How To Start An LLC In South Dakota 2024?

When a small business begins to expand, the owner may consider converting to a separate company. This can be difficult because some corporate structures can be costly and time consuming. An LLC, or Limited Liability Company, on the other hand, provides entrepreneurs with the best of both worlds. They are easy to set up and provide liability protection for the owner’s personal assets. This article will walk you through the steps necessary to set up your South Dakota LLC. Many small business owners benefit from assistance with the formal paperwork required to establish and maintain an LLC. As a result, we examined the top LLC formation companies that can assist owners with filing articles of organization and handling registered agent duties.

What Is An LLC?

A simple business structure, the LLC is an abbreviation for Limited Liability Company. This form is the easiest way to create a company with its own separate identity. This is a popular choice for small business owners because it is easy to set up, yet still protects the owner’s personal assets from liability. LLC owners report that they enjoy the simplicity of a sole proprietorship while having the liability protection one finds in a S-Corp or C-Corp. The owners, known as “members” agree to an operating agreement, which directs the day-to-day operation of an LLC.

What Is An LLC In South Dakota?

In South Dakota, limited liability companies are a common type of small business structure. The South Dakota Secretary of State will first approve articles of organization for the LLC, then the business has its own separate identity from the owner. The primary advantage of this structure is that the owners personal accounts and assets are protected from liabilities and debts held against the business.

Requirements To Start An LLC In South Dakota

In order to begin a South Dakota LLC, owners need only complete a few prerequisites. The members need to appoint an official registered agent to serve as an official point of contact. Additionally, the new business must be given a unique name that is approved by the South Dakota Secretary of State’s office. Once the business meets these requirements, the members can begin the filing process for the South Dakota LLC articles.

Appoint a Registered Agent

Any South Dakota LLC must have an official business address where someone is present to receive correspondence from the government – which can include tax documents, law suits, or subpoenas. The person responsible for receiving and signing for these documents is the registered agent. Most businesses do not appoint a member as the agent, because the owners are not always present at a single physical location all day, every day. It is usually more effective to hire a service who specializes in these tasks. These hired agents receive mail, properly organize the documents, and make them available to members.

The LLC’s Name Must Be Different From an Existing Business

To establish a business in South Dakota, the company needs to have a unique name. The name has to be easily distinguishable from all other businesses registered in the State. Names that are too similar can cause confusion in the marketplace or obscure the identity of a business. TheSouth Dakota Secretary of State’s office must approve the name. Consequently, do not purchase business cards, signage, or other marketing collateral until you know officials have approved the name.

Benefits Of Starting An LLC In South Dakota

A South Dakota LLC is a business structure that is simple and helps owners protect their assets. LLCs can be formed in a few simple steps and are inexpensive. Owners can easily become overwhelmed if they start a more complex corporation such as an S-Corp or C-Corp with heavy filing requirements and boards of directors. An LLC on the other hand, has only minimal such requirements. Nevertheless, the LLC creates a corporate veil to protect the owners’ assets. Any debt or liability incurred can only be enforced against the individual or business entity, leaving personal funds and assets unburdened. 

How Much Does an LLC Cost in South Dakota?

Overall, an LLC will cost under $300 for the first year. per year for domestic filers (meaning from South Dakota). This includes $25 to reserve a business name, $150 for filing the articles of organization, and $50 each year annual report. You can add expedited services for $50. Foreign LLC (outside of SD) filers are charged a higher rate of $750 for the foreign LLC.

6 Basic Steps To Start An LLC In South Dakota 2024

Prospective owners will find that filing to establish an LLC is a straightforward process. Take the following six steps to start your South Dakota LLC and obtain the local business licenses needed to conduct business in the state:

Choose a Name for Your LLC in South Dakota

Every South Dakota LLC must have a distinct name. South Dakota requires all naming rules to be followed.

Naming Rules in South Dakota

Your South Dakota LLC’s name can be anything provided you follow a few naming rules in South Dakota. First, the name must be available – meaning that no other business in South Dakota can have too similar a name. Additionally, the name cannot imply any type of service that was not described in the articles of organization. To make clear that the organization is a business entity, the name must contain the term, corporation, incorporated, company, or limited, or the abbreviation, corp., inc., co., or ltd.

Searching Available Name in South Dakota

In order to determine which names may still be available, South Dakota provides a searchable database on the the State of South Dakota website. However, wait until the state approves your business name before buying an advertising collateral, signage, or business cards.

Choose a South Dakota Registered Agent

A South Dakota LLC must have an address and South Dakota requires a person designated to receive official correspondence from the government. This person is the commercial registered agent. Every LLC must have an agent, and business owners can be their own registered agent. The agent receives and signs for mail from government agencies or courts such as lawsuits, tax documents, or subpoenas. A member may act as the agent in some cases, but this is frequently inconvenient because members are rarely present at the same location during business hours every day. As a result, many owners believe that hiring a professional registered agent service is the best option. These agents receive official documents, such as a South Dakota annual report, for the business, accurately catalog them, and make them available to members.

File Organizational Paperwork With the State

When forming South Dakota LLCs, the most important documents to file are the Articles of Organization. They are a special type of LLC incorporation document. The founders specify ownership arrangement and the rights, responsibilities, and duties of all the founding partners in the LLC. The founders are called “members” – but keep in mind you can be a sole member of an LLC as well. The LLC is officially formed by completing the South Dakota articles of organization.

Prepare an LLC Operating Agreement

The operating agreement is a separate document that specifies daily operations, as opposed to the articles of organization, which establish the business’s opening parameters. . This agreement governs the management of the business by the LLC members and serves as the primary guideline for how the business operates.

Obtain an (EIN) for Your LLC in South Dakota 

All South Dakota businesses must have a federal identification number, known as an Employer Identification Number (EIN). This number is used by the Internal Revenue Service for tax reporting purposes. New LLCs must apply to the IRS for this number. On the IRS website, you enter basic information about your LLC and are assigned a number. This is the federal tax identification number for the LLC. Third-party LLC formation companies can also handle this for a company.

Annual Compliance

A business owner is required to submit annual reports in accordance with the established regulation. South Dakota first requires an Annual Report for the LLC to continue to operate. The identities of the members, managers, and registered agents are updated in this report which is submitted to the office of the South Dakota Department of State. The LLC is also a separate legal entity that must file annual tax returns with both the state of South Dakota for the South Dakota business taxes, and the Internal Revenue Service for the federal government.

The Top 2 LLC Services in South Dakota

Business filers can now access LLC formation services online. These companies help with incorporation paperwork, annual compliance, acting as registered agents, and other important services. Many small business owners value the convenience, knowledge, and assistance they receive from trusted providers. We thoroughly examined numerous services and discovered that Northwest Registered Agent and Zenbusiness are the top two LLC Services in South Dakota.

Northwest Registered Agent

With over 3 million clients over decades of service, you simply cannot have a more solid and dependable track record than Northwest Registered Agent. Northwest outshines all competitors in three areas – registered agent service, data security, and personal service. Their customer representatives, called “corporate guides” always pick up the phone and give you service with a personal touch. There are no chats with bots and you do not have to endure automated menus. Its business done with an old-fashioned charm. Their registered agents are reliable and efficient. Additionally, Northwest exercises tight controls on their agents and couriers to protect your data. So if you want top class registered agent services and personal service, Northwest is a superior choice.

ZenBusiness

With a growing client base and a fantastic platform, ZenBusiness has arrived as an emerging leader in the LLC formation field. The ZenBusiness user interface is intuitive and easy to use. Some clients were able to start their LLC in just minutes. They provide formation services, registered agents, and annual compliance help. Customers also praise their responsive customer service. ZenBusiness offers transparent pricing, with excellent services at three low cost price tiers. If you are looking for an easy to use platform, fast filing speeds, and the best return on investment – ZenBusiness is an excellent service.

Final Thoughts

South Dakota LLC’s finances separate from their owner’s assets. These are protected from liabilities and obligations by upgrading to a formal and separate business entity. With a South Dakota LLC, you can create a new legal business entity which protects the owner from personal liability. Because LLCs are much easier to set up and manage than other corporate structures, they are frequently the best option for a small business. Many entrepreneurs find it advantageous to use LLC formation and registered agent services to handle the paperwork and filings. According to our research, Northwest Registered Agent and ZenBusiness are the industry leaders. Northwest has a proven track record, an exceptional personal touch, and the most secure registered agent service available. While ZenBusiness is quick and easy to use, and well-rated by users. These two are the top of the class in the field.

Frequently Asked Questions (FAQs)

An LLC provides entrepreneurs with the best of both worlds. They are easy to set up and provide liability protection for the owner’s assets. This article will walk you through the steps necessary to set up your South Dakota LLC. Many small business owners benefit from assistance with the formal paperwork required to establish and maintain an LLC. As a result, we examined the top LLC formation companies that can assist owners with filing articles of organization and handling registered agent duties.