier.
Most banks in South Dakota will allow business owners to open accounts linked to their LLCs, including savings and checking accounts.
Opening a bank in South Dakota is straightforward. You just need to visit one of the following banks with your LLC’s Article of Organization, business license, Federal and State Tax ID, Operating Agreement, and a small opening deposit amount:
Get South Dakota Business Insurance
There are several kinds of insurance policies that you may wish to purchase for your South Dakota LLC.
One business insurance policy that most business owners in South Dakota purchase is general liability insurance. It protects LLCs against lawsuits concerning things like property damage, bodily harm, or personal injury.
Some LLCs in South Dakota may need to purchase professional liability insurance. This is essential when professional services or licensed professionals are involved. This insurance policy provides coverage against business errors and accusations of malpractice.
Businesses with more than one employee, including LLC members, are required by the South Dakota laws to obtain workers’ compensation insurance cover. This offers protection for employees involved in on-the-job illness or injury.
Get a competitive quote for all of your LLC’s insurance needs by visiting a comparison website like Insureon.
Streamline the Process with an LLC Formation Package
Forming an LLC in South Dakota isn’t for everyone, and it can be daunting and time-consuming. Fortunately, you can buy an LLC formation package to streamline and speed up the process.
While there are many LLC formation companies, our best recommendation is ZenBusiness. You will love their Starter LLC formation package, as it is completely free of charge. You only pay the state filing fee.
If you don’t mind spending more money, you can opt for ZenBusiness’ Pro package, which costs $199, or the Premium LLC formation package, which costs $299. With these two packages, you will get expedited processing and more features that streamline the LLC formation process, such as domain name and worry-free compliance.
Another excellent company that provides comprehensive LLC formation packages is Northwest. They promise to handle all the essential LLC formation tasks, including registered agent services, filing the Article of Organization, and providing all the required paperwork like an Operating Agreement. Their fee is just $125.
FAQs About Forming an LLC in South Dakota
How Long Will It Take to Form My South Dakota LLC?
In total, it takes around one week to form an LLC in South Dakota by mail. If you file your Article of Organization online, your South Dakota LLC will be formed within one working day.
How Much Does It Cost to Set Up an LLC in South Dakota?
At the very minimum, you can expect to pay $150 to form an LLC in South Dakota. This is the fee for filing an Article of Organization with the South Dakota Secretary of State. You may also incur extra fees if you want expedited filing or reserve your business name.
Can I Act as my Own Registered Agent in South Dakota?
Yes. South Dakota state laws allow entrepreneurs to nominate themselves as registered agents for their LLCs. However, you must meet certain requirements for being a registered agent in South Dakota. This includes the following:
- You must be 18+ years old with a permanent street address in South Dakota.
- Be available to accept legal correspondence documents during regular business hours in South Dakota.
Can I Form a Single-Member LLC in South Dakota?
Yes. You can form a single-member LLC in South Dakota by following the steps outlined in this guide. It is also vital to follow all the guidelines and regulations for forming a single-member LLC in South Dakota.
Get Your South Dakota Business Going Today
We hope you found our article on forming an LLC in South Dakota helpful. As you can see, forming a Limited Liability Company in South Dakota is straightforward and affordable. However, if you find the process time-consuming or complex, you should consider hiring a top LLC formation package, such as ZenBusiness or LegalZoom, to streamline the process.