From the entity name itself, an LLC will give you, your shareholders and your board of directors limited liability. When you incorporate your business, it becomes a separate and independent entity so you will be absolved from being accountable for any problem like lawsuits and debt issues in the future.
Personal assets and properties are well protected under the law so financial institutions and creditors will not be able to run after you. This kind of protection is not characterized by businesses operating under sole proprietorship or general partnership.
Tax benefits and tax savings are two very important reasons why most entrepreneurs incorporate as an LLC. It is highly flexible that you will be given the option how you want your business to be taxed: as a single member LLC, Partners in an LLC or an LLC filing as a corporation.
For more details, you can consult your South Dakota attorney; he will explain to you the terms and conditions for every LLC type.
Apart from flexible tax policies, a South Dakota LLC also has a flexible organizational structure. Within company owners, you can discuss how the management structure of your LLC is to be formed. You are not required by the law to follow any rule when it comes to forming your corporate structure.
A South Dakota LLC can be operated by a single person, by the owners or through hired managers. As long as it’s not illegal, you are allowed to manage your business in whatever way you like.
When it comes to state-imposed requirements, LLC’s have very few. This is also one of the reasons why entrepreneur would opt to form an LLC rather than a corporation. Lesser annual requirements and lesser ongoing formalities means less hassle so it is definitely conducive for business owners.
Your business reputation is one of the most important things that you have to take care of if you want to stay long in this industry.
The only way to develop your business reputation is to work hard in establishing your credibility. Incorporating your business as an LLC makes you a legal entity authorized by the state to conduct business; you become legitimate and clients and business professionals will respect and trust you.
Based on experience, I know how it is to form a South Dakota LLC – it can really be tough! To make your life as easy as possible, you can follow this 5-step guide to ease the burden of completing the entire process.
There are two guidelines that you must follow when naming your South Dakota LLC. First, you have to include one of the following words or abbreviations after your business name: Limited Liability Company, Limited Company, LLC, L.L.C., LC or L.C. Second, it should be distinguishable from other existing business names.
Check for availability by using the South Dakota Secretary of State’s business name search tool. You can also reserve your business name for 120 days by filing an Application for Reservation of Name before the South Dakota Secretary of State. The filing fee is $25.
A registered agent plays a big role in your South Dakota small business, thus, you have to designate the right one. The main function of your agent is to receive pertinent documents on your business’s behalf. She/he is also in charge of sifting, forwarding and notifying you of important paperwork and mails.
Your agent can be a resident or a business authorized to conduct business within South Dakota. He should willingly accept the responsibility as your agent and he should have a physical address where documents are delivered. Here’s a list of registered agents in South Dakota.
To legally form your South Dakota LLC, you must file your Articles of Organization before the Secretary of State Department. Some of the information that will be asked of you include your:
You can submit your form through postal mail along with a $150 filing fee.
The EIN is one of the highly used requirements when starting a business. It is used when hiring employees, opening a business bank account, filing for income tax returns and a lot of other business transactions.
Your EIN is important because it is the IRS’ way of monitoring your taxes and business activities. Get your EIN now at IRS website for free.
An Operating Agreement is not required in South Dakota but you have to realize how important it is to have one considering how flexible an LLC is. You basically have the freedom when it comes to taxes, management structure, ownership status and even your requirements and paperwork.
With this flexibility comes the risk of developing misunderstandings and conflicts thus the need for an operating agreement. The latter is a legal document that outlines your ownership and operating procedures as well as your financial and working relationships with other owners. By having this kind of outline, you are making sure that everyone stays on the same page.
Before you start operating your South Dakota LLC, you need to make sure that you comply with these supplementary requirements.
Writing a business plan is not a mandatory requirements when starting an LLC in South Dakota, but it will help you immensely if you have one.
A business plan is not only a guide that will increase your chances of long term success, it is also a powerful tool that can save you from unexpected turns and rough roads. To help you get started in writing your business, here are some useful resources that you can use.
Paying federal and state taxes is part of the deal when you start an LLC in South Dakota. Failing to comply with this requirement will result in negative consequences; you can be fined or sanctioned or your LLC status may totally be revoked.
To avoid problems, you have to understand South Dakota tax regulations and requirements. For further information, you can visit the South Dakota Department of Revenue – Business Tax Division website.
Businesses in South Dakota have to adhere to the standards set by the state so they can start and operate their business in the state.
Business licenses and permits are different from state to state and from business to business so you need to inquire in the right offices first before you start complying.
Recommended Resource: For professional assistance to compile your licenses you can use this business research license package. You can also checkout the SBA’s roundup resources.
This guide is not meant to replace any advice given by your legal team or lawyer. If you want to learn more specific information or things not discussed in this guide, you can directly address them to your lawyer.