How to Form an LLC in South Dakota
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This guide to starting an LLC in South Dakota provides step-by-step instructions on filing formation documents, obtaining tax IDs, and setting up company records.
LLCs are the most popular business structure because they are inexpensive to form, provide flexibility to the owners, and are easy to run. Forming your LLC legally establishes your business, limits your personal liability, and gains tax flexibility. The following step-by-step will help you as you undertake this process.
Fast Facts: Your Budget and Timeline
Here is an overview of the total paperwork, cost, and time it takes to form an LLC in South Dakota. Be sure to read the final step in this guide - "Ongoing Filings" - to understand your ongoing costs to maintain a compliant LLC.
- Articles of Incorporation Domestic Limited Liability Company
- Operating Agreement
- IRS Form SS-4: Obtain an EIN
- South Dakota Tax License Application
- Formation: $150 + optional $50 expedite fee
- Formation: ~3-5 business days. Expedited service is available for a $50 fee and is defined as completion sooner than the normal course of business upon request.
Step-by-Step South Dakota LLC Instructions
The legal name of your LLC may not conflict with any other registered name. Check availability of your desired name by conducting a name search.
- Name Search:
- Secretary of State database search
- Name Reservation:
- The name of a limited liability company must contain, limited liability company, or limited company, or the abbreviation, L.L.C., LLC, L.C., or LC. Limited may be abbreviated as Ltd. and company may be abbreviated as Co. South Dakota Codified Laws §47-34A-105
Identify the LLC’s South Dakota Registered Agent. This individual or company receives notice of lawsuit and other legal service for the LLC.
File the articles of organization to create your limited liability company.
Your filed articles of organization are the first document for your limited liability company records. Your
LLC will generate many other official records such as your operating agreement, meeting minutes, and your
Office supplies intended for an LLC will help you stay organized and save time. Membership certificate templates should come with your company record book. Each owner receives a membership certificate as evidence of his or her ownership in the LLC.
Draft an operating agreement (potentially using a template) which is the governing document for the LLC. It defines the formalities of how the LLC will run itself such as holding an annual meeting. You will review and adopt the agreement at your organizational meeting.
The first meeting of the members of the LLC is the organizational meeting. You will need your filed articles of organization and your operating agreement in order to conduct this meeting. Keep minutes of this meeting and store them in your company record book.
If your LLC has more than one member or will hire employees, it must obtain an EIN. An EIN is also often required to open a bank account.
- Submit to:
- Internal Revenue Service
- IRS Form SS-4
- IRS Pub 1635: Understanding Your EIN
- Filing Method:
- Mail, phone, fax, or apply online with the IRS
- Immediately online
- The IRS website is only available during certain hours. Print your EIN before closing your session.
South Dakota does not have a corporate, unitary, or personal income tax. However, businesses may be subject to one or more other state taxes. You can use the South Dakota Tax Application to apply for the following tax licenses: Contractors' Excise, Manufacturer, Sales, Use, Wholesaler, and all Motor Fuel tax types.
By default, your LLC receives pass-through taxation and the vast majority of LLCs keep this tax classification. Some LLCs benefit from electing S-Corp or C-Corp tax treatment:
- S-Corp treatment can help owner-employees who earn more than ~$75,000 per year save on self-employment taxes. File Form 2553: S-Corp Election.
- C-Corps suffer from double taxation: the corporation pays taxes on profits then members pay taxes on their distributions. If profits exceed $250,000 per owner, you provide employee benefits, or you will re-invest most of your profit in the business, you may benefit from the low tax rates on retained earnings under C-Corp treatment. File Form 8832: C-Corp Election.
To run your business legally, you must obtain applicable licenses and permits. The easiest way to navigate the wide range of federal, state, and local requirements is to search by your business type and locality using the Small Business Administration Business License & Permit look-up tool.
You must file federal and state tax returns. You must also file:
- South Dakota LLCs are required to file a South Dakota Annual Report.