How to Form a Corporation in South Dakota

Choosing to start a new company is both exhilarating and terrifying. It’s the first of many choices you’ll have to make along the path. Depending on where you reside, you may need to register your company at the state, municipal, and federal levels. This tutorial will lead you through the steps necessary to register your company in South Dakota.

South Dakota Business Registration

1. Give Your South Dakota Company a Name

Naming a new company may be a difficult job for many people. The name should be memorable, letting people know what you have to offer. A strong name, on the other hand, is much more than that. It is a branding tool that provides an inside peek into your organization’s purpose and future goals. The correct name may help you set yourself up for long-term success; the wrong name can destroy a ship before it ever sets sail.

Considering Your Name

While many entrepreneurs are inclined to speed through the name process, you should take your time and investigate all naming options. Take multiple brainstorming sessions and utilize the free internet business tools available today to assist you come up with a variety of choices, narrowing them down as you go.

South Dakota Name Lookup

South Dakota offers a company information search engine and a business name availability tool set up by the Secretary of State that may assist you in searching for business entities by name. You should also make sure that your name isn’t too similar to any existing firm in your state. This will assist to prevent future misunderstanding and legal problems.

It’s time to start legitimizing your firm once you’ve chosen a name that appropriately portrays your brand. These following procedures will differ based on your company structure and the legal requirements of your state. The next section will go through the various company structures.

If you want to utilize a “doing business as” (DBA) name, also known as a DBA – business name in South Dakota, our DBA guide will assist you in ensuring you are legally registered at the state, county, and/or local levels. There are various advantages to registering your DBA with the state. It provides further security against competing South Dakota firms, establishes your company’s validity, and may be needed by certain suppliers, banks, and lenders.

2. Select a Business Structure for Your South Dakota Company

Now that you’ve picked a good name for your brand, it’s time to start the legalization process. Before you begin the registration procedure, you must decide which company structure is appropriate for you. Each has its own set of perks, drawbacks, and tax advantages.

The sole proprietorship

A single proprietorship is the simplest straightforward business form. This informal corporation was created for entrepreneurs who do not want to work with others. It provides no personal asset protection and does not need state filing.

Unless you apply for a DBA with the state of South Dakota, your company will function under your surname. The Secretary of State charges $10 to register a DBA in South Dakota, and it must be renewed every five years.

Partnership

A general partnership, like a sole proprietorship, is an informal structure established for entrepreneurs who form a partnership with at least one other person. You and your partners’ surnames may be used for the firm, or you can get a DBA name. Profits and losses would be reported on your (and your partners’) personal tax return, and no personal assets would be protected.

Some partnerships (including limited partnerships and limited liability partnerships) in South Dakota are required to submit formal documentation with the state, along with a filing fee.

LLC

If you do not intend to go public in the foreseeable future, a limited liability corporation (LLC) may be the best option. It provides more freedom and protects your personal assets in the case of a lawsuit.

The state of South Dakota requires all LLCs to choose a registered agent who will receive legal papers on their behalf. Your registered agent must be a qualified South Dakota citizen or a company allowed to do business in South Dakota. Many new LLCs choose to use a registered agent service, which costs between $29 and $300 each year.

South Dakota also needs you to follow specific name rules and submit the Articles of Organization, which include important information about your business.

Corporation

A corporation is a kind of business entity for those who have (or want to have) shareholders. So, if you want to go public in the future, this may be the greatest alternative for you.

Corporations, like LLCs, must designate a registered agent to receive paperwork, compliance papers, and government communication on the organization’s behalf. Your registered agent, like an LLC, might be a professional service, a corporate organization, or a person.

In addition to a registered agent, you must submit the Articles of Incorporation with the state.

3. Determine whether your business has to be registered in South Dakota.

Once you’ve decided on your formal company structure and registered your new business name, you need check with your state to see what the criteria are for business registration. Each state has its own set of rules, which must be strictly followed.

Most informal company arrangements, such as sole proprietorships and general partnerships, do not need to be registered with the State of South Dakota. Check with your local government to discover whether your sole proprietorship or general partnership has to be registered at the county or municipal level.

Furthermore, certain firms (for example, sole proprietorships and single-member LLCs with no workers) are exempt from registering and filing for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a necessity for your company, you should consider registering regardless since there are various legal and tax advantages.

Even though you are not compelled to register your firm, it is important to recognize that creating an LLC has several legal and financial advantages. Your business debts are considered personal debts if you are a single proprietorship or a partnership. This implies that in the case of a lawsuit, your personal assets might be taken. Personal protection is provided through LLCs, which legally shield your personal assets and minimize your personal liabilities.

Aside from personal protection, LLCs have various additional advantages, including:

Profit distribution, decision-making, and company management flexibility
“Flow-through” taxes permits the LLC’s revenue and costs to pass through to the owners’ personal income tax returns, with no limits on the number and type of owners.

If you don’t have the time or skills to organize your own LLC, there are a variety of trustworthy LLC filing services that may assist you. We analyzed and selected the five finest LLC registration services because we realize how difficult it can be to navigate through the thousands of accessible alternatives. Our LLC service review compares each to ensure you associate with a service that saves you both time and money.

4. Register Your South Dakota Business for Taxes

EINs are used by the IRS to identify firms for tax purposes. Every company with workers is obligated to have one. Our EIN guide will assist you in determining the EIN requirements for your company structure and will coach you through each stage of the procedure.

Once you have your EIN, the next step is to register your workers for the state’s Reemployment Assistance Tax, formerly known as unemployment insurance tax. All firms that offer physical goods and/or taxable services must also collect sales and use tax on all transactions.

You may be needed to register for extra state and municipal taxes, such as tourist tax, vehicle fuel tax, or bank franchise tax, depending on the nature of your company. Visit the Department of Revenue’s website for a complete list of possible taxes and registration requirements.

5. Obtain South Dakota Business Permits and Licenses

A variety of variables, including your chosen sector and the county in which you operate, influence the licenses and permissions necessary for a South Dakota firm. Assisted living institutions, for example, must get permits from the state’s Department of Health. The South Dakota Governor’s Office of Economic Development Firm Licensing guide will help you learn more about the state requirements for your specific business.

Furthermore, certain businesses are governed by a federal agency and need federal licenses and/or permits. A liquor company, for example, would be subject to FDA standards and recommendations. Visit the Small Business Administration (SBA) website to learn more about federal permit requirements and costs.