Create a South Dakota LLC

Properly formed and maintained, a South Dakota limited liability company (LLC) can provide significant personal liability protection for its owners. LLCs offer a flexible business structure and are typically taxed as pass-through entities.

Starting an LLC in South Dakota requires filing Articles of Organization with the South Dakota Secretary of State, but before that, you must choose a name for your business and designate a registered agent.

If you file by mail, it generally takes 3-5 business days for the state to process your paperwork, while online filings are typically processed as soon as they are received.

Once the state approves your paperwork, your LLC is official, but you will need to take additional steps before your LLC can conduct business.

In the following sections, we will guide you through the entire process.

To register your LLC in South Dakota, you need to select a name that complies with the state's naming requirements.

Here are some of the key requirements to keep in mind:

• Your business name must contain either "Limited Liability Company," "LLC," or "L.L.C."
• Your name must be different from any other business entity currently operating in the state. You can use the Secretary of State's website to verify name availability. Here's the link to check name availability in South Dakota.
• Your business name cannot include words that imply a connection to a government agency, such as "State Department," "CIA," "FBI," or "Treasury."
• Certain restricted words like "bank," "lawyer," "attorney," "credit union," etc. may require additional documentation and licensure paperwork.

You can find a complete list of South Dakota's naming regulations by following this link.

DBA Name

To conduct business under a name other than your LLC's legal name, you must register a fictitious name, also known as a "doing business as" (DBA) name or a trade name.

DBAs are useful if you want to abbreviate your name or distinguish a new product or service line. The South Dakota Secretary of State registers DBA names for a nominal filing fee and necessitates renewal every five years.

In order to register a South Dakota LLC, it is necessary to appoint a registered agent who will receive legal and official notices on behalf of the company. This person or entity is also referred to as a resident agent, statutory agent, or agent for service of process in other states. All South Dakota LLCs must have a registered agent, and you'll need to name them in your Articles of Organization.

A registered agent is responsible for receiving legal forms, official government correspondence, and other important documents on behalf of a business, such as notices of service of process (lawsuits), tax forms, and more.

Once the registered agent receives these documents, they inform the appropriate person at the LLC that they need attention. The registered agent must have a physical address in South Dakota and be available during regular business hours.

Who can be a registered agent?

When you file your Articles of Organization in South Dakota, you have the option to name either a commercial registered agent or a noncommercial registered agent, which can be an individual. Anyone who meets the state's requirements can serve as your registered agent, provided that they have a physical address (i.e., a registered office) and are available during regular business hours.

Complete and file your South Dakota LLC Articles of Organization with the Secretary of State to officially recognize your LLC as a legal business entity in the state.

To complete your Articles of Organization, you'll need to provide the LLC's name, initial business address, registered agent's information, including name, address, CRA# (if applicable), and whether they're a commercial or noncommercial agent, as well as the name and address of the LLC organizer(s).

You'll also need to indicate the company's duration if it won't be perpetual and the management structure, whether it's member-managed or manager-managed. Refer to Section 47-34A-203 of South Dakota's Uniform Limited Liability Company Act for additional details.

Member-Managed or Manager-Managed?

You can choose to have a member-managed or manager-managed LLC in South Dakota. A member-managed LLC is the default management setup in the state, where the members manage the LLC.

In contrast, a manager-managed LLC designates managers to head the company's day-to-day operations, which can be helpful if the members don't want to deal with this responsibility.

Managers can be one of the members or an outside party chosen by the members. You can also indicate your LLC's management structure in your operating agreement.

Filing Your Articles of Organization

You can choose to have a member-managed or manager-managed LLC in South Dakota. A member-managed LLC is the default management setup in the state, where the members manage the LLC.

In contrast, a manager-managed LLC designates managers to head the company's day-to-day operations, which can be helpful if the members don't want to deal with this responsibility.

Managers can be one of the members or an outside party chosen by the members. You can also indicate your LLC's management structure in your operating agreement.

Your LLC's operating agreement is a crucial document that outlines how your business will operate. Although South Dakota doesn't legally require an operating agreement, having one in place is highly recommended.

A written operating agreement is beneficial in several ways, such as settling disputes that may arise over financial agreements and other potential legal disputes.

Without an agreement in place, the courts may make determinations based on state law, which may not necessarily be in the best interest of the LLC and its members.

Your LLC's operating agreement can cover a range of topics, including, but not limited to:

• The LLC's name and principal address
• Duration of the LLC
• Name and address of the registered agent
• Information about the Articles of Organization
• Purpose of the business
• Members and their contribution
• How profits and losses are divided
• Procedures for admitting new members, as well as outgoing members
• Management of the LLC
• Indemnification and liability clauses

Remember that your operating agreement is a legal document, so it's essential to ensure that it accurately reflects your LLC's needs and goals.

It's recommended to work with an attorney to draft your LLC's operating agreement to make sure that it complies with South Dakota's laws and accurately reflects your LLC's interests.

The Employer Identification Number (EIN) is a unique nine-digit number issued by the Internal Revenue Service (IRS) to identify different types of businesses for tax purposes. It is a mandatory requirement for all active and inactive businesses.

LLCs in South Dakota must obtain an EIN when they hire employees. The process of hiring employees in South Dakota LLCs involves compliance with specific rules and regulations. For South Dakota foreign LLCs, an EIN must be obtained if they are based in other states.

To obtain an EIN (also called FEIN), the IRS requires filling out a form, which can be done online or by mail. You must provide your LLC details and complete the form before mailing it to the address provided. If you need assistance, you can use the EIN Assistant to help you with the process.

You can mail the form to Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999, or fax it to (855) 641-6935. There is no fee for obtaining an EIN.