South Dakota LLC
South Dakota LLC
Form a South Dakota LLC
At LawInc, we keep things simple and allow you to easily form your South Dakota (SD) Limited Liability Company online or over the phone (800-989-5294).
South Dakota LLC formation is simple with LawInc.com. Once you submit your application, we check name availability, prepare your Articles of Organization and file your paperwork with the South Dakota Secretary of State. As soon as your South Dakota LLC is formed, we forward you your final paperwork.
A South Dakota LLC can help protect your personal assets, such as your home, car or family savings. In the event of a lawsuit or if your business should fail, your personal assets cannot be touched, assuming you have properly formed, capitalized and maintained your LLC. This limited liability feature of a South Dakota LLCs is not available in a sole proprietorship or general partnership, where the business owners are personally liable for all business debts.
Let LawInc walk you through the South Dakota Limited Liability Company formation process. Our clear, concise and easy to use website, helps keep things simple.
South Dakota LLC Name
The first step in forming a South Dakota Limited Liability Company (LLC) is selecting the business name. South Dakota LLC names:
- Must contain, limited liability company, or limited company, or the abbreviation, L.L.C., LLC, L.C., or LC. Limited may be abbreviated as Ltd. And company may be abbreviated as Co.
- Muse be distinguishable upon the records of the secretary of state from the name of any corporation, limited partnership, or company incorporated, organized or authorized to transact business, in this state; a name reserved or registered; and a fictitious name approved for a foreign company authorized to transact business in this state because its real name is unavailable.
An available South Dakota LLC name may be reserved for 120 days.
LawInc.com permits you to choose up to three names and will conduct a name search for your South Dakota LLC, prior to filing.
South Dakota LLC Formation
South Dakota LLC Filing Procedure: When forming a South Dakota LLC, the South Dakota Articles of Organization must be filed with the South Dakota Secretary of State. The South Dakota Articles of Organization must state:
- The South Dakota LLC name.
- Name and address of each South Dakota LLC organizer.
- Street address of South Dakota registered agent.
- Street address of principle place of business.
South Dakota LLC Organizers: An South Dakota limited liability company can be formed by one (1) or more organizers.
South Dakota LLC Members: South Dakota LLCs require 1 or more members. There is no residence or age requirement. South Dakota LLC members are not required to be listed in the Articles of Organization.
South Dakota LLC Duration: The period of duration of a limited liability company shall be perpetual unless the South Dakota Articles of Organization place a limitation on the company’s existence or until dissolution or termination.
South Dakota LLC Purpose: A South Dakota Limited Liability Company may be formed to transact any or all lawful businesses for which LLCs may be organized under the Law, except the business of banking or insurance.
South Dakota Registered Agent: An South Dakota LLC must maintain a registered agent and office to receive service of process in South Dakota. The South Dakota registered agent should be available, at an South Dakota physical address, during normal business hours to accept important legal and tax documents on behalf of the South Dakota LLC. The registered agent can either be (1) a domestic entity or a foreign entity that is registered to do business in South Dakota or (2) an individual resident of the state. A South Dakota LLC may not act as its own agent.
South Dakota LLC Operating Agreement: After filing, it is highly advised that an operating agreement is drafted which dictates the LLC internal affairs and management. There is no set criteria, but an South Dakota LLC operating agreement should reference how the South Dakota LLC is managed, allocation of profits and losses and member capital contributions. The South Dakota LLC operating agreement does not need to be filed.
South Dakota LLC Post-Filing Requirements
South Dakota LLC Annual Report: South Dakota LLCs are required to file annual reports which are due on the last day of the anniversary month of South Dakota LLC formation.
South Dakota LLC Taxes
South Dakota State Income Tax: The LLC tax rate for South Dakota is variable, depending on South Dakota taxable net income.
Federal Income Tax: An advantage of the LLC is its tax flexibility. LLC members are allowed to select how the entity will be taxed. An LLC may be classified for federal income tax purposes as either a:
- Sole proprietorship
- Partnership, or
Single member LLCs are treated the same as sole proprietorships. Profits are reported on Schedule C as part of your individual 1040 tax return. Self-employment taxes on South Dakota LLC net income must be paid just as you would with any self-employment business.
Most South Dakota multi-member LLCs elect to be treated as partnerships by the IRS and file IRS Form 1065. On this form, South Dakota LLC profits are reported and allocated to each of the owners according to the South Dakota LLC’s operating agreement. Each owner is given a Schedule K-1, which shows each owner’s share of LLC income or loss. The owner then reports and pays taxes on this income on the owner’s annual 1040 income tax return. It is important to note that as with sole proprietorships, all South Dakota LLC profits are taxed to the owners, even if they are not actually distributed by the LLC. This situation can arise when the LLC needs to use its profits to pay ongoing expenses.
If pass-through taxation is not desired, an LLC may elect to be taxed as a corporation by completing IRS Form 8832. If this election is made, the LLC is taxed as a C corporation by the federal government. Because the corporate income tax rates for the first $75,000 of corporate taxable income are lower than the individual income tax rates that apply to the taxable income of non-corporate taxpayers, it is possible a net income tax savings can result from this tax election. Additionally, an LLC can be taxed like an S corporation by filing IRS Form 2553.
Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. An EIN is typically required if the South Dakota LLC has more than one owner or any employees.
South Dakota LLC Dissolution/Cancellation
South Dakota LLC Dissolution/Cancellation: In order to dissolve or cancel an South Dakota LLC, the members or managers must file Articles of Termination with the South Dakota Secretary of State. The filing fee is $10.
Acts Triggering South Dakota LLC Dissolution: A South Dakota LLC can be dissolved upon the happening of one of the following:
- At a time specified in the Articles of Organization or operating agreement;
- Upon occurrence of events specified in the Articles of Organization or operating agreement;
- Consent by the specific number or percentage of members indicated in the operating agreement;
- At any time there are no members; or
- Judicial decree to dissolve by a Court.