Start an LLC in South Dakota

First up, naming your LLC! You can’t file your paperwork without knowing what the name of your business will be. South Dakota’s LLC naming rules are outlined in SDCL § 47-43A-105. Specifically, these rules say your LLC’s name must:

• Include an indicator like “limited liability company,” “L.L.C.,” or “LLC.”
• Be “distinguishable” (different) from any other business name registered in South Dakota.

If you know exactly what you want to call your LLC and are ready to file your Articles of Organization, find out if it’s available. And if you’re not ready to form an LLC yet, you can reserve your business name as long as 120 days for $25.

South Dakota law requires every LLC in the state to name a registered agent. The registered agent is someone (yourself, another individual, or a company like Northwest) that can accept legal mail on behalf of your business. You’ll need to know your registered agent’s name and physical address before filling out your LLC Articles of Organization.

The requirements for a registered agent in South Dakota are set in SD Codified Laws § 59-11-6. In addition to accepting legal mail on your behalf, your registered agent needs to:

• Have a physical address in South Dakota (a PO box won’t work!).
• Be available at that address during regular business hours.

Learn why the pros use a registered agent service.

To officially create your South Dakota LLC, you’ll need to file Articles of Organization with the South Dakota Secretary of State and pay a formation filing fee. All the information you supply in your Articles of Organization becomes part of the public record.

To complete the form, you’ll need to list the following information:

• Company Name. Include the words “limited liability company” or an abbreviation thereof.
• Purpose. This is an optional part of the paper form where you can designate a business purpose.
• Initial Designated Office. This is your main business address and it must be a street address. You can also add a mailing address and an email address.
• Registered Agent. The person or company that you’ve named to accept legal mail on behalf of your LLC. If you appoint a commercial service (like Northwest!) as your LLC’s agent, you’ll also need to provide a CRA number, which you can get from your registered agent.
• Organizer Information. The name and address of the person who signs and submits this form. The organizer can be someone from outside your LLC.
• Duration. You can optionally specify an end date for your LLC to dissolve.
• Management. Check a box to indicate whether your LLC will be managed by members or managers.
• Manager Information. Manager-managed LLCs must list the name and address of each manager.
• Extra provisions. One last optional section, where you may attach extra information or provisions to add to your articles.
• Organizer Signature. Each person completing and submitting this form must sign and date the form.

Your South Dakota LLC needs an operating agreement, a legally binding document that establishes how your LLC is organized and how it will function. The operating agreement covers important, big-picture stuff like how voting works, how profits are allocated, and how you’ll proceed if you need to dissolve the business. You don’t have to file your operating agreement with the Secretary of State, as it’s an internal document that you should keep on file with your business records.

Check out our attorney-drafted South Dakota LLC Operating Agreement.

It’s no surprise that your South Dakota LLC can’t operate without money. And in order to keep your LLC’s limited liability and remain a legally distinct entity from its members, you’ll need to open a business bank account. Generally, that means you’ll also need to get an EIN to open that account (unless you have a single-member LLC and don’t mind giving out your social security number).

Once your business bank account is formed, your LLC then can fund it. Each member should make an initial deposit to the business account. The amount they contribute will determine their membership interest (percentage of LLC ownership).

There are specific tax and reporting requirements your South Dakota LLC needs to meet. Here’s how they all stack up:

• Taxes: In South Dakota, like all other states, LLCs are taxed as pass-through entities by default. That means LLCs usually don’t pay income tax as a business. Instead, profits “pass through” the LLC as distributions to the owners (members), who then report the profits as earnings on their personal tax filings. Profits are subject to the federal self-employment tax rate (15.3%).
• Annual Reports: South Dakota requires LLCs to file a yearly report on your LLC’s current ownership and contact information. This annual report costs $50 to file online, or $65 to file by mail or in person. If you’re worried you’ll forget to file, let us handle your annual report for you.
• BOI Report: The majority of South Dakota LLCs also need to complete a federal-level filing called the Beneficial Ownership Information (BOI) Report. This report discloses identifying information about your LLC’s beneficial owners and company applicant and all beneficial owners to the Financial Crimes Enforcement Network (FinCEN). You can hire us to file the BOI Report for you for $9.

*This is informational commentary, not advice. This information is intended strictly for informational purposes and does not constitute legal advice or a substitute for legal counsel. This information is not intended to create, nor does your receipt, viewing, or use of it constitute, an attorney-client relationship. More information is available in our Terms of Service.