How to File an LLC in South Dakota

Starting a business — or making your side hustle official — is not for the faint of heart, but the benefits are well worth it. 

LLC, or a limited liability company, is a popular type of business structure that offers multiple advantages to entrepreneurs, such as personal liability protection. While you can choose from various business structures, such as an S Corp or a C Corp, filing for an LLC is typically the best choice. 

South Dakota is a great place to run a small business. With its business-friendly climate, tax incentives, and low cost of living, the state is full of promising opportunities. In this article, you’ll learn how to start a South Dakota LLC in just a few simple steps. 

Key Takeaways

• LLCs offer a flexible tax structure and important protections to business owners. 

• To form a South Dakota LLC, you must choose a business name, file Articles of Organization, and appoint a registered agent.

• To run your new business successfully, you must create an operating agreement and apply for an EIN.

What Is an LLC Formation?

LLC stands for a limited liability company. This type of business structure is formed under state statutes, and each state has a unique LLC formation process you have to follow. To start an LLC in South Dakota, you have to file with the South Dakota Secretary of State. 

LLCs offer multiple advantages to entrepreneurs and small business owners, including personal liability protection, flexible tax status, and ease of management. 

Personal Liability Protection

Once you incorporate your South Dakota LLC, your personal assets and your LLC’s business assets will become separate.[1] 

As a result, if your limited company has debts or is involved in a lawsuit, your personal assets, such as your house or car, will be protected under South Dakota state laws. Similarly, if you have debts or get sued, only your personal assets are on the line. 

Flexible Tax Status 

The LLC incorporation process allows you to choose how you want your LLC to be taxed. Since your South Dakota LLC is a “disregarded entity,” you can elect for it to be taxed as a: 

• Sole proprietorship (for single-member LLCs) 

• Partnership (for multi-member LLCs)

• S Corp

• C Corp

Many small business owners use their LLCs’ flexible tax status to avoid double taxation. They declare their LLC profits and losses as a part of their personal income tax return instead of filing a separate return for LLC tax. This way, they don’t have to pay the tax on their LLC income twice. 

Ease of Management

LLCs are typically easy to maintain active and compliant with the law. As an LLC owner, you can run your LLC yourself. In this case, it’ll be “member-managed.” Alternatively, you can appoint a manager to take charge of your operations. In this case, your LLC will be “manager-managed.” 

To keep your South Dakota LLC active, you’ll typically only need to pay an annual filing fee and any other state fees relevant to your business, such as your business licenses and permits. 

When Should I File for My LLC? 

Some entrepreneurs believe they have to wait to incorporate their LLCs until they have regular business revenue. However, the truth is that you don’t have to wait until your business is established to make it official. 

The earlier you start your LLC, the earlier you’ll be able to take advantage of the personal liability protection and the flexible tax status. 

Step-By-Step Guide to Starting Your South Dakota LLC

To form an LLC in South Dakota, you must complete the necessary paperwork with the Secretary of State and cover your LLC filing fee. 

As a new business owner, it can be overwhelming to navigate the logistics of the incorporation process. This is why we created this step-by-step South Dakota LLC filing guide, so you can get your LLC up and running quickly. 

Step 1: Choose a Business Name for Your South Dakota LLC

To begin the LLC formation process, you must choose your business name and confirm its availability. 

For the most part, you have complete agency over your LLC name. However, there are a few rules that every South Dakota LLC name must follow: 

1. Your LLC name must be distinguishable from other business names registered in South Dakota. You must search on the Secretary of the State website to confirm name availability. 

2. You must include the words “limited liability company” or “limited company” or the abbreviations “l.l.c.”, “l.c.”, “llc” or “lc” in your LLC name.[2]

3. You need to make sure that your LLC name is appropriate. Do not use vulgar or discriminatory language or language that may imply a government association, such as “FBI.” 

Once you decide on your LLC name and ensure it’s available, you can reserve it for 120 days with a $25 fee. 

Can I Only Do Business Under My LLC Name? 

You don’t have to do business under your official LLC name. You can also register a DBA, which stands for “doing business as.” DBAs are helpful if you want to abbreviate your business name or introduce a new product line.[3]

It costs $10 to register a DBA in South Dakota. After the registration, you’ll need to renew your DBA registration annually, paying an additional $10 fee. 

Do I Need to Get a Domain Name for My Business? 

At this stage of your LLC incorporation, securing your domain name for your future business website is also a good idea. Even though you may not publish your website immediately, it’s essential to ensure you can do so at the right time. 

Do I Need to Trademark My LLC Name? 

A federal trademark gives you exclusive rights to your LLC name. It means that no other business across the US can start a business with the same name. 

If you want to trademark your LLC name, taking this step after your LLC incorporation is advisable. Every trademark needs an owner, and making your LLC the owner makes the most sense. 

Step 2: Fill Out South Dakota Articles of Organization

Your Articles of Organization is a legal document that officially establishes your LLC with the Secretary of State. 

You must provide the following information to file Articles of Organization: 

• LLC name, street address, and mailing address

• Your registered agent’s name and address

• Your LLC’s purpose, duration, and whether it’ll be member- or manager-managed

• Your LLC’s fiscal year 

• Signatures of organizers 

You must also include your filing fee with the Articles of Organization. You can pay your filing fee online ($150) or by mail ($165). For foreign LLCs, it costs $750 to incorporate your LLC online or $765 by mail. 

To keep your new LLC in good standing with state laws, you must file an annual report with a $50 fee. 

Step 3: Hire a South Dakota Registered Agent

Your LLC must have a South Dakota registered agent to receive legal documents on behalf of your company. 

You can appoint yourself as your own registered agent as long as you are over 18 years old and have a South Dakota street address (a PO box doesn’t qualify). However, being your own registered agent comes with significant limitations. 

The most important one is that the law requires registered agents to be present at their physical address during business hours, Monday through Friday, 9 am-5 pm. If you serve as your own registered agent, you won’t be able to leave your office during those hours. 

Additionally, if you work from home, being your own registered agent means that your home address will become public record. This raises privacy concerns for many. 

To avoid these problems, many small business owners hire a registered agent service such as Swyft Filings. In just a few simple steps, you’ll get a designated South Dakota registered agent to receive important notices, such as service of process, on behalf of your business. 

Going with a registered agent service means more flexibility, privacy, and freedom to grow your business worry-free. 

Step 4: Create an LLC Operating Agreement

LLC operating agreement establishes standard rules for how your LLC will function and makes it easier to resolve disputes. 

Even though you’re not required to create an LLC operating agreement in South Dakota, having one in place is highly recommended. If you decide not to make a written operating agreement for your business entity, your LLC will be governed by South Dakota state laws. 

Operating agreements are flexible, but examples of what you can include in yours are: 

• Rules your LLC’s standard operations

• LLC members’ rights and responsibilities

• Protocols for dispute resolution and admitting new members

• Management structure rules 

• Liability clauses 

• Succession plans for when LLC members leave, retire, or pass

You can create an LLC operating agreement whether you run a manager-managed, member-managed, multi-member, or single-member LLC. 

Step 5: File for an Employer Identification Number and Business Licenses

The final step to getting your South Dakota business up and running is applying for your employer identification number and any necessary business licenses. 

Your employer identification number — EIN — is a nine-digit number that the internal revenue service uses to identify your business for tax purposes. You will need an EIN to open a business bank account, hire employees, and file tax returns. To get an EIN, you need to apply for one on the IRS website. 

To operate your new LLC in compliance with the law, you must also take care of necessary business licenses and registrations. 

You may need to register with the South Dakota Department of Revenue and the South Dakota Department of Labor and Regulation and specific licenses required by the local authorities. 

Let Us Handle Your LLC Paperwork

Figuring out how to incorporate your South Dakota LLC can be complicated. There is a lot of paperwork to get through, and even tiny mistakes or inconsistencies can set the process back multiple business days. 

This is why many business owners invest in professional services for fast and accurate LLC formation. 

Swyft Filings can help entrepreneurs file for your LLC online in just a few minutes. With a simple three-step process and low fees, Swyft Filings has successfully created 300,000+ businesses. 

FAQs:

How much does it cost to set up an LLC in South Dakota?

At the very least, you must cover the $150 filing fee when you file your Articles of Organization. However, you may incur additional fees if you reserve your LLC name or expedite filing. 

How is an LLC taxed in South Dakota?

You can choose for your LLC to be treated as a sole proprietorship (for single-member LLCs), a partnership (for multi-member LLCs), a C Corp, or an S Corp. 

What are the benefits of a South Dakota LLC?

An LLC separates your personal and business assets and protects personal liability. South Dakota is a business-friendly state with tax incentives and a low cost of living. 

How do you dissolve an LLC in South Dakota?

To terminate your South Dakota LLC, submit your Articles of Termination form to the South Dakota Secretary of State and pay a filing fee. 

Bibliography:

1. U.S. Small Business Administration. Choose a Business Structure. Accessed April 23, 2023. 

2. South Dakota Secretary of State. Form or Register a New Business. Accessed April 23, 2023. 

3. South Dakota Secretary of State. Frequently Asked Questions. Accessed April 23, 2023.