Should you form your LLC in South Dakota? We've collected the relevant information that will help you make this decision.

Pros

  • No state taxes
  • Low cost of living
  • Among "Best States for Business" (Forbes 2016)

Cons

  • Geographical distance from coasts
  • Sparse population

Cost of doing business

  • $150 filing fee / $50 annual report

Privacy

  • Must only list managers, if manager-managed.

Forming an LLC in South Dakota

The name
In order to communicate to the public that your new business is an LLC, its official name will need to end with one of the following signifiers (or abbreviation of): “Limited liability company”, “LLC”, or “L.L.C.” In addition, it is required that the name of your business is not intentionally misleading to consumers, for any reason. Your company’s new name must also be completely unique, and not deceptively similar to any other organizations name or trademarks. Do a FREE name search now.

Ownership
The owners of an LLC are called “members.” The following information must be required regarding your LLCs members:

  • Required number of members
    South Dakota LLCs must have at least one member or manager listed in their incorporation documents.
  • Age restrictions
    LLC members in South Dakota may be of any age.
  • Residence restrictions
    There are no residence restrictions imposed on LLC members in South Dakota.
  • What information needs to be included in the Articles of Organization?
    Outside of the principal member, LLC Members in South Dakota are not required to list their name or addresses in their Articles of Organization. However, if the members will be part of the organization’s management, they will need to disclose this information.

Requirements for the Articles of Organization

The Articles of Organization is a document that must be filed during the LLC formation process in every state. Here is the information that must be included in this document when filing in South Dakota:

Registered agent information
All South Dakota LLCs must have a registered agent on file, and submit their name and address (which cannot be a PO box). This agent will be required to be accessible during standard business hours, and act as the state’s point of contact with the company. Learn more about registered agents.

If your business is a professional practice
Professional service companies are not permitted to form under the professional limited liability company (PLLC) structure. However, they may form as traditional LLCs.

South Dakota LLC taxation and fee requirements

There are several tax and fee requirements that must be addressed by LLCs in South Dakota. They are as follows:

Taxation
All states have complex taxation requirements. For more information regarding taxes in South Dakota, it is advised that you visit the state’s official business related website. 

Annual report requirements
LLCs in South Dakota are required to file an annual report every year before the first day of the second month following the company’s incorporation anniversary date. The cost of this filing is currently $50. Learn more about annual reports.

Tax identification numbers
South Dakota requires an EIN (employee identification number) for all LLCs that will have employees, and most banks will require one to open accounts. South Dakota does not require LLCs to obtain state tax ID numbers. Learn more about EINs.

Business license requirements

The business licenses and permits required in South Dakota vary wildly depending on the county or municipality in which your new LLC is located. If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.

Need a South Dakota corporation instead? Click here.