How Much Does An LLC Cost In South Dakota? (Fees Revealed)
Creating a South Dakota LLC comes with more costs than you might think, but don't be alarmed.
As a Mergers and Acquisitions specialist, I worked with multiple individuals and businesses, and helped them create new joint organizations.
After consulting LLC specialists in the state and conducting thorough research, we’ll provide the costs and requirements to form a South Dakota LLC.
Quick Summary
- The South Dakota LLC state filing fee is \$150 if filed online and \$165 if filed via paper.
- There are permits and licenses you may need to apply for and pay for based on the industry you're in and where you do business.
- The 20.6% increase in new business applications from December 2022 to December 2023, as per the U.S. Chamber of Commerce, highlights the growing entrepreneurial interest in the region.
- Inasmuch as it may add to the cost of starting an LLC in South Dakota, I would advise individuals new to the business to seek professional legal consultation and maintain organized documentation.
Cost to Start an LLC in South Dakota
There are certain costs to starting an LLC in South Dakota, which include the following:
1. LLC Filing Fee (\$150/Online - \$165/Via Paper - Mandatory)
The South Dakota LLC filing fee is \$150 if you file online or \$165 if you file via paper. You will pay this fee only once when establishing your business in South Dakota [1].
The increase in new business applications, with a 20.6% change in December 2023 compared to December 2022, as per the U.S. Chamber of Commerce, reflects a growing interest in starting businesses like LLCs in the region [2].
The South Dakota Secretary of State also offers expedited mail processing for \$50. I advise my clients to opt for the standardized filing service since the time difference is relatively close.
2. Registered Agent Service Fee (\$80-\$300 – Optional)
A South Dakota LLC is required to have a registered agent when filing for a business entity in the state. They represent the company and are authorized to receive service of process.
Employing a professional registered agent service in South Dakota will typically cost between \$80 and \$300 a year. Hiring one can be beneficial if you don't want your address to be public or don't have an address within the state.
3. Name Reservation Fee (\$22 - Optional)
In South Dakota, you can reserve your business name by filing a name reservation and submitting a \$25 fee.
Name reservations keep your preferred business name unavailable for other South Dakota LLCs. In my experience, the registration of your LLC may be delayed if you do not verify the availability of your desired business name.
Your reservation lasts for 120 days, and you can't reserve the same name until 60 days after the expiration [3].
Expenses Following the Approval of Your LLC
Once the business has been approved and officially registered, there are financial obligations that have to be met in order for the business entity to remain legitimate.
1. Business License (Depending on the Line of Business - Mandatory)
Depending on the location of your South Dakota LLC and the nature of your business, the state may require you to obtain certain permits and licenses.
This requirement is significant considering that 89,679 small businesses, which constitute 98.9 percent of all South Dakota businesses, according to the SBA data, might undergo similar processes [4].
South Dakota laws required a client of mine to obtain a professional business license to operate a medical clinic in the state.
2. Annual Report Fee (\$50/Online and \$65/Via Paper – Mandatory)
A \$50 annual report fee must be filed with the South Dakota Secretary of State if filed online or \$65 if filed via paper.
Any LLC annual reports in South Dakota that are not filed on time will have a \$50 late fee per annual report [5].
When I had to file online, I used the South Dakota business forms page and paid via credit or debit card.
3. Taxes Payable (Mandatory)
There are several South Dakota LLC business taxes that your company may be subjected to, including:
- Contractors Excise Tax: Any business that engages in construction, building, installation, and more must have a contractor's tax license. The excise tax is a 2% rate and depends on the type of construction project [6].
- Sales Tax: Sales tax is needed for a business that does the selling, leasing, or renting of products, including tangible property and any product transferred electronically or the sale of a service.
- Use Tax: Use tax is needed for a business that sells goods and services for which South Dakota sales tax isn't paid. This includes any goods and services that are used, stored, or consumed in South Dakota.
- Municipal Sales Tax: Most municipal cities and towns in South Dakota have local sales tax in addition to state tax. This varies by city.
You can apply for any tax permits online through the South Dakota Department Of Revenue.
4. DBA Name (\$10 - Optional)
If you are planning on doing business under a different name from your registered title, register a Doing Business As name and pay the \$10 filing fee.
When a client applied for a DBA, the state required at least one owner and the owner's name and address or the State Business ID of the South Dakota LLC.
5. Certified Copies (\$15 + \$2 per additional page - Optional)
You can order any certified copies of your South Dakota LLC documents from the Secretary Of State, including your LLC operating agreement, LLC's Articles Of Organization, legal documents, registered agent information, and more, for \$15 plus \$2 per additional page.
Certified copies can be ordered online, by phone, or in person.
6. LLC Certificate Of Good Standing (\$20/Online - \$35/Via Paper - Optional)
You can order an LLC certificate of good standing for \$20 online or \$35 via paper. A certificate of good standing shows your LLC is in compliance with the South Dakota Secretary Of State fees and filings.
I advise clients to acquire this document since it’s required when creating a business bank account or registering as a foreign LLC.
7. Employer Identification Number (\$0 - Optional but Recommended)
An EIN costs nothing to file and can be done online, by mail, or by phone through the Internal Revenue Service.
The IRS requires the LLC members' full legal names and addresses, social security numbers, and business names.
8. Operating Agreement (Optional but Recommended)
The operating agreement specifies the rules and regulations governing your LLC. It specifically outlines how the business is managed, the distribution of profits and losses, the rights and responsibilities of the members, and voting procedures.
There is no associated cost to drafting an operating agreement yourself. However, you can hire an attorney or use an online LLC formation service. They usually charge \$100 to \$200, depending on the company.
Related articles:
- How to Cancel an LLC in South Dakota
- How to Start n LLC in South Dakota
- How to Change an LLC name in South Dakota
FAQs
How Much Does An LLC Bank Account Cost In South Dakota?
The cost of an LLC bank account in South Dakota varies. Some banks charge \$10 to \$20 monthly fees, while others don't charge any monthly fees or have methods to avoid them.
What Is The Sales Tax Percentage For A South Dakota LLC?
The sales tax percentage for a South Dakota LLC is 4.5 percent. Every business that sells a product or service needs to apply to the Department of Revenue to get a sales tax license to collect sales tax from customers.
References:
- https://sdsos.gov/general-information/filing-fees.aspx
- https://www.uschamber.com/small-business/new-business-applications-a-state-by-state-view?state=sd
- https://sdsos.gov/docs/business/reservationofllcname20180215.pdf
- https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-SD.pdf
- https://sosenterprise.sd.gov/BusinessServices/Business/AnnualReportInstr.aspx
- https://apps.sd.gov/rv23cedar/main/main.aspx
