Choosing to form an LLC in South Dakota will provide you with personal asset protection against the company’s debts and obligations. It is a legal business entity structure that many startups prefer. Additionally, it allows for pass-through taxation.
Forming A South Dakota LLC: The Requirements
States require the filing of LLC paperwork to register a business and ensure that its operations are legal. The same is true in South Dakota. You will have to go through a process and submit the necessary documents not only during the formation stage. There are certain requirements you need to comply with as long as your company exists, so it may be best to have a reliable agent to assist you in ensuring business compliance.
· Naming Requirements – All companies need to follow the naming regulations of the state. An LLC needs to have the phrase Limited Liability Company or any of its abbreviations. Additionally, you have to make sure that your company has a distinguishable name. You cannot use a company name that another business entity is currently using. An agent like DoMyLLC can conduct a name availability search for you. That way, you can be sure that your name follows all of the guidelines and is unique.
· Articles Of Organization – One of the first documents you need to file with the state is the Articles of Organization along with the corresponding fee. It has to include basic information about your company, such as the following:
o LLC name
o Purpose of the company (optional)
o Principal office address
o Name and address of the registered agent
o Names and addresses of the organizers
o Duration of the company, if not perpetual
o Management structure, whether member-managed or manager-managed
o Whether one or more members will have liability for the debts of the LLC
o Signature of the organizer
· Operating Agreement – South Dakota does not require LLCs to submit an operating agreement. But this primary document will help you establish the rights, duties, obligations, powers, and liabilities of the members. You can also use it to outline how to distribute profits and losses as well as the operating procedures of the company.
· Employer Identification Number (EIN) – Your LLC’s EIN will serve as a social security number for the LLC. You can also use it to open a company bank account for federal and state tax purposes and the business account that you will use for payroll taxes. You can obtain one from the Internal Revenue Service (IRS) for free. Use the SS-4 form. Make sure the state has already approved your LLC before applying for an EIN because the registered name needs to be the same as the one in your EIN.
· Annual Report – All South Dakota LLCs have to file annual reports with the Secretary of State. The filing fee for the report is $50. Failure to submit on time can lead to the loss of good standing status with the state. The deadline for the first annual report is before the first day of the second month of the following year after you get the authorization to transact in South Dakota. You need to file subsequent annual reports by the same date each year. Usually, the office of the Secretary of State mails a reminder to the address of the registered agent before the filing month.
· Business Licenses And Permits – Depending on your activities, you may have to secure certain business licenses and permits. You have to check federal, state, and local requirements to make sure you do not overlook anything. For local licenses and permits, you can ask the clerk of the city or county where you formed your business. You may also need to acquire a sales tax permit if you are selling taxable products or services. You can get one from the Department of Revenue.
Registered Agent For Your South Dakota LLC
One of the requirements of South Dakota is the appointment of a registered agent. It can either be an individual or an organization that will accept all legal mails on behalf of your LLC.
Here are the state requirements for registered agents:
· Have a street address in the state
· Should be available during business hours
· Basic information of the registered agent has to be accessible to the public
· Should be authorized to transact in South Dakota if it is a company
· Should at least be 18 years old if it is an individual
· Should be a South Dakota resident if it is an individual
Registered agents in South Dakota also serve as the general point of contact for receiving LLC paperwork like business and tax notices, annual report reminders, and other necessary documents from the state and other organizations.
Making The Right Choice
So who can you appoint as a registered agent? South Dakota allows LLCs to choose from three options. First, you can be a registered agent. Second, it can be a friend or a family member. Third, it can be a commercial registered agent.
You have to weigh all of the pros and cons carefully. What option will be advantageous for your company? Which makes you the most comfortable? Some entrepreneurs appoint themselves, friends, or family members to save some money. However, doing this may expose your LLCs to unwanted risks. On the other hand, hiring a company will make you spend a little bit more. But choosing a reliable third-party organization like DoMyLLC can benefit your company in many ways.
You have to make sure the state will always be able to reach your registered agent. If they cannot contact your registered agent, you may end up losing your good status. The state may even administratively dissolve your company.
If a process server also fails to reach your registered agent regarding a lawsuit, a court case may proceed without your knowledge. The worst-case scenario is if a court decides to place a judgment against your company because you were not able to defend your side.
Hiring a company to serve as your registered agent may be a more reliable setup. It also gives you the freedom to manage your time well. You do not have to worry about changing the registered agent in case you move, either.
How DoMyLLC Can Help
A commercial registered agent is a third-party organization specializing in receiving documents and service of process on behalf of South Dakota companies. Aside from this, choosing the right company can give you access to other business compliance solutions. For instance, DoMyLLC has a team of experts that can assist you in preparing, handling, and filing LLC paperwork.
You can benefit as early as the formation process since DoMyLLC also offers business filing services. Additionally, we can provide a personalized solution that will suit your LLC’s needs and circumstances.
What To Do
When starting a business in South Dakota, it is important to choose the right structure. Your decision will have a long-lasting impact on your company’s taxes and your personal liability. It will also determine the process you will have to go through and the paperwork you will have to submit.
The popular structure for many startups is LLC because it provides protection, flexibility, and tax benefits. It is also less complex compared to a corporation. Knowing the necessary documents in forming an LLC in South Dakota can help you handle the process properly. However, consulting a reliable third-party organization like DoMyLLC will allow you to complete the whole ordeal without hassle.
It is also crucial for you to appoint the right registered agent. As the state’s point of contact, your registered agent will have the responsibility of handling legal mails and other documents on behalf of your company.
If you need to hire a commercial registered agent for your South Dakota company, make sure it is someone from a company that can assist you throughout your company’s existence. A good organization will not only serve as a contact person but also support you so you can be sure that your company remains compliant with all state requirements.
If you want to learn more about our services or get started in forming your South Dakota LLC, contact our team at DoMyLLC. We also provide live support to address your queries and concerns.