South Dakota LLC

This guide will walk you step by step through forming your LLC, from choosing a business name to maintaining your company in compliance with state requirements.

1. Name Your South Dakota LLC

Choosing the right name is critical because it reflects your business identity and can influence customers' first impressions. Start by clearly defining your business concept, then brainstorm names with trusted colleagues or friends. Use online searches to ensure your ideas are unique and check domain availability if you plan to have a website. Online business name generators can inspire creativity, but your final choice should reflect your business vision and professionalism.

South Dakota Naming Rules

South Dakota naming rules require:

The name must include "Limited Liability Company", "LLC", or "L.L.C.".
It cannot mislead the public into thinking it's a government entity.
Certain words like bank, insurance, or university require state approval.
The name must be distinguishable from other registered businesses in South Dakota.

After narrowing your options, check the U.S. Patent and Trademark Office to ensure the name is available nationally.

Name Reservation

You can reserve a name by submitting a Name Reservation Form via mail to:

Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501

The fee is $25, and the reservation lasts 120 days.

Doing Business As (DBA)

If you want to operate under a different name than your LLC, you'll need a DBA. For example, if your LLC is "JJ's Waffles" but you want to launch a new product line called "JJ's Muffins", a DBA allows you to use that name legally. A DBA also lets you open a bank account under the DBA name. In South Dakota, DBAs are registered online through the Secretary of State for a $10 fee.

2. Select a Registered Agent

South Dakota requires every LLC to appoint a registered agent, a person or business authorized to receive legal and tax documents. This agent ensures your LLC receives critical notices and stays compliant.

Requirements for a Registered Agent in South Dakota

Must be 18 years or older
Have a physical South Dakota address (no P.O. Boxes)
Be available during regular business hours
If it's a business, it must be registered to operate in South Dakota

While you can serve as your own agent, many business owners hire a registered agent service for convenience and to avoid missing important documents.

3. Determine Your Management Structure

LLCs in South Dakota can be member-managed or manager-managed.

Member-Managed

All members actively handle day-to-day operations. Best for small businesses where all owners participate directly in management.

Manager-Managed

Non-member managers run the company, while members may remain passive investors. Useful for LLCs with multiple members or those preferring a hands-off role.

If your LLC does not specify management in the Articles of Organization, it defaults to member-managed.

4. File Articles of Organization

The Articles of Organization officially form your LLC. You can file online or via mail with the South Dakota Secretary of State.

Required Information Includes

LLC name
Business purpose
Principal office address
Registered agent information
Organizer and member/manager information
Additional provisions (optional)

Filing fee: $165. Online filings are usually confirmed immediately; mail filings take 1–2 business days after receipt.

Contact Information

South Dakota Secretary of State
215 E. Prospect Ave.
Pierre, SD 57501
Phone: (605) 773-4845
Website: sdsos.gov

5. Draft an Operating Agreement

Though South Dakota does not legally require an Operating Agreement, it is highly recommended. This document outlines how your LLC operates, how profits and losses are distributed, and how disputes are handled. Even single-member LLCs benefit from having one, as it strengthens liability protection and clarifies management practices.

An Operating Agreement Should Include

LLC name and address
Duration of the LLC
Registered agent information
Membership and management structure
Voting rights and decision-making procedures
Financial allocations and distributions
Procedures for adding/removing members
Dispute resolution and legal policies
Record-keeping and communication rules

Templates are available online, but professional review is advised to ensure compliance with your business goals.

6. Obtain an Employer Identification Number (EIN)

An EIN is issued by the IRS to identify your business for tax purposes. LLCs with multiple members or employees must have an EIN. Single-member LLCs without employees may still benefit from one to open bank accounts or establish business credit.

The application requires information about the responsible party, a natural person who controls or directs the entity's funds. EIN applications can be completed online on the IRS website.

7. Obtain Business Licenses and Permits

Licensing depends on your industry and location. Federal permits may apply for certain professions, such as food services or healthcare. State-level requirements in South Dakota are minimal, but local municipalities often require licenses or permits for operating a business. If your business sells taxable goods or services, a sales tax license from the South Dakota Department of Revenue is required.

Common Licenses and Permits Include

Industry-specific licenses (construction, childcare, food handling, professional services)
Building, zoning, or fire permits
DBA registration permits
Health permits for regulated industries

Failure to obtain required permits can lead to fines, penalties, or closure. Consulting a business attorney or a service like MyCorporation can simplify this process.

8. Determine Your Tax Status

By default, LLCs in South Dakota are pass-through entities, meaning profits and losses pass directly to members' personal tax returns.

Single-Member LLCs

Taxed as sole proprietorships. Profits are reported on Schedule C, and self-employment taxes apply.

Multi-Member LLCs

Taxed as partnerships. The LLC files Form 1065, and each member reports their share of income on personal tax returns, paying self-employment taxes.

LLCs Can Elect to be Taxed as a C-Corp or S-Corp

C-Corp: Corporate tax applies, and dividends to members are taxed separately, avoiding self-employment taxes on distributed profits.
S-Corp: Pass-through taxation with the requirement to pay members a reasonable salary. Remaining profits distributed are not subject to self-employment taxes, often resulting in tax savings for high-income LLCs.

South Dakota has no state income tax, but sales tax, payroll taxes, and local taxes may apply.

Additional Steps for Your LLC

Open a Business Bank Account

Keeps personal and business finances separate, maintaining liability protection. Banks usually require your EIN and Articles of Organization.

Apply for a Business Credit Card

Helps establish credit history for loans and financing, and can manage business expenses efficiently.

Get Business Insurance

Protect your investment with appropriate coverage. Common policies include:

General liability
Professional liability (E&O)
Workers' compensation
Property insurance
Equipment breakdown
Commercial auto
Business owner's policies (BOPs)

Maintain LLC Records

Keep formation documents, operating agreements, and any contracts or legal papers organized and secure.

Annual Reporting

South Dakota LLCs must file an annual report by the first day of their anniversary month. Fees are $50 online and $65 by mail.

South Dakota LLC FAQs

Starting an LLC requires several fees: Name reservation ($25), Articles of Organization ($165), DBA registration ($10), business licenses (varies by locality and industry), and annual report filing ($50 online, $65 by mail).

The South Dakota Secretary of State maintains a Business Entity Search where you can look up registered businesses by name or Business ID.

DBAs are registered online through the Secretary of State's portal. You'll need your LLC's Business ID, owner information, and a $10 fee.

Online filings are approved immediately, while mailed filings typically take 1–2 business days plus mailing time.

File an annual report by the first day of your LLC's anniversary month and maintain required licenses. Keep clear business records and comply with tax obligations.

Yes, if you're over 18, have a physical South Dakota address, and are available during normal business hours. P.O. Boxes are not permitted.

No, but having one is highly recommended to define ownership, management, and operating procedures.

There is no state income tax. LLCs may still owe sales tax, payroll taxes, and local taxes depending on their business activities.

How to Start Your Own LLC in South Dakota