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South Dakota LLC For Beginners: No Attorney Required

South Dakota LLC For Beginners: No Attorney Required

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South Dakota LLC For Beginners: No Attorney Required

In the process of starting your business and got stuck on how to form a South Dakota LLC? When starting an LLC for the first time, it’s common to have a lot of questions and feelings of uncertainty, but fortunately, I have a step-by-step guide to help you through it.

Related: How to start a business in South Dakota

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Steps To Start A South Dakota LLC

Step 1: Choose a Name for the LLC

The first step in forming a South Dakota Limited Liability Company is to make sure the name you want is available.  

It’s critical to do a South Dakota LLC name search before registering an LLC name, as the name of each LLC must be distinguishable from other entity names registered in the state of South Dakota. The South Dakota Secretary of State makes it easy to search and verify if your LLC name is available. 

In addition to the name being unique, the entity designator (identifier used at the end of the business name) must be either:

  • Limited Liability Company
  • Limited Company
  • L.L.C.
  • LLC
  • L.C.
  • LC

Additionally, Limited can be abbreviated as Ltd. and Company abbreviated as Co.

A comma may be used after the business name and before the designator.  “Rushmore Roots LLC” and “Rushmore Roots, LLC” are both acceptable.

If there is an LLC name you want to use, but you are not ready to register the LLC, the Application for Name Reservation can be filed with the Secretary of State to hold a name for up to 120 days.

Before settling on a name, you may want to do a domain name search to try and match your business name and website address.

Step 2: Appoint a South Dakota Registered Agent

Every LLC in South Dakota is required to have a registered agent, which is simply someone with a South Dakota street address who will be responsible for any legal correspondence, for example, if the business is served papers in the event of a lawsuit.

Many LLC owners are their own registered agent, but it is possible to hire a registered agent service like Northwest Registered Agent. The reasons why someone would hire a registered agent service include when the owner lives in another state or if the owner prefers that their personal address not be on public record.

Related: What is a South Dakota registered agent?

Step 3: File the South Dakota Articles of Organization

The paperwork to officially create an LLC in South Dakota is called the Articles of Organization. To submit the paperwork, either file online through the South Dakota Secretary of State’s website.  If you prefer to fill out and mail the application, download the Articles of Organization Form.

Related: How to fill out the South Dakota articles of organization

When filling out the Articles of Organization, there are a few sections that can be confusing. Let’s go over a few of these sections to help get your LLC started right.

Principal address: In this section, enter the street address, city, state, and zip code of the initial principal office.  This address can be the LLC’s physical address or the address where the business records are stored.  You may not use a PO Box for the designated office.  There are also fields for a phone number and email address, and is not often provided as the phone number becomes a public record.  The email is required and is the address where the Secretary of State will send notifications when annual reports are due.

A mailing address is needed, and it can be the same as the principal address.  If the LLC records should be sent to a different address, enter that information in the Mailing Address Section.  If the address is the same as the principal office, click on the “Use this address as the Mailing Address also” box to copy the Principal Address address.

Organizer(s): An LLC Organizer is someone involved with the formation of the Articles of Organization.  The Organizer may or may not become a member, such as a mentor, attorney, or accountant, but any LLC member can be listed as an organizer.

For most LLCs, the members will also be the organizers.

Period of duration: In this section, you can indicate how long the LLC will remain in existence.  Most LLCs will choose a Perpetual duration; however, some businesses (usually investment-related) will have a specific closure date.

Delayed effective date: If you want the LLC to start immediately, leave this field blank.  If you want the LLC to start later, enter a date less than 90 days in the future.  The main reason for delaying the LLC start date is when the filing is made close to the end of a calendar year, but the business isn’t going to have any activity until the start of the next year.  You can eliminate the need to file a partial-year business tax return by delaying the start date until the following year.

Management: This section asks if the LLC is Member-Managed or Manager-Managed.

  • Member-Managed LLCs have an active involvement in the management and have the authority to act on behalf of the LLC.
  • Manager-Managed LLCs are hired by the members to run the LLC, similar to a CEO of a corporation.  This is generally used when there are passive members in the LLC, and the members do not actively manage or operate in the affairs of the business.

Most LLCs are Member-Managed.

Beneficial owner(s): This is an optional section, and each member of the LLC is typically considered a beneficial owner.  Entering their names with the LLC filing puts their names and addresses on public records.

If you are worried about making a mistake when forming your LLC, or just don't want to deal with filling out state paperwork, an LLC formation service will help guide you through the process. My top recommended services include:

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What To Do After Forming A South Dakota LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a South Dakota LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement (South Dakota included), but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: South Dakota operating agreement template

Obtain an EIN

If the LLC will hire employees or is owned by more than one member, an EIN is required. 

The EIN or Employer Identification Number (also referred to as a Federal Employer Identification Number, FEIN, or Federal Tax ID Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes.

Related: How to apply for an EIN

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original LLC formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • Occasionally, a bank will request a South Dakota Certificate of Good Standing to prove the LLC is active and in good standing with the state.

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting a business. Some common registrations include:

  • Business license: Some cities require businesses to obtain licensing before they can start.
  • Professional license: Certain services, such as barbershops, accountants, salons, and others, must be licensed.
  • Sales tax license: In order to sell products and certain services, registering for a sales tax license from the South Dakota Department of Revenue will be necessary.

Related: What business licenses are needed in South Dakota?

File the South Dakota LLC Annual Reports

LLCs are required to file an annual report with the South Dakota Secretary of State.  There is a $50 state fee for filing the South Dakota Annual Report (Form CL-1), which is due by the last day of the anniversary month of the LLC. For example, an LLC formed on November 5th, 2024, would have its first annual report due on November 31, 2025.

Related: How to file a South Dakota LLC annual report

File the Beneficial Owner Information Report

Beginning in 2024, any individual who owns at least 25% or has “substantial control” of an LLC or corporation in South Dakota or any other state must file the Beneficial Ownership Information (BOI) form with the Financial Crimes Enforcement Network (FinCEN). BOI reports are filed electronically through FinCEN’s website.

This is a separate requirement from the beneficial owner question in the Articles of Organization.

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South Dakota LLC FAQs

What is an LLC?

The Limited Liability Company (LLC) is a popular business structure (also called a business entity) for many businesses starting in the state of South Dakota.  The LLC provides personal liability protection and has the potential to save money on taxes. With our step-by-step guide, you can learn how to form an LLC in South Dakota without an attorney.

Unlike a sole proprietorship or partnership, where the small business owner can be personally liable for lawsuits against the business, the LLC is a separate legal structure that helps to protect the business owner’s personal assets.

Besides asset protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

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

The state filing fee to start an LLC with the South Dakota Secretary of State is $150 to file online.

How long does it take to start an LLC in South Dakota?

South Dakota LLCs that are formed online are processed immediately with the Secretary of State, while mailed-in forms can take 5-7 business days.

Is there a yearly fee for an LLC in South Dakota?

Each year, an annual report and $50 annual report fee will need to be sent to the South Dakota Secretary of State.

What is a South Dakota Foreign LLC?

A foreign LLC isn’t a special type of LLC. Instead, it’s an LLC that was formed in another state that wants to operate physically in South Dakota. Physically operating means having a presence, such as having an office or hiring an employee.

Related: What is the difference between a domestic South Dakota LLC and a foreign LLC?

What is a Professional Limited Liability Company?

Businesses that require occupational licensing in South Dakota, such as accountants, attorneys, veterinarians, etc., can register for a Professional LLC (PLLC), but it is not required.

Related: What is the difference between a domestic South Dakota LLC and a foreign LLC?

Is South Dakota the best state to form an LLC?

It’s generally best to form an LLC where you reside and will be doing the work, however, there may be reasons to form one in another state.

Related: What is the best state to form an LLC?

South Dakota LLC For Beginners: No Attorney Required

South Dakota LLC For Beginners: No Attorney Required

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