How to start a South Dakota LLC

Updated: September 27, 2023, 12:30pm

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South Dakota was one of the states that joined the union in 1889. It became the 40th State out of the 50 states to join the union. The Mount Rushmore State has an exceptional policy to open up an LLC in South Dakota. If you want to open up a Limited Liability Company in the State that runs with the motto ‘Under God The People Rule,’ then let your business rule the State of South Dakota by abiding by the guidelines set forth for opening up a business in the State.

The cost of setting up a business starts by filing an Articles of Organization with the South Dakota Secretary of State, with a minimum amount of $150 for online and $165 for offline purposes. You can apply for the same online or by mail. Now that we have got every detail in order let’s start by finalising the information about what needs to be done to register your LLC in the State of South Dakota. Let’s dive deeper into it by sharing information about the step-by-step guide that needs to be followed to start your LLC so without further ado, let’s begin

#1 Choose A Name For Your South Dakota LLC

The first step to getting things in order is to pick a name for your South Dakota LLC. You would be required to do a South Dakota LLC name search on the State’s website. It is important that your name contains the text LLC in it or has references to it like Limited Liability Company or L.L.C. A name is unique in the State of South Dakota if it doesn’t have any resemblance to the Federal, State, or local names.

If you are looking to add another attribute to your LLC, then you would need to ensure that the relevant information is in order so that you don’t face any consequences from the local or State authorities. We would like to clarify that if you use the name Doctor, Attorney, or Bank, then there must be supporting documentation in the same regard. It is advisable to check for the domain availability of your business name in the online space before you finalize the name for your LLC.

#2 Find A Registered Agent For Your South Dakota LLC

When the first thing has been taken care of, the next thing you need to do is to find a registered agent for your South Dakota LLC. You would need a person who is a resident of South Dakota or a business entity that is registered in the State of South Dakota to perform this task.

It is necessary to have a registered agent as the person/business will be responsible for taking care of all legal documents, federal and State taxes, and other communication on behalf of the LLC. If you don’t want to have anyone outside of the business as your registered agent, then you can pick someone from your team to represent you in the State of South Dakota.

#3 Submit The Articles Of Organization For Your South Dakota LLC

If you have taken care of the first two steps, now is the time to look into the third step, which involves submitting the Articles of Organization to the South Dakota Secretary of State. The application can be sent online or over mail. It is at this time that you would have to make a decision if the business will be manager-managed or member-managed.

Sending details to the Secretary of State through either method will ease the process and make things exceptionally easy. It will also mean that you are authorized to run a business in South Dakota. Drop a postal mail to the appended address in case of an offline application, along with a $165 cheque, and the team will process details accordingly:

Secretary of State Office

500 E. Capitol Ave.

Pierre, SD 57501

#4 Generate An Operating Agreement For Your South Dakota LLC

The State of South Dakota doesn’t require an operating agreement, but it is a good idea if you plan to create one for your business. You can always refer to it in case of a conflict between the members of your team.

It serves as the standard bearer for your business and keeps everyone in check. The laws of running a business, its vision, mission, motto, and so many other details will be mentioned in the Operating Agreement.

#5 Submit A Request To Generate An EIN For Your South Dakota LLC

The Employer Identification Number (EIN) serves as the Social Security Number for your business. It would help your business’s tax reporting be tracked and keep every piece of information in check for your South Dakota LLC.

Employer Identification Number (EIN) can be obtained from the Internal Revenue Service (IRS) for free. You will be able to open a business bank account using this EIN and also hire employees along with federal and State tax purposes. You can apply online or submit an application offline by sending it to the appended address:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

#6 Submit An Annual Report For Your South Dakota LLC

Every LLC in the State of South Dakota requires you to file an annual report with the Secretary of State online by paying an annual filing fee of $50. This amount needs to be paid by or before November 15th of each year and must be done the following year of your LLC formation.

You would require a business ID to file the annual report. A penalty of $50 is charged if you fail to file annual reports on time. The State of South Dakota reserves the right to revoke an LLC’s business registration after 60 days in case the LLC is unable to file the annual report.

#7 Ensure That Your LLC Complies With The State Laws Of South Dakota

If you want to operate your LLC, you would have to comply with the laws of the land. Your LLC must comply with the Federal, State, and local laws. The fees and requirements will vary depending on the kind of business license required by your LLC.

You are required to file one or more of the following taxes to comply with the state laws for an LLC. Kindly ensure that you don’t miss out on them, as that could lead to severe repercussions.

Sales Tax

Your LLC would require a Seller’s permit through the South Dakota Department of Revenue website in case you plan to sell a physical product in the State of South Dakota. The sales tax for the State is 4.5%, with an additional maximum local sales tax rate of 2%.

Employer Tax

South Dakota LLC requires an Unemployment Insurance Tax in case they have employees in the State. It is referred to as Reemployment Assistance Tax and can be registered on the Department of Labor and Regulation’s website.

Income Tax

State

The State of South Dakota doesn’t require an individual income tax; however, you are required to submit your federal income tax by filing different forms based on the type of your LLC. You would have to submit Form 1065 for a multi-member LLC and Form 1040 Schedule C for a single-member LLC.

#8 Hiring Employees

In case you are in the State of South Dakota and own an LLC, then you would have to hire employees who can work for your business. In order to do so, you would need to first verify that the people are eligible to work in the US. You are required to report them as ‘new hires’ to the State.

Along with the aforementioned, you need to provide workers’ compensation insurance for employees and withhold employee taxes. You, as a business, are required to print workplace compliance posters and place them in the visible areas of your workspace.