South Dakota is one of the best states in the US to start a business. No state income tax, low annual fees, strong privacy protections, and a business-friendly environment for both US residents and international entrepreneurs who wish to establish a legal business in the US makes South Dakota a no-brainer.
In this Bizstartz guide, we cover all the steps for forming a Limited Liability Company (LLC) in South Dakota, including choosing a business name, filling out formation documents, applying for an EIN, opening a US bank account, and business compliance.
This is a step-by-step guide for South Dakota LLC formation designed to allow US citizens starting their first business and non US residents who are venturing out for global business expansion.
Why South Dakota for your LLC?
South Dakota is highly recognized for being dependable and one of the most business-friendly states in America. This is largely due to the state’s fellowship tax structure, uncomplicated regulations, and a strong privacy emphasis.
Let’s look at the advantages of choosing South Dakota as your LLC home:
1. No State Income Tax
No South Dakota business or personal income tax means business owners of any residency take home higher profits. This attracts online business owners, eCommerce store owners, consultants, and other digital service providers because no income tax means even more profits from sales out of the state.
2. Inexpensive Filing and Maintenance Fees
When it comes to LLC South Dakota is also budget friendly. Business owners pay $150 filing fees and $50 for annual reports meaning filing reports and maintaining your LLC is inexpensive.
3. Strong Privacy Protection
South Dakota is more protective of your confidentiality as business owners. South Dakota does not require listing owners or management in their online database. This can be beneficial to business owners needing privacy for their enterprises.
4. Less Complicated Compliance
South Dakota has a focus on entrepreneurship and being business friendly. They have no franchise tax on your business, and annual reports and filings have less to no complex requirements.
5. 100% Foreign Ownership Allowed
South Dakota LLCs can be 100% owned by foreign nationals. South Dakota makes it easy for international owners to incorporate because there are no residency or citizenship considerations.
With that in mind, South Dakota is tax efficient, private, and simple which is why it is favored by international and U.S. business owners.
Step 1: Choose a Name for Your South Dakota LLC
The name of your LLC is your business identity. Selecting a name that fulfills South Dakota’s LLC naming requirements will aid in defining your professional brand.
South Dakota LLC Naming Guidelines:
- Your name must have “Limited Liability Company,” “LLC,” or “L.L.C.”
- Your name must be original and distinguishable from other LLCs in South Dakota.
- Your name cannot include the words “Bank,” “Insurance,” or “University” without special permission.
- Your name cannot mislead the public as to the nature of the business and must not suggest a government affiliation.
You can find out if your proposed name is available by using the South Dakota Secretary of State Business Name Search.
If you see that your desired name is available, but you are not ready to file, you may file for a Name Reservation Application and hold your name for 120 days for a small fee.
Pro tip: Create a name that is easy to say and remember. Think about the audience you are trying to reach. If you are planning to have a business website, check that your preferred domain name is available too.
Step 2: Choose a Registered Agent
Every LLC in South Dakota has to have a Registered Agent, which is just a person or business who is assigned to receive legal and official correspondence on behalf of your LLC.
Your Registered Agent must:
- Have a physical South Dakota street address (no P.O. Boxes)
- Be present to receive documents during business hours
- Be authorized to do business in the state.
If you are not a U.S. resident, choosing a Registered Agent service is a must, since you most likely don’t have local business presence.
Bizstartz has Registered Agent services in every state in the U.S., including South Dakota, and keeps your LLC under state compliance.
Step 3: Submit the Articles of Organization
The Articles of Organization is the official name giving document to form your South Dakota LLC. You can complete this task online through the Secretary of State’s portal or by sending it through the mail.
Filing Fees:
- Online: $150
- Paper Filing: $165
The Articles of Organization typically include:
- LLC name
- Your Principal business address
- Registered Agent’s name and address
- Management structure (member-managed or manager-managed)
- Duration of your LLC (perpetual or limited)
Once this is approved, the State Secretary will issue a Certificate of Organization. This document will confirm the legal existence of your LLC.
Bizstartz Tip: When you form your LLC through Bizstartz, we manage all the filing for you and guarantee your documents will be complete, correct, and filed promptly.
Step 4: Write an Operating Agreement
Even if South Dakota law does not require it, the Operating Agreement is a necessary document to the LLC. This document includes the internal structure and defines how your LLC will operate.
The items above allow your LLC to clearly define and manage:
- Each member’s ownership percentage
- The roles and responsibilities of the members and managers
- The distribution of profits and losses
- Management and ownership additions or removals
- The procedures for dissolving the entity
For your multi-member LLC, this document will be vital to avoiding unnecessary disputes.
For single-member LLCs, additional legal protection is achieved by proving the separation between personal and business activities.
Bizstartz offers custom Operating Agreement templates for both single and multi-member LLCs. This ensures that your company is legally sound from day one.
Step 5. Get an EIN
An EIN (Employer Identification Number) is your business’s Social Security Number. The IRS issues one for tax and banking purposes.
You need an EIN when you:
- Open a U.S. business bank account
- File federal and state taxes
- Heed employees
- Applay for payment processors like Stripe and PayPal
You can apply for an EIN online at the IRS website if you have a Social Security Number (SSN) or ITIN.
Bizstartz can obtain your EIN by filing Form SS-4 on your behalf if you are a non-U.S. resident without an SSN or ITIN.
This step is important because most banks and payment gateways will not approve your business account without an EIN.
Step 6. Open a U.S. Business Bank Account.
This is critical for maintaining liability protection. It allows your LLC to gain more legitimacy and helps you separation personal and business finances.
To open a business bank account in the U.S., you need the following:
- Certificate of Organization (LLC approval document)
- EIN Confirmation Letter
- LLC Operating Agreement
- Passport/Government ID
- Proof of Business Address
Some banks will require you to be in the U.S., but some U.S.-based banks and fintech partners to Bizstartz allow you to open a business bank account remotely.
Having a U.S. business bank account allows you to:
- Receive international payments.
- Build business credit.
- Accept card payments through Stripe or PayPal.
- Look professional and trustworthy to U.S. clients.
Step 7: Register for State Taxes
Although South Dakota doesn’t charge state income tax, your LLC might still need to register for other state taxes, depending on what your business does.
For example, register for:
- Sales and Use Tax: Needed if you sell taxable goods or services in South Dakota.
- Employer Taxes: Required if you have employees; you need to register with the South Dakota Department of Labor and Regulation.
You can register these taxes on the South Dakota Department of Revenue online services.
Note: If your LLC does business only online and has no physical presence or sales in South Dakota, you might not need to register for state taxes. Bizstartz can assess your business activity for compliance.
Step 8: Maintain Ongoing Compliance
To keep your LLC in South Dakota good standing, you need to follow the state annual compliance procedures.
Annual Report
Every LLC in South Dakota must file an Annual Report.
- Filing Fee: $50 when filing online and $65 for paper filing.
- Due Date: The first of the month that is the anniversary of when your LLC was formed.
The Annual Report confirms that your LLC’s contact and ownership details are correct. Late filing will incur late fees and penalties and could result in the dissolution of your company.
To keep your company active and compliant, you can use the Annual Compliance Service offered by Bizstartz. We keep track of your deadlines and file your reports on your behalf.
Benefits of Forming a South Dakota LLC for Non-U.S. Residents
If you are outside the United States, a South Dakota LLC allows you to reach the U.S. market with no complications from anywhere in the world.
Benefits for International Founders:
- no U.S. partner is necessary
- no need to be in the U.S. in person
- no state income or corporate taxes
- no personal U.S. business bank account restrictions
- access to U.S. payment processors like Stripe, PayPal, and Amazon
- beneficial ownership
- legal compliance is easy
Because of these advantages, South Dakota is one of the best U.S. states for eCommerce store, SaaS company, agency, and digital consultancy entrepreneurs.
Bizstartz has helped hundreds of South Asian, European, African and Middle Eastern founders seamlessly launch U.S. LLCs, obtain EINs, open bank accounts and set up payment processors.
How Bizstartz Can Help You Form a South Dakota LLC
At Bizstartz, we understand how easy and fast business formation can be in the states, especially for the non-U.S. residents, as well as how much worry comes along with it, and we aim to alleviate that.
Our South Dakota LLC package is all-inclusive and comes with a lot. For example, we do the following for you:
✅ LLC formation filing with the Secretary of State
✅ Registered Agent service in South Dakota
✅ EIN (Tax ID) application
✅ Operating Agreement preparation
✅ BOI (Beneficial Ownership Information) filing
✅ U.S. business bank account opening support
✅ Bookkeeping and tax compliance assistance
We aim to provide complete peace of mind by managing the process to guarantee that your South Dakota LLC business can legally operate without fear of compliance and structuring issues.
Final Thoughts
For an entrepreneur that values tax savings, simplicity, and privacy, opening an LLC in South Dakota is one of the best business decisions they can make. The state is perfect for digital entrepreneurs, startups, and foreign business owners that want to penetrate the U.S. market, as it offers a zero income tax, business-friendly climate, and low fees.
Therefore, you can complete your South Dakota LLC formation remotely, as well as having all the confusing and complex documentation to us to navigate. If you need further assistance, our team at Bizstartz is always happy to help.
🚀 Getting Started with Your South Dakota LLC
Starting your company in the US is quick and easy with Bizstartz.
At Bizstartz, we help entrepreneurs from all over the globe set up their businesses in the US in a quick, legal, and professional manner.
👉 Go to Bizstartz.com to start the process today, or schedule a consultation with our professionals free of charge.
