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How to Start a Business in South Dakota

If you’re looking to start a new business in the state of South Dakota, you’ve come to the right place!

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Showing up on an impressive amount of “top 10 states for business” lists in 2015, South Dakota has earned a reputation for being a pro-business state. South Dakota is the only state in the nation where businesses don’t pay personal income, corporate income, inheritance, business inventory, or personal property taxes. The state also offers tax refunds on sales and use taxes. South Dakota’s business costs are 17% below the national average, the third lowest in the U.S. Mount Rushmore National Park is the prominent tourist attraction, and the state’s residents enjoy a low overall cost of living.

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How to Start a Business

Starting a business can be both exhilarating and challenging. It requires your full attention and energy. It all begins with an idea, an observation that there is a problem and the belief that you have a new solution – or a better one. Allow us to walk you through the steps in this free guide: How to Start A Business.

General resources for starting a business in South Dakota

  • Physical Address
    Secretary of State Capitol Building 500 East Capitol Avenue Ste 204 Pierre, SD 57501-5070

  • South Dakota Tax Forms
    http://dor.sd.gov/forms/

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Fun facts about starting a business in South Dakota

Famous business headquartered in South Dakota Super 8 Motels

Super 8 Motels is the world’s largest budget hotel chain, with hotels in the U.S., Canada, and China. It was founded in 1974 in Aberdeen, South Dakota.

Famous businessperson born in South Dakota Al Neuharth

Al Neuharth (1924-2013) was a businessman, author, and columnist born in Eureka, South Dakota. He was the founder of USA Today and The Freedom Forum.

“Everyone should fail in a big way at least once before reaching forty

Al Neuharth
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Which type of legal structure is best for my business in South Dakota?

At bizHUMM, we strongly recommend you incorporate, but you must consider the tax, legal, and liability implications carefully before deciding on the right legal structure for your business.

Here are 5 helpful steps to determine the best structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of South Dakota.
LLC (Limited Liability Company)
An LLC is a hybrid business organization that combines the pass-through taxation of a sole proprietorship or partnership with the limited liability of a corporation. Each owner of an LLC has limited liability, like a stockholder of a corporation.

Steps to starting an LLC in South Dakota:

  • Step 1 — Choose a name for your LLC.
  • Step 2 — File Articles of Organization.
  • Step 3 — Appoint a Registered Agent.
  • Step 4 — Prepare an Operating Agreement.
  • Step 5 — Comply with any publication requirements.
  • Step 6 — Comply with other tax and regulatory requirements.
  • Step 7 — Annual Report -- not required in South Dakota
  • Step 8 — Register foreign LLCs doing business in South Dakota.

For help forming your LLC in South Dakota we recommend CorpNet (they have fees for their service).

Alternatively, visit the South Dakota Secretary of State website.

Other South Dakota resources for LLCs:

Secretary of State Business Name Database: Search for the availability of your LLC name here.
File your “Reservation of an LLC Name” here.
File your “Articles of Organization” here.
File your Annual Report here.

Registered Agents: Every South Dakota LLC must have an agent for service of process. Search this site for a list of registered agents in the state.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC here. If your LLC has more than one member, you must get an EIN, even if you have no employees.

South Dakota Department of Revenue: If you will have employees or will be selling goods, you’ll need to register with this site.

Sole Proprietorship
A sole proprietorship is a one-person business that is very popular among individual self contractors or business owners. Even though there aren’t complicated start-up requirements for establishing a sole proprietorship, there may be local registration, business license, or permit laws you need to comply with to make your sole proprietorship legitimate. The owner of the sole proprietorship is entitled to all profits, and is responsible for all the business’s debts, losses, and liabilities.

Steps to starting Sole Proprietorship in South Dakota:

  • Step 1 — Choose name for your business.
  • Step 2 — File a fictitious business name with the South Dakota Secretary of State.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Get an Employer Identification Number (EIN).

For help forming your sole proprietorship in South Dakota we recommend CorpNet (they have fees for their service).

Alternatively, you can visit the South Dakota Secretary of State website.

Other South Dakota resources for Sole Proprietorship:

Secretary of State Business Name Search: Search for the availability of your business name here. A sole proprietor may use his or her given name, or an assumed business name.
File your Fictitious Business Name here.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your sole proprietorship here. If you hire employees, you will need an EIN.

South Dakota Department of Revenue: If you will have employees or will be selling goods, you’ll need to register with this site.

Partnership
A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor, or skill. In return, each partner shares in the profits and losses of the business.

Steps to starting Partnership in South Dakota:

  • Step 1 — Choose a business name.
  • Step 2 — File a fictitious business name.
  • Step 3 — Create a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Obtain an Employer Identification Number (EIN).

For help forming your partnership in South Dakota we recommend CorpNet (there are fees for their service).

Or, visit the South Dakota Secretary of State website.

Other South Dakota resources for Partnership:

Secretary of State Business Name Search: Search for the availability of your business name here. A partnership may use the surnames of the individual partners, or a fictitious business name.
File your Fictitious Business Name here.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your partnership here. Partnerships must have an EIN, whether you have employees or not.

South Dakota Department of Revenue: If you will have employees or will be selling goods, you’ll need to register with this site.

S Corporation
With an S corporation (or S corp), income and losses are passed through to shareholders and included on their individual tax returns. As a result, there's just one level of federal tax to pay. The shareholders must report the income or loss on their own individual income tax returns. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.

Steps to starting S Corporation in South Dakota:

  • Step 1 — Name your S corp.
  • Step 2 — File Articles of Incorporation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with South Dakota Annual Report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in South Dakota.

For help forming your S corporation in South Dakota we recommend CorpNet (they have fees for their service).

Alternatively visit the South Dakota Secretary of State website.

Other South Dakota resources for S Corporation:

Secretary of State Business Name Search: Search for the availability of your corporate name here.
File your “Reservation of Corporate Name” here.
File your “Articles of Incorporation” here.
File your Annual Report here.

Registered Agents: Every South Dakota corporation must have an agent for service of process. Search this site for a list of registered agents in the state.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

South Dakota Department of Revenue: Register here to fulfill business tax requirements.

C Corporation
A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed.

Steps to starting C Corporation in South Dakota:

  • Step 1 — Name your corporation.
  • Step 2 — File Articles of Incorporation.
  • Step 3 — Find a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with South Dakota Annual Report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in South Dakota.

For help forming your C corporation in South Dakota we recommend CorpNet (they have fees for their service).

Or, you can visit the South Dakota Secretary of State website.

Other South Dakota resources for C Corporation:

Secretary of State Business Name Search: Search for the availability of your corporate name here.
File your “Reservation of Corporate Name” here.
File your “Articles of Incorporation” here.
File your Annual Report here.

Registered Agents: Every South Dakota corporation must have an agent for service of process. Search this site for a list of registered agents in the state.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

South Dakota Department of Revenue: Register here to fulfill business tax requirements.

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Why choose South Dakota for my business?

  • 1

    CNBC: “America’s Top States for Business” (2015)
    South Dakota ranks #11.

  • 2

    Forbes: “Best States for Business” (2015)
    South Dakota ranks #9. “South Dakota’s business costs are 17% below the national average, the third lowest in the country. Retail, finance, and healthcare make up the primary service industries in the state. In 1981, Citibank established significant operations in South Dakota in order to take advantage of its favorable banking regulations; the company employs more than 3,000 people today in the state.”

  • 3

    Tax Foundation: 2016 State Business Tax Climate Index
    South Dakota ranks #2.

  • 4

    USA Today: “The Best States for Business” (2015)
    South Dakota ranks #4. \“No state had a lower cost of doing business than South Dakota. In particular, the cost incurred from wages was the lowest nationwide, with a statewide average wage of just $36,818 in 2013. While residents have relatively low wages, they also have a generally high quality of life and low cost of living.”

  • 5

    South Dakota Financing and Incentives
    “Whether you already operate a business in South Dakota, are starting up a business in South Dakota, or are looking to expand or relocate here from outside the state, all of our financing programs are designed to help you grow. Professional loan officers and business development specialists are at your disposal to move your company from blueprints and business plans to bricks and mortar.”

  • 6

    South Dakota Tax Incentives
    “We are the only state in the nation where companies don’t pay personal income, corporate income, inheritance, business inventory or personal property taxes. South Dakota also offers tax refunds on sales and use taxes.”

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