How to Form an LLC in South Dakota | Guide on South Dakota LLC

Forming an LLC (Limited Liability Company) in South Dakota is easy and affordable. The following are few procedural steps on how to start an LLC in South Dakota. LLCs can be formed in two ways, domestic and/or foreign. If you are planning to set up an LLC in states other than South Dakota, visit How to Start an LLC.

south dakota LLC

Why an LLC in South Dakota

If an entrepreneur is looking forward to starting an LLC and is looking for the best incentive programs, then they should choose to go for the option of LLC in South Dakota. There are several benefits that the state is offering to the new start-ups that are discussed below.

Privacy of the trust documents 

There are many trust documents that are signed and preserved under the state government when a new LLC is built. They ought to be kept private, but all the states are not unable to provide the same level of privacy and protection to those documents. Still, there are some states like South Dakota where the rules regarding privacy are the best in the states. Here the documents are not required to be submitted publically.

Only the information that is filed in front of the court during the starting of South Dakota LLC, which has proceedings to modify, can be sealed.

South Dakota Reinvestment payment Program 

When a business is thinking of upgrading their business or relocating it from one place to another, then they can take the help of a reinvestment program. In this program, a business entity can get a reinvestment incentive from the government. The amount of less than or equal to the payment LLC will be paying as sales and use tax for the particular project of reinvestment is provided. The Board of Economic Development is openly taking the application of relocation of LLCs.

Variety Benefits Program of South Dakota

If entrepreneurs start an LLC in South Dakota, then they get eligible for various types of benefit programs offered by the government. Some of them are discussed in detail below.

  • The first incentive is related to the job applications and hiring. When an LLC hires a candidate who belongs to a high–need category, or either belongs to high-demanding areas. The government will bear the half cost of hiring that particular employee.
  • Those start-ups are thinking of purchasing new machinery for their business. The government issued tax-exempt bonds, which an entity should file if they want to get credit out of their money- incentive project.
  • There is a fixed amount of working capital that is required by an LLC to keep its business running. The South Dakota WORKS program can provide this capital under which the cost of payrolls, start-up, and construction of buildings can be covered.

How to Start a South Dakota LLC

Suppose you’re planning to invest in some profitable business or maybe about to set up your business in South Dakota. In that case, forming an LLC in South Dakota is the simplest option for you.

An LLC or a Limited Liability Company a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. This section gives you a step-by-step guide on How to Start an LLC in South Dakota. 

Step 1: Decide a Name for Your LLC

If you are to start an LLC in South Dakota, the first thing you do is decide on a business or company name, and how to name your LLC may be tricky. Thus, you have the option to choose a name that complies with the South Dakota business naming requirements. It must also be easily searchable for potential clients. Here is a step-by-step guide to follow when naming your South Dakota LLC. 

Why do you need a proper business name?

If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.

Because of this, here are some of the major benefits of choosing the best LLC corporate names.

  • To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
  • After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
  • You can only get the EIN number when you have your name registration certificate with you.

What are the requirements when deciding a name for your LLC? 

name search is vital to make sure your business’ name is unique. Check the availability of your name with Business Entity Search on the South Dakota Secretary of State’s website. Reserve the name by completing the Name Reservation Request Form for Domestic Entities.  

  • Don’t include words that could confuse people about your company. Words like ‘treasury, state department.’
  • You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
  • As for a business website and your URL name, check if your name is still available for domain use with NameCheap.

Reserve a business domain

Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.

If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.  

Step 2: Assign a Registered Agent in South Dakota

A registered agent, or business entity, is a person that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in South Dakota. Choosing South Dakota-registered agents for your LLC is required. 

Make sure your registered agents are residents of Alabama. It could also be a business. Here are the recommended agents and employees for you:

These five LLC formation services are recommended agents’ registered services as they are authorized to conduct business in South Dakota. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years. 

Step 3: File Articles of Organization in South Dakota

A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the South Dakota Secretary of State, with a starting fee of $150 to file. You may file them online or by mail. 

This Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in South Dakota, like if it is a member-managed or managers-managed

Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your South Dakota LLC will offer.

How to File Online

Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county.

How to File by Mail

If you prefer filing real-life forms for your Indiana LLC registration, then you can download the South Dakota Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others,  your name, city, state, zip code, and signature. 

Step 4: Create Your South Dakota LLC Operating Agreement

An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts. 

Starting an LLC in South Dakota does not require you to have an operating agreement, but it is ideal to have one that contains all your details of business operation.

Step 5: Filing a South Dakota LLC EIN

The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes. It is like a Social Security number dedicated to a business. 

It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for tax filing and to determine tax classification options.

Mail to:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

Fee: Free

After Starting your South Dakota LLC 

After forming your LLC, there are still some things that you will need. Take note of the following:

  • Get a company business account
  • File South Dakota business permits & licenses
  • Get liability for business insurance with coverage for employees
  • File a South Dakota LLC annual report or biennial report
  • Already existing LLCs that wish to operate in South Dakota must register as a foreign South Dakota LLC.  

This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date. 

Top Businesses that are Established in South Dakota

Before an entrepreneur forms an LLC in South Dakota, it is advised that they should learn the details about the state’s economy. They should go through the top businesses formed in the state and their contribution to the state. An overview of it is discussed below in brief.

Finance and Service sector

Most of the population of the state is working under the service sectors of the state. The service sectors mainly include financial services like taxation and advisory, tour and travel services, along with educational services and healthcare. The service sector has helped in the generation the employment in the state after the great depression and is now accountable to contribute around $8.2 billion to the state.

Agriculture-related services

The state’s agriculture is focused on the production of corn, rye, wheat, flaxseed, and soybean. Apart from these crops, there is a flourishing industry of high-quality wool production in the state. People have high-quality machinery that they use for the rearing of wool and later sell them.

Also, there is a small fisheries market in the state which is established near the Missouri River. The overall contribution of the agriculture sector to the GDP of South Dakota is nearly $5 billion.

Manufacturing industry

State manufacturing is dependent only on raw agricultural material. The primary industry that is found in the state is wool processing and its textiles. Other than that, there are businesses of wooden products and furniture making, and food processing. There are a few numbers of an industry that makes computers or light machinery in the state. The total income of the manufacturing sector of the state is $4.52 billion.

There is a huge scope of small businesses in the state due to its small size. Some of the best ideas that are working well in the state are:-

  • Cattle Ranch
  • Account Consultancy
  • Well water drilling 

South Dakota LLC Formation Review

Time needed: 1 hour and 5 minutes.

Just to recap, here are the easy steps again when forming an LLC in South Dakota. Click on the steps in this list to read the full detail.

  1. Name your South Dakota LLC

    The first thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
    name llc

  2. Choose a registered agent

    In South Dakota, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
    get registered agent

  3. File a formation certificate

    Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
    file formation certificate

  4. Create operating agreement

    An operating agreement is not a strict requirement but something encouraged when you start an LLC.
    create operating agreement

  5. Get an EIN

    The Employer Identification Number (EIN), also called  Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
    get an ein

F.A.Qs

What is the difference between ‘domestic LLC’ and ‘foreign LLC’?

A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing LLC that extended business to another state.

What do I need for Domestic and Foreign LLCs?

For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign LLCs, you must have a Certificate of Good Standing.

Is the cost to form an LLC the same across states?

The cost to form an LLC varies per state.

Does an LLC need to use a DBA?

Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here

Why are operating agreements important?

This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.

Is there anything else I should keep in mind when naming my LLC?

>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.” 
>Do not include words that could create confusion between your LLC and any government business. 
>Words like ‘bank, attorney, university’ are restricted as well. 
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.

Where can I file my LLC name?

Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the fees for business names may also vary per state.  

How can I know if my URL name is available?

As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website. 

Can I mail the LLC Certificate of Formation to the Secretary of State?

No. Never mail these documents or payments to the Secretary of State directly. 

Why do I need an EIN?

The reason you might need an E.I.N. is that it would help for three reasons:
>Opening a business bank account
>Filing and managing federal and state taxes
>Hiring employees or agents

How do I get an EIN when I do not have a Social Security number?

You are not required a Social Security number when getting an EIN You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.

I already have an EIN for a sole proprietorship; what now? 

Note that an LLC is different from a sole proprietorship. If you already have an EIN for your sole proprietorship, the IRS will require you to get a new one when your convert to an LLC. 

Do foreign applicants need an SSN to get an EIN?

International EIN applicants do not need an SSN to get an EIN.

What is an IRS?

The IRS is the one that will issue your EIN. You can request an EIN from the IRS ONLINE or download the FORM, fill it out, and send it by mail or fax.

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