South Dakota LLC costs: summary
| Item | Cost |
|---|---|
| State filing fee (Articles of Organization) | $150 (online) |
| Annual report | $55 online ($70 by mail) |
| DBA Fee | $10 |
| Name reservation fee | $25 |
| Paper filing fee (by mail) | $15 |
There’s no denying the fact that starting a business in South Dakota comes with multiple costs. These costs can make you put off doing vital tasks, such as forming your LLC and turning your sole proprietorship into a formal business entity. Fortunately, the cost of creating an LLC is affordable, and you’ll find that it’s worth paying for as it shields you from liabilities among other benefits.
You have two options when it comes to forming an LLC: do it yourself, or use an LLC formation service like Tailor Brands. If you do it yourself, you have to pay close attention to the details of generating the paperwork that’s required to form an LLC. Either way, you’ll pay the state filing fee.
Regardless of your preference for how you file your paperwork to form your South Dakota LLC, you need to know the costs of the LLC formation process, and when you need to pay fees. Read on to learn more about how much you can expect to spend on creating an LLC in South Dakota.
General steps and costs when forming a South Dakota LLC
The overall cost to form your South Dakota LLC is relatively low, as is the fee for the annual report. There are very few steps involved with the filing, and little in the way of associated fees. If you file by mail a document that can be filed online, the state adds a $15 paper filing fee.
Here are the steps involved in forming your LLC, and the cost of each step.
Naming your South Dakota LLC
The first step towards forming your LLC is to perform a South Dakota business search on the Secretary of State’s corporate database. This is to ensure that your business name isn’t already in use by another business, and is distinguishable from other businesses. The search itself is free, but you can pay to reserve your business name and file a doing business as (DBA).
- A business name can be reserved by filling out the form titled Application for Reservation of Name (Limited Liability Company) and paying a fee of $25. A name reservation lasts 120 days.
- You can register a DBA (fictitious business name) online with the Secretary of State or on paper with a county register of deeds. It costs $10 and must be renewed every five years.
Total cost of naming your LLC: $0 to $35
Filing Articles of Organization
The articles of organization are the papers you submit to the SoS to legally form your LLC. Once the SoS accepts your articles of organization, you can move forward as an LLC and begin operating according to your operating agreement. The filing fee is $150 online.
By mail, the cost of filing the articles of organization is $165 (which includes a $15 paper filing fee).
Total cost of filing the articles of organization: $150 ($165 by mail)
Appointing a registered agent
A South Dakota registered agent is required by the state and must be listed in the Articles of Organization. Your registered agent can be you or another person or business with a South Dakota street address (not a P.O. box), or a commercial registered agent listed with the Secretary of State. In practice, someone needs to be available at that address to accept legal papers and state notices when they’re delivered.
In the event you prefer to retain a registered agent service, registered agent services typically cost $50–$300 per year. Tailor Brands’ registered agent service is $199 per year. Utilizing a registered agent service gives you personal privacy and keeps you in compliance with state laws. You’ll have to ask yourself if the cost of the service makes sense, but the benefits can be worth paying for.
Estimated cost for a registered agent: $0–$300 per year
Creating an operating agreement
South Dakota doesn’t require LLCs to have an operating agreement, and state law allows it to be written or oral, but a written one is highly recommended as you work on forming your LLC. It’s considered an internal document that’s legally binding as to the operation and dissolution of the LLC.
Some of the clauses that go into an operating agreement include:
- Members and their titles
- Management duties
- Voting rights and shares
- Investment amounts
- Handling membership changes
- Distribution of profits
- Dissolution
The cost of creating an operating agreement ranges anywhere from $0 to $1,000. How much you pay depends on who does the work of drafting the agreement. You can use a generic operating agreement template and fill it out yourself after reviewing the clauses, you can hire a service, or you can use a lawyer.
Creating the agreement by yourself is the cheapest option, but it may not have the specificity and correct language you need for it to hold up in court. Working with a service results in getting an operating agreement that’s tailored to your specific needs. For a complex operating agreement, a lawyer is the best option to ensure that the resulting document is in line with the needs of your LLC.
Estimated cost of an operating agreement: $0 to $1,000
Other annual and additional South Dakota LLC costs
There is a South Dakota LLC annual report fee for filing. All other fees are optional, and include a $15 fee to file paper forms by mail, certified copies of business documents ($15 plus $2 per page), and expedited processing ($50) to file and receive paperwork in less time.
Franchise tax
A franchise tax is imposed on certain types of businesses for the privilege of operating within the state. South Dakota’s franchise tax applies only to banks and other financial institutions and is based on net income, so it doesn’t apply to most LLCs.
Business licenses & permits
Governments at the local, state, and federal levels may require businesses to obtain licenses and/or permits to operate legally. Some businesses engage in activities that are closely monitored by the relevant agencies, and getting permits and licenses shows that your business is operating in compliance with the law.
Some of the more common permits and licenses needed in South Dakota include:
- Liquor license
- Building permits
- Business license
- Certificate of occupancy
- Contractor licenses
- Daycare license
The costs of these permits and licenses vary from location to location. It’s best to set aside a fund that is more than adequate to cover the costs as they arise. Alternatively, you can look up the cost of the permits and licenses that you need online and estimate how much money you’ll need.
Clerks at the local and county level will help you get permits and licenses that you need for the legal operation of your business. If you sell taxable goods or services, you’ll need a sales tax license from the South Dakota Department of Revenue. The state sales tax rate is 4.2%, plus any municipal tax.
Annual report
The annual report is a document that tells the state that your business is still in operation, and has been in compliance with laws and regulations over the past year. South Dakota LLCs are required to file the annual report in order to stay in good standing with the state and carry on with their business as usual. The annual report is filed each year in your LLC’s anniversary month. For example, if you form your LLC in May 2026, your first annual report is due in May 2027. Starting January 1, 2027 (HB 1102), an LLC can also choose to file by January 31 each year instead.
To file your annual report, you need to go to the File an Annual Report page and follow the instructions. Enter the required information into the online forms, pay the $55 fee by debit or credit card, and submit. You’ll receive a notification that your annual report was accepted and your LLC is in good standing.
The annual report has to be filed in the anniversary month. If you file late, the state adds a $55 late fee. If your report is more than 60 days late, the Secretary of State can administratively dissolve your LLC.
Estimated cost of an annual report: $55 to $125
What expenses you can write off
The costs associated with forming an LLC in South Dakota are tax-deductible at the federal level. You can generally deduct your state filing fee ($150 online or $165 by mail) and your $55 annual report fee going forward. These are considered business expenses, and as such, can be used to reduce your tax liability.
Some of the fees and costs you can write off include:
- State filing fees
- Fees for having a third party write the operating agreement
- DBA fee
- Business name registration fee
- Registered agent fee
- Permits and licenses
- Attorney fees
Make sure to check with a tax professional about the validity of these deductions. Most of the time, these deductions are allowable, but tax laws change every year. What was once allowed for a deduction may not be allowed for the current tax year. A tax professional can also help you identify other deductions you can take to reduce your tax liability.
South Dakota LLC state fees
The following fees are for domestic and foreign LLC, as detailed in the South Dakota Secretary of State’s site:
| Form/Service | Fee |
|---|---|
| Domestic Articles of Organization | $150 online, $165 paper filing |
| Foreign Certificate of Authority | $750 online, $765 paper filing |
| Annual Report | $55 online, $70 paper filing |
| Late annual report fee | $55 |
| Expedited processing | $50 |
| Amended or Restated Domestic Articles | $60 |
| Amended Foreign Certificate of Authority | $750 |
| Articles of Termination | $10 |
| Articles of Merger | $60 |
| Statement of Dissociation | $10 |
| Statement of Change of Registered Agent and/or Address | $10 |
| Reservation of Name | $25 |
| Application for Registered Name (foreign, non-qualifying) | $25 per year |
| Application for Renewal of Registered Name (between Oct-Dec) | $15 per year |
| Reinstatement Domestic (plus delinquent reports and fees) | $150 + fees |
| LLC Master Series Articles of Organization (Domestic) | $200 |
| LLC Master Series Certificate of Authority (Foreign) | $800 |
Conclusion
Starting an LLC in South Dakota is relatively inexpensive, giving it a low barrier to entry. You may find that you spend more on obtaining permits and licenses for your business than you do to submit your articles of organization. The fact you can write the fees off on your federal taxes adds another reason why starting an LLC is a good idea.
Ultimately, an LLC protects your personal assets from legal liability, and gives you a legal division between your business and your personal life. The costs associated with forming a South Dakota LLC are low in comparison to the protection it provides for you and your family. You get the opportunity to start your dream business free from worry that you’ll lose everything to a lawsuit, and can instead focus on making your dreams come true.
FAQ
You’re not strictly required to file your LLC online, but there’s a $15 paper filing fee for documents you could have filed online, so filing your articles of organization online saves money.
You should reserve your business name so you can claim it later. Otherwise, you’re taking a chance that someone else will come up with the same name and take it before you have a chance to file your articles of organization. A reservation lasts 120 days. This helps you claim ownership of the name in the event someone tries to dispute it in the future.
If you’re unsure of how to form an LLC, or want to avoid mistakes, you can get help from a business service that can guide you through the process. Oftentimes, these services offer registered agent services and can also maintain a filing calendar for annual reports, permit and license renewals, and more. They take care of these and other administrative tasks so you can focus on running your business.