How to form an LLC in South Dakota

The current fee schedule lists $150 for online formation or $165 by paper. The annual report is $55 online or $70 by paper and is first due on the first day of the anniversary month in the following year.

Online filings through SD SOS Enterprise approve in 1–2 business days. Mail filings take 5–7 business days.

Yes. South Dakota has no personal income tax, no corporate income tax, and no franchise tax. This is one of the most favorable state-tax climates in the U.S. — comparable to Wyoming, Texas, Florida, Tennessee, and a few other states. The trade-offs are higher sales tax and a moderate annual report fee.

South Dakota has some of the most permissive trust laws in the world. Dynasty trusts can last forever (no rule against perpetuities), trust assets are highly protected from creditors, and there's no state income tax on trust income. This makes South Dakota a popular jurisdiction for sophisticated estate planning, often involving LLCs as trust assets. For most small businesses, this is irrelevant — but for high-net-worth families, the SD Trust + LLC combination is a major planning tool.

No franchise tax of any kind. SD is one of only a handful of states with no income tax AND no franchise tax — making it one of the most owner-friendly tax environments in the U.S.

It is due each year on the first day of the LLC's anniversary month. The current fee is $55 online or $70 by paper. The entity becomes delinquent two months after the due date, when the current additional late fee is $55.

Yes. SD has no residency requirement for LLC members or managers. You only need an SD-based registered agent. Out-of-state owners commonly use a commercial registered agent service.

For SD residents: yes — the no-income-tax + no-franchise-tax combination is exceptional. For asset-protection or estate-planning purposes (the "South Dakota Trust" structure), it's among the best in the world. For solo founders without an SD presence, your home state will likely require you to register as a foreign LLC anyway, eliminating the SD tax savings — and SD's foreign-LLC qualification fee of $750 is one of the highest in the U.S.

South Dakota is one of the few states with no corporate or personal state income tax, which means your LLC's profits pass through to members without any state-level income tax bite. Members still owe federal self-employment tax on their share of earnings, and if your LLC does business in other states, those states may tax the income sourced there. South Dakota also has no franchise tax or gross receipts tax on LLCs, making it one of the most tax-friendly states for small business owners. You will still need to collect and remit South Dakota sales tax at a rate of 4.2% if your LLC sells taxable goods or services in the state.

Yes, non-residents and foreign nationals can freely form an LLC in South Dakota — there is no requirement that any member or manager reside in the state. You will need to appoint a registered agent with a physical South Dakota address, which out-of-state owners typically satisfy by hiring a commercial registered agent service. If your LLC actively conducts business in your home state or any other state, you will also need to foreign qualify that entity there by filing an Application for Certificate of Authority and paying that state's fees. South Dakota's $150 filing fee and business-friendly laws attract many non-residents who want a low-cost domestic LLC structure.

To dissolve a South Dakota LLC, you file Articles of Dissolution with the South Dakota Secretary of State, either online through the SD OneStop portal or by mail, along with a $10 filing fee. Before filing, your LLC should settle all outstanding debts, notify creditors, liquidate assets, and distribute remaining funds to members per your operating agreement. The Secretary of State's office processes dissolution filings and, once approved, the entity is officially terminated in the state's records. You should also cancel any local business licenses, close your EIN with the IRS by filing a final tax return, and notify the South Dakota Department of Revenue if your LLC collected sales tax.

South Dakota does not issue a general statewide business license for LLCs, but certain regulated industries require specific state licenses — for example, contractors need a license from the South Dakota Contractor's Licensing Board, and professionals such as accountants or cosmetologists must be licensed through their respective state boards. If your LLC sells taxable products or services, you must register with the South Dakota Department of Revenue to obtain a sales tax license, which carries a one-time $30 application fee. Local municipalities like Sioux Falls or Rapid City may also require a local business license or permit, so check with your city or county clerk's office. Operating without required licenses can result in fines, so confirm all applicable requirements before you open for business.

South Dakota law does not require LLCs to have a written operating agreement, but the state strongly recommends one and courts will rely on it to resolve member disputes if one exists. An operating agreement spells out ownership percentages, how profits and losses are divided, member voting rights, rules for adding or removing members, and procedures for dissolving the company. Without one, your LLC defaults to South Dakota's standard LLC statutes under SDCL Title 47A, which may not reflect how you actually intend to run the business. Even for single-member LLCs, having a signed operating agreement reinforces the separation between you and the business, which helps protect your personal assets if liability is ever challenged.