How to Start an LLC in South Dakota (Step-by-Step Guide)

If you’re considering forming a South Dakota LLC, you’re making a smart choice for protecting your assets while enjoying flexibility in business operations.

To establish your LLC successfully, you must choose a unique business name, designate a registered agent, and file South Dakota LLC Articles of Organization.

But there’s more.

Filing your LLC Articles of Organization in South Dakota costs about $150 if you file online, and they are processed immediately. Filing by mail costs $165, and it takes three to five business days to be approved.

This guide compiles all the information you need to start an LLC in South Dakota today.

What Are the Steps to Start an LLC in South Dakota?

To start an LLC in South Dakota, you need to:

• Step 1. Choose a unique name for your South Dakota LLC
• Step 2. Designate a registered agent in South Dakota
• Step 3. File Articles of Organization with the state
• Step 4. Create an Operating Agreement
• Step 5. Get an EIN from the IRS
• Step 6. File a BOI Report
• Step 7. File annual reports
• Step 8. Finally, obtain any local permits or licenses.

Let us dive more in-depth into these steps so I can show you how to get them:

Step 1: Choose a Name for Your South Dakota LLC

Naming your LLC is an essential first step. Your business name must be distinguishable from other companies in South Dakota. You can use the South Dakota LLC name search online to check if your desired name is available.

When selecting a name, make sure it includes an indication that your business is an LLC. You can use phrases like “limited liability company” or abbreviate it to “LLC.” For example, you could write “XYZ Ltd. Co.” as your business name.

If you aren’t ready to file your LLC paperwork right away, you can reserve your chosen name for 120 days. This requires filing an Application for Reservation of Name with the Secretary of State. The fee for the application is $25.

You cannot reserve the same name again until more than 60 days after the expiration,

If your business will operate under a different name, you might want to consider a DBA (“Doing Business As”). This allows you to use a trade name not tied to your LLC’s legal name. You can register a DBA online for $10, lasting five years.

Step 2: Designate a South Dakota Registered Agent for Your LLC

A registered agent is an essential part of your LLC. This person or business receives official documents and legal notices for your company. They ensure you stay informed about any legal matters.

Who Can Be a Registered Agent?

You have a few options for who can be your Registered Agent in South Dakota:

• You: You can act as your registered agent, but remember you must be available during business hours to receive documents.
• A Family Member: A trusted family member can be your registered agent.
• An LLC Formation Service: Professional services offer expertise in handling official correspondence and ensuring compliance with state regulations.
• A Lawyer: A legal service firm can also serve as your registered agent, providing additional legal support if needed.

Requirements for South Dakota Registered Agents

South Dakota law requires registered agents to have a physical street address, not just a P.O. Box. The address must be where the agent can consistently receive legal documents and official mail during regular business hours.

Additionally, the registered agent must be at least 18 years old and available to accept service of process. This means they must be present to handle any legal notices or court documents delivered to the LLC.

What registered agents do I recommend for South Dakota?

I highly recommend Northwest registered agent services for obvious reasons.

They offer a range of benefits that set them apart, including a free year of registered agent service, which helps you save (about $300) on initial costs.

You’ll receive a complimentary operating agreement essential for outlining your LLC’s internal structure. My favorite part? Northwest also allows you to use their office address for your LLC filing, keeping your address off public records and enhancing your privacy.

Their free email forwarding service ensures you stay on top of important correspondence, and their exceptional customer support is always available to assist you whenever needed.

Step 3: File South Dakota LLC Articles of Organization

To make your LLC official, you need to file the Articles of Organization. This document provides important details about your business to the state. This form includes essential details such as your LLC’s name, address, registered agent, and members’ or managers’ names.

To file your Articles of Organization in South Dakota, follow these steps:

Step #1. Complete the Form: Obtain and complete the Articles of Organization form from the South Dakota Secretary of State website.

When filling out the Articles of Organization, you’ll include:

• LLC Name: Choose a unique name for your business.
• Purpose: State what your LLC will do.
• Principal Office: Provide the main address of your business.
• Registered Agent: Name your registered agent and their address (if noncommercial) or CRA number (if commercial).
• Organizer Contact Info: List your contact details.
• Duration: Indicate how long your LLC will operate.
• Management Structure: State if the members manage the LLC or if a manager is designated.
• Equity Owners: Mention if there are any equity owners.

Step #2: File Online or by Mail: You can file your Articles of Organization online through the South Dakota Secretary of State’s website or by mailing the completed form to:

Secretary of State Office 
500 East Capitol Avenue 
Pierre SD 57501

Step #3: Pay the Filing Fee: The filing fee is $150 if filed online and $165 by mail.

Online submissions are immediately processed and mail filings take three to five business days. After approval, your LLC is officially recognized, and you can start your business activities, obtain your EIN, open a bank account, etc.

Make sure everything is correct when you file. Amending your articles later can be costly and time-consuming. Using a formation service can help ensure a smooth process.

Step 4: Prepare Your LLC Operating Agreement

An Operating Agreement is an essential internal document for your South Dakota LLC. It outlines how the LLC will operate and defines the members’ roles and responsibilities.

While South Dakota does not require an operating agreement, having one is smart. It helps prevent misunderstandings among members and protects your limited liability status.

Here are some key components to include in your operating agreement if you choose to prepare one:

• Ownership Structure: Listing all members and their ownership percentages.
• Management Roles: Specify who will manage the LLC. This can be member-managed or manager-managed.
• Voting Rights: Define how decisions will be made. Will all members have equal votes?
• Profit Distribution: Explain how profits and losses will be shared among members.
• Meeting Procedures: Outline how often meetings will occur and how members will be notified.
• Amendment Process: Describe how changes can be made to the agreement in the future.

Creating an operating agreement may feel complex, but it’s essential for clarity.

It serves as your LLC’s rulebook, guiding operations and avoiding conflicts down the line. Keeping everyone on the same page is even more vital if you have partners.

Step 5: Obtain an EIN for Your LLC

An Employer Identification Number (EIN) is a unique nine-digit number the IRS assigns. You need it for various business activities, such as opening a business banking account, applying for permits, or signing contracts.

How to Apply for an EIN:

• Online: Visit the IRS website. This is the fastest way to get your EIN.
• By Mail: Fill out Form SS-4 and send it to the IRS. This option takes longer.
• By Fax: You can also fax the completed Form SS-4.
• Phone: U.S. residents can call the IRS at 1-800-829-4933 to apply.

How Much Does It Cost To Get EIN?

Obtaining an EIN is free. However, some services charge $100 or more to help you with the entire process.

How Does it Take to Obtain my EIN?

• Online: Get it immediately.
• By Mail: Expect 4 to 6 weeks.
• By Fax: Usually within 1-2 weeks.

Step 6: File a BOI Report

You must file a Beneficial Ownership Information (BOI) report for your LLC in South Dakota. This report provides important information about the owners of your business.

You must submit this report to FinCEN within 90 days of forming your LLC. Filing is free and can be done online at the FinCEN website.

Here’s what you need to prepare:

• Company Information: Name, address, and formation date.
• Beneficial Owners: Full names, addresses, dates of birth, and identification numbers.

Gather this information along with your LLC formation documents. This will help streamline the filing process.

Completing the BOI report is essential for maintaining compliance with federal regulations. It ensures transparency about who owns and controls your LLC. Take the time to do this correctly to avoid any potential penalties.

Step 7: File Annual Report for your South Dakota LLC

Once you form an LLC in South Dakota, you’re required to file an Annual Report each year to stay compliant and in good standing with the Secretary of State.

You have two options for filing your South Dakota LLC’s Annual Report: online or by mail to:

Secretary of State
500 East Capitol Avenue
Pierre, SD 57501-5070

Filing online is more convenient, with a fee of $50 and immediate processing and approval. If you prefer to file by mail, the fee is $65, and it takes 3-5 business days for processing.

Your first Annual Report is due by the last day of the anniversary month of your LLC’s formation, starting the year after your LLC was established. Each subsequent Annual Report will be due on the same date every year.

For example, if your LLC was formed on September 15, 2024, your first Annual Report will be due by September 30, 2025, and then by September 30 each year going forward.

You may file your Annual Report as early as one month before the due date. If you miss the deadline, your LLC will be marked “delinquent.”

To restore good standing, you’ll need to file all overdue reports, pay the required fees, and a $50 penalty for each late report. Continued failure to file can lead to the administrative dissolution of your LLC.

The South Dakota Secretary of State will send a reminder to the email address listed in your Articles of Organization, or to your Registered Agent if no email is provided.

The most common reason LLCs are dissolved in South Dakota is failure to file an Annual Report, so it’s crucial to stay on top of this requirement. We recommend setting reminders on your phone, computer, or calendar to avoid missing the deadline.

What are the Different Methods To Start a South Dakota LLC?

You have several options to start your LLC in South Dakota. Each method has particular features that may suit your needs. Below are the common ways to form your LLC.

DIY LLC Formation in South Dakota

If you prefer a hands-on approach, you can start your LLC yourself. This method involves filing the necessary documents with the South Dakota Secretary of State.

All by yourself, no third party!

Pros:

• Cost-Effective: You save money by not hiring anyone.
• Control: You have complete oversight of each step.
• Learning Opportunity: You gain knowledge about the process.

Cons:

• Time-Consuming: It may take longer if you are unfamiliar with the process.
• Complexity: You must ensure all forms are correctly filled out.
• Privacy issue: If you’re going to be serving as your registered agent, you’d be risking having your address out there.
• Lack of Guidance: You might miss the necessary steps.

Using a Professional/Online LLC Formation Services

Many online services can help you form your LLC. These platforms guide you through the entire process, handling most paperwork.

Pros:

• Convenient: They manage the filing, saving you time.
• User-Friendly: Most platforms have easy-to-understand instructions.
• Support Available: Many offer customer service for questions.
• Privacy benefits: Most services allow you to use their address for free so your personal address doesn’t get compromised

Cons:

• Costs: You’ll pay a service fee.
• Variable Quality: Some services may not be as reliable as others.

Hiring an Attorney

Working with an attorney is another option for forming your LLC. This method ensures you have professional legal guidance throughout the process.

Pros:

• Expertise: An attorney knows the legal requirements and can avoid pitfalls.
• Customization: Your LLC can be tailored to your specific business needs.
• Support with Complex Situations: Ideal for businesses with unique circumstances.

Cons:

• Higher Costs: Legal fees can be expensive.
• Dependence on Others: You may rely heavily on the attorney’s schedule.
• Potential Delays: The process may take longer due to attorney workloads.

What is The Cheapest Alternative Way to Form an LLC in South Dakota?

If you’re looking to start an LLC in South Dakota on a budget, the most affordable option is to do it yourself online. By filing the Articles of Organization directly with the South Dakota Secreatry of State, The main costs involve filing the Articles of Organization, which is $150 online or $165 for mail submissions.

This DIY approach helps you avoid the extra fees of hiring a service or lawyer, saving you money for other business expenses.

However, while DIY is cost-effective, it requires some effort. You’ll need to understand all the forms and regulations, and missing a detail could delay your application or create problems later.

Consider using a registered agent if you prefer not to handle everything yourself.

They can make the process smoother by ensuring you receive important documents and helping you stay compliant with state requirements. Although this adds a bit to the cost, it can provide valuable support and peace of mind.

Who Provides the Best LLC Services in South Dakota?

There are a myriad of South Dakota LLC services from which to choose. Choosing the wrong one can affect your South Dakota LLC formation timeline—I know this from my experience using a few and researching a dozen over the years.

Here are some top-rated options you should consider:

Best South Dakota LLC Service	Google Rating	LLC Formation Cost	Registered Agent Fee
Northwest Registered Agent	4.7/5	$39	Free for 1 year
Doola	4.6/5	$0 (plus state fees)	$297/year
Tailor Brands	4.4/5	$0 (plus state fees)	$199/year
ZenBusiness	N/A	$0 (plus state fees)	$199/year

Besides, the fact that other services bill you for their registered agent in the first year, and Northwest offers it for free, is a HUGE plus for me.

Northwest Registered Agent stands out in South Dakota LLC formation due to its commitment to transparency, customer service, and privacy. Using their address helps protect your personal information, making them a reliable choice.

How Much Does It Cost To Form an LLC in South Dakota?

Starting an LLC in South Dakota involves some costs. The primary expense is the filing fee for the Articles of Organization. This fee is $150 when filed online and $165 when filed by mail.

Here’s a quick breakdown of the costs involved in forming a South Dakota LLC:

Requirement	Cost
New LLC Filing Fee (Articles of Organization)	$150 (online), $165 (mail)
Name Reservation (optional)	$25
DBA Filing (optional)	$10
LLC Formation Service (optional)	$39 (via Northwest)
Registered Agent Fee (optional)	$0 (via Northwest)
Annual Report (every year)	$50 (online), $65 (mail)
Total Estimated Cost	$200 – $310

When forming a new company in South Dakota, it is ideal to budget about $260-$300 for the first year. Then, if you want to go further, you can get other bells and whistles like a virtual mailbox, custom website, trademark services, premium EIN services, etc.

The most significant (and important) expense for every South Dakota business owner is filing the Articles of Organization, which costs $150 when filed online and $165 by mail.

Pros and Cons of Forming an LLC in South Dakota

6 Important Things To Do After Creating Your South Dakota LLC

After you create your LLC in South Dakota, several key steps must be taken to ensure that your business runs smoothly and remains compliant with state regulations.

Taking care of these details will help you focus on growing your business and achieving your goals.

1. Research the Best Licenses and Permits for Your Business

Different businesses require different licenses and permits to operate legally in South Dakota. Start by identifying the specific licenses needed for your industry. Check with the South Dakota Secretary of State and local government for requirements.

Common types include:

• Business License: Often needed for general operations.
• Sales Tax Permit: Required if you sell taxable goods or services.
• Health Permits: Necessary for food-related businesses.
• Professional Licenses: Required for certain professions like real estate or health care.

Make sure to apply for these before starting your operations to avoid fines.

2. Create Business Accounts for Your South Dakota LLC

Opening a separate bank account for your LLC is essential for keeping your business finances organized and distinct from your personal funds. This separation simplifies your accounting and helps safeguard your personal assets by clearly distinguishing between personal and business transactions.

When choosing a bank, look for one that offers business-friendly services, such as waived fees, free online banking, and other features that can benefit your business. To open the account, be prepared to provide your EIN and a copy of your Articles of Organization.

A dedicated business account streamlines your financial management and simplifies tax preparation.

Having all your business transactions in one place lets you easily track your income and expenses, ensuring everything is well-organized and accessible when tax season rolls around.

3. Understanding South Dakota Tax Requirements and Managing Your Taxes

By default, the IRS taxes an LLC based on its ownership structure: a single-member LLC is treated as a sole proprietorship, while a multi-member LLC is taxed as a partnership.

Meaning they follow “pass-through” taxation.

Since South Dakota does not have a state income tax for businesses, federal income tax is your only concern. 

If your LLC sells goods or services, you must collect and remit sales tax to the South Dakota Department of Revenue (DOR).

The state sales tax rate is 4.5%, with some cities imposing additional taxes up to 2%, and a gross receipts tax of 1% on specific items like alcohol, restaurant meals, and event admissions.

As an LLC owner, you’re responsible for self-employment tax, covering Social Security and Medicare. The rate is 15.3% (12.4% for Social Security and 2.9% for Medicare). You may need to make quarterly estimated tax payments using Form 1040-ES.

If your LLC has employees, you must withhold federal taxes like income tax, Social Security, and Medicare from paychecks and send them to the IRS. Employers must match the 7.65% payroll tax and file Form 941 quarterly.

You’ll also need to pay unemployment insurance taxes, federally (FUTA) and the state via the South Dakota Department of Labor and Regulation (DLR).

FUTA is 6% on the first $7,000 of each employee’s wages, with potential credits reducing that rate.

4. File your South Dakota Annual Report

Once you form an LLC in South Dakota, you must file an Annual Report each year to stay compliant and in good standing with the Secretary of State. You have two options for filing your South Dakota LLC’s Annual Report: online or by mail.

Filing online is more convenient, with a fee of $50 and immediate processing and approval. If you prefer to file by mail, the fee is $65, and processing takes 3-5 business days.

Your first Annual Report is due by the last day of the anniversary month of your LLC’s formation, starting the year after your LLC was established. Each subsequent Annual Report will be due on the same date every year.

You may file your Annual Report one month before the due date. If you miss the deadline, your LLC will be marked “delinquent.”

To restore good standing, you’ll need to file all overdue reports, pay the required fees, and pay a $50 penalty for each late report. Continued failure to file can lead to the administrative dissolution of your LLC.

5. Get Business Insurance for an LLC

Just as you wouldn’t leave your home without coverage, your LLC also needs the right business insurance to guard against potential risks and liabilities. Insurance protects your company’s assets and ensures financial stability in case of unforeseen issues or legal claims.

Your insurance needs will vary based on your business operations.

For example, general liability insurance covers risks such as slip-and-fall accidents or property damage if your LLC operates from a physical storefront.

Conversely, if you run your business as a consultant and work remotely, you might only need professional liability insurance to cover potential service errors or omissions. Assessing your business needs helps you choose the appropriate coverage to protect your LLC.

6. Setup Your Business Online Presence (optional)

Today, having an online presence is crucial for attracting customers. Start by creating a professional website that reflects your brand. Ensure it’s easy to navigate and contains essential information about your products and services.

Consider these online strategies:

• Social Media: Use platforms like Facebook and Instagram to promote your business and engage with customers.
• SEO: Optimize your website for search engines to improve visibility.
• Online Listings: Register your business on Google My Business and other directories.

This can help you reach a wider audience and enhance your credibility.

South Dakota LLC vs. S Corp vs. Partnerships vs. Sole Proprietorship vs. Corporations

When starting a business in South Dakota, you have several options. Each type has its own features, benefits, and drawbacks.

Sole Proprietorship

A South Dakota sole proprietorship is the most straightforward way to start a business. Imagine you’re running a lemonade stand on your own. You make all the decisions and keep all the profits.

However, there’s no legal separation between you and your business. This means if your lemonade stand faces financial trouble or legal issues, your personal assets, like your car or home, could be at risk.

It’s easy to set up and manage, but it does leave you personally responsible for any business debts.

Partnership

A South Dakota partnership involves teaming up with one or more people to run a business together.

Think of it as joining forces with a friend to open a café. You share the profits and responsibilities, and you both make business decisions.

However, like a sole proprietorship, each partner is personally liable for any business debts or legal issues. If the business encounters financial trouble, your personal assets could be at risk, too. Partnerships are relatively easy to set up but require clear agreements between partners to avoid conflicts.

LLC (Limited Liability Company)

An LLC offers a blend of flexibility and protection.

Picture it as a protective umbrella over your lemonade stand. This structure separates your personal assets from your business, so if your LLC faces legal issues or debts, your personal belongings are generally safe.

It’s more formal than a sole proprietorship or partnership but offers flexibility in management and tax treatment. LLCs are ideal for small to medium-sized businesses that want liability protection without the complexity of a corporation.

S-Corporation

An S Corporation is a more structured business form.

Think of it as a business where owners are shareholders, much like a small-scale company with multiple investors. It protects liability and allows profits to pass through to your tax return, avoiding double taxation.

This means you report the income and losses on your personal tax return, which can be beneficial for tax purposes. However, S Corps have stricter operational requirements and formalities compared to LLCs.

Corporation

A South Dakota corporation is the most complex structure, suitable for larger businesses aiming for significant growth. Imagine a big company with many shareholders.

A corporation offers robust liability protection and is a separate legal entity from its owners, meaning your personal assets are protected.

Corporations can raise capital more easily by issuing stock and can offer employee benefits.

However, they come with extensive regulatory requirements, formalities, and paperwork, making them more suitable for businesses with significant resources and expansion plans.

My Final Thoughts: Forming an LLC in South Dakota

Starting an LLC in South Dakota is an exciting step toward bringing your business idea to life. Although it might seem like many steps initially, breaking them down makes the process more manageable and ensures you cover all the essential bases.

To start your LLC in South Dakota, follow these steps:

• Choose your business name.
• Select a registered agent in South Dakota
• File the Articles of Organization with the South Dakota Secretary of State
• Create an operating agreement.
• Obtain an EIN from the IRS.
• File a BOI Report
• File an annual report to maintain good standing.

The filing fee for the Articles of Organization is $150 if filed online and $165 by mail.

After forming your LLC, prepare for annual reports, which cost $50 yearly if filed by mail and $65 yearly if filed by mail.

Starting an LLC protects your liability and can help your business grow. Be sure to complete all steps and keep track of important deadlines. This can lessen stress and help you focus on your business goals.

Learn More About Starting an LLC in South Dakota

If you need additional help to start an LLC in South Dakota, check out these valuable resources:

Frequently Asked Questions

Can I change my registered agent in South Dakota?

Yes, you can change your registered agent in South Dakota. To update this information, you must file a form with the Secretary of State and pay the appropriate fee.

How do I change my South Dakota LLC’s name?

To change your LLC’s name, you must file an Amendment to the Articles of Organization with the South Dakota Secretary of State. This process involves a fee.

How do I renew my South Dakota LLC?

Renewal for your South Dakota LLC is done by filing the Annual Report each year. You can complete this online and pay the $50 fee or file by mail and pay the $65 fee.

How do I dissolve an LLC in South Dakota?

To dissolve your LLC in South Dakota, you must file a Certificate of Dissolution with the Secretary of State. Make sure all financial obligations are settled before proceeding.

How do I add a member to a South Dakota LLC?

You should review your operating agreement to add a member to your LLC. Then, you may need to file an amendment with the state if your agreement requires it.

How do I add a DBA to an LLC in South Dakota?

To add a DBA (Doing Business As) name to your LLC, you must apply with the Secretary of State. This process often involves a fee.

Can a minor own an LLC in South Dakota?

Yes, a minor can own an LLC in South Dakota. However, they may need an adult to act on their behalf in legal matters.

When is the South Dakota Annual Report due?

The Annual Report for your LLC is due on the last day of the anniversary month of your LLC’s formation. It’s important to file on time to maintain good standing.

Does LLC expire in South Dakota?

An LLC does not automatically expire in South Dakota if you file your Annual Reports and pay any required fees on time.

Can a non-resident open an LLC in South Dakota?

Yes, non-residents can open an LLC in South Dakota. There are no residency restrictions for forming an LLC in this state.

Can I buy a house or car with my LLC in South Dakota?

Yes, your LLC can purchase a house or car. However, all transactions must be appropriately documented to protect the LLC’s assets and maintain liability protections.

Can you have multiple businesses under one LLC in South Dakota?

In South Dakota, you can operate multiple businesses under one LLC. This can simplify management and reduce costs, but consider the potential risks involved.

Is South Dakota a good state to form an LLC? Is it worth it?

South Dakota is often seen as favorable for LLCs due to low fees, a business-friendly environment, and strong asset protection laws. However, you should evaluate your specific needs when choosing a state to form your LLC.

Can one person form an LLC in South Dakota?

Yes, one person can form an LLC in South Dakota. This type of LLC is a single-member LLC and provides liability protection for the owner.