How to Form an LLC in South Dakota

Co-authored by Clinton M. Sandvick, JD, PhD and Christopher M. Osborne, PhD

Last Updated: May 4, 2023

Forming a Limited Liability Company (LLC) may seem like an unnecessary hassle for your small business, but doing so might save you a good deal of money and legal wrangling in the future. An LLC basically limits the owner's (or owners') personal liability for the company's actions in legal and financial terms. The process for forming an LLC in South Dakota is similar to that in other U.S. states, with some unique aspects. You may feel more comfortable utilizing an attorney, but it is manageable for the average small business owner to form an LLC.

Part 1

Part 1 of 2:

Applying to Form an LLC

1
Pick a name for your LLC. An LLC is a unique legal entity before the law, so it needs a unique legal name for purposes of identification. South Dakota requires that you choose a name that is not already in use.^{[1]
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- For your convenience, use the searchable online database of existing business names provided by the South Dakota Secretary of State, available at https://sos.sd.gov/business/search.aspx.
- The actual words Limited Liability Company, or the abbreviations LLC, L.L.C., Ltd. Liability Co., Limited Company, or Ltd. Co., must appear at the end of your business name. “Joe's Shoes, LLC” would be your full legal business name, for instance, not “Joe's Shoes.”^{[2]
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- If you are worried that someone else may take your perfect business name while you are completing the paperwork, you can request a name hold for 120 days by paying $25 and filing a form.
2
Complete the Articles of Organization. In South Dakota and many other states, this is the main form required to create an LLC. Despite your worst fears, it is in fact a rather short and uncomplicated form, and is available for download.^{[3]
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- Some of the required fields for the Articles of Organization form include: the LLC’s name and primary address; a description of the type of business; contact information for the LLC's Registered Agent (see the Step below for more information on this); contact information for all managers or organizing members of the LLC (you need at least one, including yourself); and a declaration regarding whether the LLC will be run by manager(s) or its member(s).
3
Select a Registered Agent. South Dakota joins many other states in requiring LLCs to name an agent for "service of process." In basic terms, the Registered Agent is the person or entity that is authorized to accept legal papers if the LLC is sued.^{[4]
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- In South Dakota, the Registered Agent must be either an individual or business that is located in the state and authorized to serve in this capacity.
- Your can browse a list of authorized South Dakota Registered Agents on the Secretary of State website. Make your selection and arrangement for representation by a Registered Agent before officially filing your Articles of Organization.
4
Send your application and fee by mail. While the primary forms are available online, South Dakota currently requires you to apply to form an LLC by mail.^{[5]
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- Include a check for the filing fee (currently $150), payable to "Secretary of State," with your application.
- Mail the application and fee to: Secretary of State Office, 500 E. Capitol Ave., Pierre, SD, 57501.
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Part 2

Part 2 of 2:

Addressing Other Requirements

1
Prepare for your tax obligations and other licensing and registration requirements. Once your LLC comes to legal "life," it will (not surprisingly) be subject to an array of taxes. Whether required or not by the particular details of your LLC, it is wise to apply for a tax identification number to simplify the tax process somewhat.
- LLCs with more than one member are required by federal law to have an IRS Employer Identification Number (EIN). You may want to apply for one regardless, even if you are the only member (https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employer-ID-Numbers-EINs). There is no filing fee.^{[6]
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- If your LLC will be selling goods or providing services, and thus collecting sales tax, you will also have to register with the South Dakota Department of Revenue. You can complete and file the South Dakota Tax Application online (https://apps.sd.gov/rv23cedar/main/main.aspx).
- Depending upon the nature of your business and its location within South Dakota, you may also need to file for various business licenses or permits. Contact the Secretary of State office, the relevant local government authorities, and perhaps also the local chamber of commerce for more information and guidance.
- Contact the U.S. Patent and Trademark Office if you are interested in getting a trademark for the name (or logos, etc.) of your LLC (http://www.uspto.gov/).
2
Plan to file an Annual Report. All South Dakota LLCs are required to file an official Annual Report with the Secretary of State “before the first day of the second month of the year following the year in which the LLC was authorized to transact business,” and yearly at the same time thereafter.^{[7]
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- The Annual Report is a brief, one-page form that mostly reiterates or updates information provided with your LLC’s Articles of Organization.
- You can access the form online and mail it in, or file online by providing your Corporate ID Number (https://sos.sd.gov/account/login.aspx?type=ar).
- The fee to file is $50, payable to the Secretary of State. Mailed reports should go to Secretary of State Office, 500 E. Capitol Ave., Pierre, SD, 57501.
3
Draft an operating agreement as protection for your LLC. South Dakota does not require an LLC to have an operating agreement, but it is a virtually indispensable part of forming an LLC.^{[8]
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- Operating agreements lay out the particular details for LLCs, and are especially vital if an LLC has numerous members with varying degrees of involvement and investment in the operation. Without an operating agreement, for example, the default rules state that all members of an LLC share in profits and losses equally, regardless of investment or activity level.^{[9]
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- Generic operating agreements include sections relating to the members' percentage interests; the members' rights and responsibilities; the members' voting powers; the allocation of profits and losses; the management structure of the LLC; the rules for holding meetings and votes; and buyout provisions. For the best protection, though, tailor the operating agreement to fit your specific LLC.
- It is easy to find templates to help you write an operating agreement, but you must be sure that it meets the legal requirements of South Dakota (or whatever other state in which your LLC resides). Because of its legal significance relating to your LLC, you may want to have an attorney draft the operating agreement for you.
4
Create a business plan for your LLCs future. Like operating agreements, business plans are not legally required in South Dakota, but they make good business sense regardless. A well-constructed business plan will serve as your LLC's guidebook as it gets off the ground.^{[10]
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U.S. Small Business Administration
U.S. government agency focused on supporting small businesses

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- A business plan is often viewed as a sales pitch for potential investors, but it is a useful creation for any new business. See the highly-recommended article How to Write a Business Plan for detailed information on creating one, including the following listing of common contents:
  - Title Page and Table of Contents.
  - Executive Summary, in which you summarize your vision for the company.
  - General Company Description, in which you provide an overview of your company and the service it provides to its market.
  - Products and Services, in which you describe, in detail, your unique product or service.
  - Marketing Plan, in which you describe how you'll bring your product to its consumers.
  - Operational Plan, in which you describe how the business will be operated on a day-to-day basis.
  - Management and Organization, in which you describe the structure of your organization and the philosophy that governs it.
  - Financial Plan, in which you illustrate your working model for finances and your need from investors.
- The U.S. Small Business Administration (https://www.sba.gov/offices/district/sd/sioux-falls) and similar small business support entities can also offer guidance on developing a business plan.
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Tips

See How to Start an LLC for additional information on the process, whether setting one up in South Dakota or elsewhere.

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Warnings

You must be at least 18 years old to set up an LLC in South Dakota.

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It is highly recommended that you have an LLC Operating Agreement.

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