How to start an LLC in South Dakota in 2024

Brynne Conroy

BLUEPRINT

Updated 5:55 a.m. UTC June 26, 2024

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Starting an LLC in South Dakota has some advantages. There are no income taxes – either on individuals or on corporations. Plus, you’ll get the protections and opportunities that come with being a limited liability company.

Here are the eight steps to start your LLC in South Dakota:

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8 steps to start an LLC in South Dakota

1. Choose your LLC business name

To name your business, first brainstorm appropriate business names while referring to South Dakota’s LLC naming guidelines. We provide further guidance on how to ensure your name is appropriate and marketable in our business naming guide.

Once you’ve landed on a preferred name, make sure it is available for use in South Dakota by running it through the state’s name availability tool. In addition, run the name through the U.S. Patent and Trademark Office’s search trademark database to ensure it is available on a national level.

If the name appears in either of these databases, you must distinguish it and try again. The way ‘distinguishable’ is interpreted according to South Dakota law is that the two names can’t sound the same. You can add a single word to make one name distinguishable, but if it’s a homonym, it’s not allowed. For example, Betty’s Delicious Apple Pies, LLC would be distinguishable from Betty’s Delicious Pies, LLC, but Flower Power Ltd. Co. would not be distinguishable from Flour Power L.C.

Once you have an available name selected, if you are not ready to officially register the LLC (and its name), you can reserve the name for 120 days using an LLC application for reservation of name form. There is a $25 filing fee associated with this form, payable by check to the “Secretary of State.”

2. Select a registered agent

All LLCs in South Dakota are required to appoint a registered agent on their LLC articles of organization paperwork (see step three). A registered agent is the appointed person or entity tasked with receiving legal or tax documents on the LLC’s behalf.

Some business owners opt to serve as their own registered agent. Some, however, end up hiring one after the role and its responsibilities become burdensome. The state keeps a list of certified registered agents (CRAs) in South Dakota. However, if you hope to eventually expand your LLC to other states, hiring a national registered agent provider may be best for your business needs.

3. File your LLC articles of organization

Now it’s time to file an LLC articles of organization form with the South Dakota Secretary of State. This form legally establishes your LLC. It costs $150 if you file using South Dakota’s business services online page. Online submissions are usually processed immediately.

New LLC reporting requirement alert

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has implemented a new reporting requirement for all non-exempt LLCs starting on January 1, 2024.

The requirement is called the Beneficial Ownership Information (BOI) report and it is estimated to only take about 20 minutes to complete.

Here’s what you need to know:

LLCs formed before January 1, 2024 have until January 1, 2025 to file.

LLCs formed between January 1, 2024 and January 1, 2025 have 90 days to file from the confirmed date of the businesses’ registration.

New LLCs formed after January 1, 2025 will have 30 days to file from the confirmed date of formation.

For all details, FAQs and to file, visit FinCEN’s BOI website.

4. Create an operating agreement

An operating agreement is a legally binding document that outlines your business’s financial and operational policies and procedures. It also confirms your members’ roles, rights, powers and protections. As such, it is used to protect the LLC in court and against dissolution, override state LLC operating rules that may contract business or member interests, attract investors and perform key business tasks, such as opening a business bank account.

5. Get an EIN through the IRS

An employer identification number (EIN) identifies your business like a Social Security number does a person. Businesses use it to complete key business operational tasks, such as hiring employees, opening a business bank account and applying for business licenses and permits.

Once you receive your LLC formation confirmation from the state, you can obtain an EIN from the IRS from Monday to Friday, 7 a.m. to 10 p.m. EST using the IRS’s online form. EINs are free and autogenerated once you’ve submitted the form.

6. Register for South Dakota business taxes

All businesses in South Dakota must register with the South Dakota Department of Revenue (DOR) to pay applicable sales taxes for products or services sold.

In addition to sales tax, you may have to register with DOR for the following tax licenses:

Alcohol tax.
Contractor’s excise tax.
Manufacturer tax.
Wholesaler tax.
Motor fuel tax.
Lottery tax.
Tobacco manufacturer and distributor taxes.

All LLCs must also register with the Department of Labor and Regulation so they can manage reemployment assistance taxes. This is the South Dakota equivalent of unemployment insurance. However, whether you hire employees or not, your LLC must be registered here.

7. Obtain required licenses and permits

South Dakota does not require LLCs to obtain a general business license to operate in the state. However, depending on your LLC’s activities, location and industry, you may need a business license in South Dakota. For example, businesses in the engineering, construction, architecture, health care, veterinarian and real estate sectors often require business licenses or permits to operate.

Read our business license guide to learn more about your licensing requirements and how to meet them.

8. File your annual report

An LLC annual report updates the state on key business data, such as an LLC’s contact information. In South Dakota, your LLC annual report is due on the first day of your LLC’s formation anniversary month. However, you can submit it up to two months early. That means if you establish your LLC in October 2023, your first annual report would be due October 1, 2024. The earliest date you could file your first annual report would be August 1, 2024.

You can file your annual report online for $50. If you file more than two months after the due date, you’re considered delinquent. Delinquent filings come with an additional $50 fee, adding up to a total of $100.

Featured LLC service offers

ZenBusiness

Learn More

Via ZenBusiness’ website

Free version available

Yes

Lowest published package price

$199

Live chat

Yes: Human

LegalZoom

Learn More

Via LegalZoom’s website

Free version available

Yes

Lowest published package price

$249

Live chat

Yes

Northwest Registered Agent

Learn More

Via Northwest’s website

Free version available

Lowest published package price

$39

Live chat

Yes

Find the best LLC services for South Dakota: Best LLC services of 2024

Frequently asked questions (FAQs)

No, you cannot set up an LLC for free in South Dakota. There is a $150 fee to file your articles of organization online. Other South Dakota LLC startup costs include reserving your business name ($25), hiring a registered agent ($0 to $300 annually), obtaining business licenses or permits (varies) and filing your LLC annual report ($50 annually).

No, South Dakota LLCs do not pay taxes based on their profits at the state level. Even if you elect to be taxed as an S corp, South Dakota does not have a corporate income tax. Your business may be required to collect other taxes, though, like sales tax (even if you’re in a service-based industry) and federal taxes. Because an LLC is a pass-through entity, federal taxes must be paid on your LLC members’ individual income tax returns.

Yes, you need a registered agent in South Dakota. You can serve as your LLC’s agent, but if you don’t have a physical postal address or simply don’t want to be available during all regular business hours at a set location to receive LLC legal and tax documents, you can outsource the role to one of the best registered agent services. All of them operate in South Dakota.

Yes, South Dakota LLCs need to file an annual report. The filing fee is $50 but it bumps up to $100 if you file more than two months late.

To dissolve a South Dakota LLC, first consult your LLC operating agreement and follow its instructions for your entity’s dissolution. Then, file a South Dakota LLC articles of termination form and pay the $10 fee payable to the “Secretary of State.”

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Brynne Conroy

BLUEPRINT

Brynne Conroy has over 12 years of experience writing about money, with a particular focus on women's finances and small business lending and credit products. Her debut book was an Amazon #1 New Release across multiple categories, and she has been awarded a PEN America grant for the body of her work in the field. Find her bylines on LendingTree, Her Agenda, GoBankingRates, and Business Insider, and features on MSN Money, Jean Chatzky's HerMoney, and Yahoo Finance.

Alana Rudder

BLUEPRINT

Alana is the deputy editor for USA Today Blueprint's small business team. She has served as a technology and marketing SME for countless businesses, from startups to leading tech firms — including Adobe and Workfusion. She has zealously shared her expertise with small businesses — including via Forbes Advisor and Fit Small Business — to help them compete for market share. She covers technologies pertaining to payroll and payment processing, online security, customer relationship management, accounting, human resources, marketing, project management, resource planning, customer data management and how small businesses can use process automation, AI and ML to more easily meet their goals. Alana has an MBA from Excelsior University.