Welcome to my guide on how to start a South Dakota LLC. Before we get into the details and all the steps, I recommend going to ZenBusiness who will be able to help you do all this without you having to go through the steps on your own.
I also want to make sure we review what South Dakota is known for and build some business ideas from that.
The top business ideas I’d recommend you consider are:
- Start a Black Hills Touring Business –> Center of the US
- Start a shoreline touring business
- Start a Mount Rushmore Touring Business
- Start a Corn Palace Touring Business
There are so many fun things you could start in South Dakota so I recommend deciding on what your business idea will be and once you’ve done that we can get into what your business name should be.
Name Your South Dakota LLC
As you think about your business name, you’re going to need to consider the South Dakota LLC naming guidelines. Every business entity in South Dakota will need to follow these rules and as South Dakota LLCs continue to get more and more important – you’ll want to validate you can use your name.
The typical rules you need to follow are
- The name must include “LLC” or “L.L.C.”
- The name cannot be deceptively similar to any other business that exists in South Dakota
- The name cannot imply a government affiliation
- The name cannot imply that you’re engaged in banking, insurance, or real estate unless you are
As a Limited Liability Company in South Dakota, I’d highly recommend you think about your business name and determine whether the South Dakota Secretary of State’s office is going to validate this is as a true and valid Limited Liability Company.
In order to do this, you’ll need to check the South Dakota Secretary of State’s website where you can search for business names which you can do here:
After you’ve validated that you can get your business name here, I recommend you also go check with the USPTO office and make sure there are not any trademarks associated with that name. You may find that your name is available at the state level but someone has put together a trademark at the national level which could create challenges for you.
Use this search portal to check before you move to the next step: https://www.uspto.gov/trademarks/search
Once you’ve validated that your Limited Liability Company business name is something that you can use and there are no trademarks associated, it’s time for you to move on and figure out how to go about locking in the digital version of it also known as your website.
Get a Website Domain for Your South Dakota Limited Liability Company
I tell people that more importantly than your physical street address is your digital street address or your website. I always recommend going to GoDaddy who will be able to help you get your domain and they have an amazing website builder to help you get started too.
As one of the LLC owners of your business, it’s important that as you go through the LLC formation process that you make sure that you’ve locked down your digital home.
Choose your registered agent
A registered agent is someone who is responsible for receiving and forwarding important legal documents on behalf of your LLC. The registered agent must have a physical address in South Dakota and be available during business hours to sign for any delivered correspondence. You can name yourself as the registered agent, but I don’t recommend it.
I recommend using Northwest Registered Agent as your professional service partner on this. They will include the first year of their service if you go through them for your LLC formation process and they have done this so many times that it’s worth it.
It’s not uncommon for an LLC to receive a lawsuit summons, and if that happens, the process server will hand-deliver the papers to your registered agent. If you’re named as your own registered agent, you’ll have to track down the process server and accept the lawsuit papers yourself.
Hiring a professional registered agent service is a small annual fee and gives you the peace of mind of knowing that important legal documents will be signed for and forwarded to you in a timely manner.
You can act as your own registered agent but that can create some personal challenges if you want to ever leave the office. It’s required that someone is at the physical street address in case legal documents need to be handed off. I recommend that for your registered agent service that you either use something like Northwest Registered Agent or you find a South Dakota law firm who has this as a service they provide too. There is no reason for you to go through the stress of acting as your own registered agent.
Prepare and File Articles of Organization with the Secretary of State
The first step in officially forming your South Dakota LLC is to file your Articles of Organization with the Secretary of State. The Articles of Organization is a simple document that provides the state with basic information about your LLC, including:
- Your LLC’s name and address
- The name and address of your registered agent
- The purpose of your LLC
- The names of the LLC’s organizers
You can find the Articles of Organization on the Secretary of State’s website.
The filing fee is $130, and you can file online, by mail, or in person.
If you have questions about this, I’d recommend going to the South Dakota Secretary of State’s office to help you get these questions answered. Once you’ve done that, we can move onto my favorite part of the LLC formation process – operating agreements.
Create an operating agreement
An operating agreement is a document that sets forth the LLC’s rules, regulations, and ownership structure. It’s not required by the state of South Dakota, but I highly recommend that you create one.
If you’re going to be putting personal assets into the business or there are going to be multiple members of your Limited Liability Company then I highly recommend you put this together. Whether or not you’re going to be running a single member LLC, foreign LLC or just need some help with your individual or business entity, this is one of the most powerful legal documents that will help protect your business income in the long term.
The typical items you’ll find in a LLC operating agreement are
- The roles and responsibilities of the LLC’s members and managers
- How the LLC will be managed (by members or managers)
- The LLC’s ownership structure
- Voting rights of the LLC’s members
- Buyout provisions (in the event that a member wants to sell their interest in the LLC)
- Procedures for admitting new members
- Provisions for dissolving the LLC
You can find templates for LLC operating agreements online, or you can hire an attorney to draft one for you. I recommend you go to Legal Templates who has a great LLC operating agreement template you can use for this here:
Once you’ve been able to get your South Dakota operating agreement organized with your LLC members and feel like your new business is going to be protected with the details you put in here, it’s time for you to head into the next step of setting up an Employer Identification Number.
Get an EIN
As a professional Limited Liability Company that wants to operating according to the South Dakota’s Secretary of State’s office, you will need to make sure you’re going to the IRS website to get your Federal Tax Identification Number which can be done on their portal here:
Once you’ve gone through this process, you’ll be able to feel like your business structure is setup correctly and start thinking about federal income taxes, federal taxes, state taxes, sales tax and whether the tax has been paid in a way you’d like it to. The EIN is basically your social security number for your business. It’s an important number that helps the Internal Revenue Service determine what you’re going to owe. As a LLC in South Dakota you’re going to need the EIN for your South Dakota LLC articles of incorporation and figure out all the tax related topics. As you go down this path you’re going to need South Dakota LLC documents which will help you make sure you’re protecting your personal assets.
Open A Business Bank Account
After you have your EIN, you can use that to open up a business bank account and I always recommend going to Lili to make that happen. They are the fastest and easiest way to help you get setup.
From there, you can start to worry about the tax paid and whether you’ve got the right LLC name setup for your business bank account. You may want an internal document for your business partners to use to track your financial institutions but it’s really not necessary if you just get a Lili bank account setup.
Get Small Business Insurance
The last thing you want to do is get your business insurance in place. I recommend going to CommercialInsurance.net who can help you get The typical types of insurance you’ll need to review and decide if you’re going to get setup are:
- Liability insurance – This will protect you if someone sues you or your business.
- Property insurance – If you have any physical property, this will protect it from things like theft or damage.
- Workers’ compensation insurance – If you have employees, this will protect them if they get injured at work.
- Vehicle insurance – If you use any vehicles for your business, this will protect them from damage or theft.
You can get quotes for all of these types of insurance on CommercialInsurance.net and they will help you make sure you’re getting the right coverage for your business.
Once you’ve done all this, you’ll be prepared to get your business up and running.
Get a Business License
Depending on the type of business you’re going to be running, you may need a business license or business licenses depending on what it is. Limited Liability Companies that need a business or commercial loan may also need to consider a license depending on the type of work they are in.
If you will be operating in a city or county, you’ll need to make sure you get the proper zoning for your business. Most businesses will require a general business license.
File an Annual Report
Each year, your LLC will need to file an annual report with the state of South Dakota. The cost is $50 and it’s due on March 1st.
You can find more information about this here:
And that’s it! You’ve now successfully started your South Dakota LLC.
Pay Annual Taxes
One last thing is business taxes whether that’s corporate income tax, inheritance tax, tax incentives, business inventory tax, personal property tax or really any other kind of tax you may need to pay. You need to review all the tax payments and that may even fall into personal tax returns too depending on how you structure your business.
You should consult a tax attorney but depending on what you’re doing there may be some pass through taxation you can take advantage of too.
As one of the many South Dakota LLCs you’ve gone through my article on the details of what you need for a Limited Liability Company and we’ve talked about everything from a South Dakota Registered Agent to professional services that will help you with your South Dakota annual report.
At this point, it’s up to you to either get the help of a professional service or do this on your own. I look forward to hearing about your newly formed South Dakota LLC and seeing your business thriving!
Do I need a business license to start my LLC?
Depending on your business and the type of work you’ll be doing, you may need a business license. You can check with your city or county to see if you need one for your specific business.
How much does it cost to file my annual report?
The cost tow file your annual report is $50 and it’s due on March 1st.
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