The first step to form your South Dakota Nonprofit is to come up with a unique and distinct name. To check for the availability of your chosen business name, you can use the business name search tool provided by the South Dakota Secretary of State.
You can also call them personally if you want. Reserve your business name in 120 days by submitting an application before the Secretary of State.
In South Dakota you need to have a total of atleast three incorporators and one director to form your nonprofit. They should be residents of the state and atleast 18 years of age to be appointed.
The name and address of your incorporators and directors should be in your articles of incorporation.
A nonprofit in South Dakota is still considered a business and it is a mandatory requirement for businesses to designate and maintain a registered agent all throughout the entire course of their operations.
Your South Dakota Registered Agent will receive and sort out documents on your nonprofit’s behalf. A registered agent service can cost you $160 every year, but it’s totally free if you incorporate your Nonprofit with IncFile.
Your South Dakota Nonprofit is legally formed by filing a certificate of incorporation before the South Dakota Secretary of State. Prepare the following information before filling out the form:
A 501(c)(3) tax-exempt status is not granted by the state of South Dakota automatically so you have to file an application before the Internal Revenue Service. Some of the languages that you must include are the following:
To understand the IRS requirements for tax exemption further, you can check out the IRS Publication 557, Tax-Exempt Status for Your Organization on the IRS website.
Also called the organizational meeting, the first meeting of the board of directors marks the beginning of your South Dakota Nonprofit. In this meeting, you must decide on the following agenda:
Make sure that you prepare the minutes of the meeting; your board of directors should also sign it. For safekeeping, it should be kept in your Corporate Records Books.
Having a Corporate Records Book or a Corporate Records Binder is not a requirement but it is definitely useful to have one for your nonprofit.
Your Corporate Records Book is a place where you’ll be able to keep your paperwork and important documents so it is essential that you have one. Purchase your Corporate Records Book at the local office supply store or place an order through Amazon.
An Employer Identification Number (EIN) is a 9-series identification number that enables the IRS to keep a close eye on your state taxes and activities.
The EIN is used for a variety of purposes, so you have to obtain one before launching your nonprofit. You can get it at the IRS website for free.
A business bank account is essential because even if you’re not doing business, all proceeds of your nonprofit should still be separated from your personal money. To fulfill your mission as a nonprofit, you must be able to handle your finances well. Look for a trusted bank within your area open a bank account for your nonprofit once and for all.
Recommended Resource: Take a look at this roundup to help you determine which kind of business bank account is best for you.
A tax exempt status is granted by the federal and South Dakota government if you apply for it. To start the process, follow the steps below.
The Form 1023 or the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code is the first requirement that you must obtain to be given a tax exempt status. It is a comprehensive form that will ask you the following information: nonprofit history, nonprofit finances, organizational structure, nonprofit policies and planned activities. After filling out the form, send it in this address:
Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192
If you qualify as a small nonprofit (income in a year less than $50,000 and assets of lower than $250,000), you can file for the Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code instead. Unlike the Form 1023, it’s easier to complete because it’s simpler. Prepare a filing fee of $850 for the form 1023 and $400 for IRS Form 1023-EZ.
In South Dakota, corporate income tax does not exist. However, your nonprofit can qualify for other exemptions like state taxes, sales, use and property taxes. To learn about this further, you can visit the South Dakota Department of Revenue for further information.
Unlike other states which requires nonprofits to register before conducting fund-raising activities, South Dakota is more lenient allowing you to carry on with your nonprofit activities without registering or complying with requirements.
Complying with South Dakota licenses is a mandatory requirement regardless of your entity type so nonprofits are not exempted from this. By obtaining the necessary licenses and permits for your nonprofit, you adhere to the standards set by the state.
Recommended Resource: Business licenses vary based on a number of factors. For professional assistance on compiling your licenses, here is a great package that you can use. Otherwise check out this resource roundup prepared by the SBA.
Starting a South Dakota nonprofit is a noble thing to begin with and I congratulate you on this milestone. However, before you celebrate, you must complete the following requirements for the good of your South Dakota nonprofit.
Writing a business plan for your South Dakota nonprofit is not a mandatory requirement but it’s highly suggested that you create one to make sure that you are able to achieve your goals in a organized manner.
Even if you’re not doing business, a business plan is still a powerful tool that will give you direction and open opportunities for financing.
A business website is highly useful if you’re operating a nonprofit. By creating one, you will be able to let everyone know of your goals and mission. You can encourage more people to participate and take part in what you’re trying to achieve.
WordPress is a great website building tool that allows you to build and customize in just minutes. Another excellent tool is Bluehost which features a one click WordPress installation tool and a customer support service.
Resource for Getting Started: Start building your website with the use of this step-by-step guide to assist you.
The article is only an informational/instructional guide and should not be considered a legal advice or a legal document. If you have any questions on the legalities of starting a nonprofit in South Dakota, you should consult your lawyer for professional legal advice.