How to Form a Nonprofit in South Dakota

Two people forming a nonprofit in South Dakota

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Before You Begin

Consider Getting a 501(c)(3)

To form a nonprofit corporation in South Dakota, follow the steps below. It is also advisable for your South Dakota nonprofit to obtain a 501(c)(3) status from the IRS, as this will enable federal tax exemption for your South Dakota nonprofit corporation. Learn more about 501(c)(3) nonprofits here.

To start a 501(c)(3) nonprofit corporation in South Dakota you must:

  1. Form a nonprofit corporation according to the rules of the state
  2. Apply for 501(c)(3) tax-exempt status with the IRS

You will need the following documents:

Forming a Nonprofit in South Dakota is easy, just follow these 4 steps:

Step 1: Select a Name for Your South Dakota Nonprofit

The name you select for your nonprofit will establish its brand. It is the first thing most people will learn about your organization. It is important to pick a name that both aligns with your mission and follows the rules of naming in South Dakota.

To learn more, read our How to Name a Nonprofit in South Dakota guide.

Nonprofit Naming Guidelines

  • The name of you pick for your organization must:
    • Be distinguishable from other businesses operating in South Dakota.
    • Not imply your organization’s purpose is different than what is spelled out in the articles of incorporation.
  • The name need not include an organizational designation, such as “Inc.”, “Ltd.”, “Incorporated”, or “Company”
  • You can read the South Dakota Legislature's official guidelines for the complete rules on naming a South Dakota-based organization.

Is the Name Available?

The name of your nonprofit must be distinct from that of any other corporation in South Dakota. Use the Business Information Search to make sure the name you have selected has not already been taken.

Is the Website Domain Name Available?

If you plan to have a website for your organization, you will want to make sure that a suitable URL is currently available on GoDaddy.

You may want to buy any URLs you are interested in, to make sure they are available when you are ready to finalize and create your website.

Find a Domain Now

Service provided by GoDaddy.com

After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

Step 2: Appoint a South Dakota Registered Agent

A nonprofit corporation in South Dakota is required to have a registered agent with a South Dakota address.

What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business' point of contact with the state.

Who can be a Registered Agent? A registered agent must be a resident of South Dakota or a corporation, such as a registered agent service, authorized to transact business in South Dakota. You may elect an individual within the company including yourself.

Incfile provides the first year of registered agent service free with nonprofit formation ($49 + State Fees)

Step 3: Select Your Board Members and Officers

The directors of a nonprofit are responsible for overseeing the operations of the organization. come together to form a board.

Features of directors:

  • All the directors of an organization together form the board of directors.
  • The power and influence of the directors over the organization is as the board of directors, the directors do not have authority as individuals.
  • The board typically creates the policies that govern the nonprofit. The board of directors also oversee management-level hiring like that of the officers.

The officers of a nonprofit (such as the president or the secretary) are individuals with responsibilities, and the authority to execute based on their job descriptions.

Together, the officers and the board will come together to make up the organizational structure of your nonprofit.

An officer may also be on the board of directors and serve both roles if allowed to do so by the organizational bylaws created by your team.

The organization structure of your nonprofit in South Dakota MUST include:

  • At least 3 directors not related to each other
  • A president
  • A vice president
  • A secretary
  • A treasurer

NOTE: The president and secretary positions cannot be held by the same person.

To learn more, read our guide on how to select board members for your nonprofit.

Step 4: File the South Dakota Articles of Incorporation

To become a nonprofit corporation in South Dakota you must file the Articles of Incorporation - Domestic Nonprofit Corporation.

Here are the sections that you will need to complete.

Article 1: Entity Name
Enter the name you selected in Step 1.

Article 1A: Purpose
Describe the purpose of your nonprofit organization.

In order to qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:

  • Charitable
  • Religious
  • Scientific
  • Literary
  • Testing for public safety
  • Fostering national/international amateur sports competition
  • Preventing cruelty to animals/children

NOTE: You can read the IRS guidelines here.

Article 2: Period of Existence
Most organizations are started with no end date in mind.

Your nonprofit’s period of duration will be considered perpetual unless you check the appropriate box to indicate if your nonprofit will cease to exist on a specific date.

Article 3: Membership
Select the appropriate box depending on whether or not your nonprofit corporation plans to have members.

Article 4: Principal Office
Provide the complete address of the principal office of your nonprofit.

Article 5: Registered Agent & Registered Office
The registered agent can be any entity registered to do business in South Dakota or any person who is a resident of the state. Your organization cannot act as its own registered agent.

Any person you designate as the registered agent must have already explicitly consented to act as the registered agent for your organization even though you do not need to include proof of consent with your articles of incorporation.

Enter the information of the registered agent you selected in Step 2.

Article 6: Incorporator(s)
The incorporator is the person who completes, signs, and submits the articles of incorporation. This person does not need to be a part of your organization. This can be you or a lawyer helping you with the process of formation. Enter the name and street address of each incorporator.

Article 7: Initial Board of Directors
At least 3 directors will need to be named and you will need to provide a street address for each director named.

Enter the information of the directors selected in Step 3.

Article 8: Classification of Members
If your nonprofit will have different classifications of members, provide details in this section.

Article 9: Election of Director
If the nonprofit’s directors will not be elected or appointed by its members, provide details about how they will be elected or appointed.

Article 10: Supplemental Provisions/Information
Use this section of the articles of formation to formally state what the assets of the organization will be used for, and what will happen to the assets if the organization is dissolved.

To be eligible for 501(c)(3) status, you must convince the IRS that the organization’s assets will always only be used for the purposes approved under 501(c)(3) rules. To this end, you must include provisions ensuring that in the event your organization is dissolved, the assets of the organization will be used towards tax-exempt purposes.

Section 5 of this sample document provides an example of these provisions required for 501(c)(3) eligibility.

Execution
When you sign and date the form you are affirming everything written in the form. You are also affirming that the registered agent listed has already consented to be the registered agent for this nonprofit organization.

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You must submit your Articles of Incorporation by mail.

The filing fee is $30.

  • Checks and money orders must be made payable to the "Secretary of State"

Submit two copies of the Articles of Incorporation - the original plus a copy - to the address found below:

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Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501

Nonprofit Formation FAQ

How long does it take to process the Articles of Incorporation?

It can take anywhere from 3-7 business days to process your Articles of Incorporation.

How do I contact the Secretary of State for more information?

You can call for information at (605) 773-4845 or visit them at their website.

Nonprofit Operating Procedures and Housekeeping

Draft Bylaws and Conflict Of Interest Policy

There are two documents that will be central to the running of your nonprofit:

Bylaws: These are the rules that determine how your organization will be governed and run.

You can think about it as a constitution for your nonprofit. It makes the rules and priorities clear for everyone involved.

In your bylaws be sure to include:

  • How the nonprofit will be governed – the role of directors and officers
  • How meetings are held, voting procedures, electing officers or directors.
  • How records will be kept and managed
  • How disputes will be handled
  • How bylaws will be added amended in the future

NOTE: Keep in mind that the bylaws will supplement any rules set forth by the federal government or the state.

Ready to get started? Check out these bylaws templates which you can customize to suit the needs of your organization.

The Conflict of Interest Policy: These are the rules set to ensure that decisions being made for the nonprofit are based on what is best for the organization, and not being motivated by what is best for individuals.

Under Appendix A the IRS provides a sample Conflict of Interest Policy.

NOTE: You will want to have both these documents drafted before for your first organizational meeting

Conduct An Organizational Meeting

An organizational meeting is the first official meeting of your nonprofit! Some of the things that are discussed in a typical organizational meeting:

  • Taking attendance to show you have a quorum (minimum number needed)
  • Appointing temporary officers, chairmen, secretary, etc.
  • Adoption of the bylaws
  • Adoption of conflict of interest policy

Don’t forget to record “minutes” of the meeting and have it signed by all attending directors. Here are some corporate minutes templates to help you get the ball rolling.

NOTE: This meeting must occur before your organization can apply for 501(c)(3) federal tax exempt status.

Get An EIN

An EIN or Employment Identification Number (also called a Federal Tax Identification Number or Federal Employment Identification Number), is used to uniquely identify a business entity. You can think of the EIN as a social security number for your nonprofit.

The EIN is required for your organization whether or not it will have any employees.

The EIN will be used for things like:

  • Filing for 501(c)(3) status
  • Opening a bank account
  • Applying for tax-exempt status
  • Submitting tax returns

Once your nonprofit is formed, you can apply for an EIN for your nonprofit via Form SS-4. If you use a nonprofit formation service, EIN assistance might already be included in the package.

NOTE: After obtaining your EIN, you will need to access the South Dakota Department of Revenue’s website to determine if you need to register for any state-level tax accounts.

Open a Business Bank Account

You will typically need to take with you the following items to open a bank account for your nonprofit:

  1. The EIN for the nonprofit
  2. A copy of the nonprofit’s bylaws
  3. A copy of the Articles of Incorporation

If your nonprofit has several directors or officers, some banks may also ask for proof that you are authorized to open the account on behalf of the nonprofit.

There are many great options when it comes to picking a bank. Here are the reviews of the top 5 business bank accounts we recommend.

NOTE: It is always best to call ahead. Your bank may require some additional documents.

Start a Corporate Records Book (Optional)

As a nonprofit corporation, your organization will need to keep track of many important documents. This includes documents such as:

  • Articles of Incorporation
  • EIN
  • Tax forms
  • Nonprofit bylaws
  • Meeting minutes

We recommend starting a dedicated corporate records book early so that as you start receiving these critical legal documents, they can be kept organized from the very beginning.

While you can keep track of everything using supplies from any office store, it may be easier to use a pre-assembled kit that has the things you need in one place. Blumberg and Bindertek have some options specifically designed to meet the needs of nonprofit corporations.

How to Apply for Tax Exemptions

For tax exemptions, your nonprofit organization can apply to

  1. the IRS to be exempt from federal taxes, and
  2. the South Dakota Department of Revenue for exemption from state sales taxes.

Applying for Exemption from Federal Taxes - 501(c)(3) Status

Before your nonprofit can apply for 501(c)(3) status it must:

  1. File the Articles of Formation with the required provisions (As covered in Step 4, Sections 1A & 10)
  2. Adopt the bylaws and the conflict of interest policy
  3. Have an EIN number

In order to file for tax-exempt status, most organizations will need to file Form 1023 online or by mail (fee: $600).

There are two exceptions:

  1. If your organization’s annual gross receipts are below $50,000 then you may be able to file Form 1023-EZ (fee: $275). Check your eligibility here.
  2. If your organization is a religious institution or has annual gross receipts in each taxable year of no more than $5,000 you may be considered tax-exempt without filing Form 1023. Religious institutions and organizations with gross receipts under $5,000 can still choose to file Form 1023. This would give them a determination letter that specifies that contributions to the organization are tax-deductible.

Applying for Exemption from State Taxes

South Dakota does not collect corporate income taxes.

Your nonprofit can apply for a sales tax exemption through the South Dakota Department of Revenue by filling out this form.

Learn more about how is eligible to apply for a sales tax exemption through this guidance published by the Department of Revenue.

Nonprofit Tax FAQ

When should an organization apply for federal tax exemption?

Form 1023/1023-EZ must be filed within 27 months from the end of the first month your organization was created.

How long will it take for the IRS to process Form 1023/1023-EZ?

Soon after sending your application you should receive an acknowledgment of receipt of your application.

If your application is simple and complete, IRS will send your determination letter within:

  • 90 days for Form 1023-EZ
  • 180 days for Form 1023

If you have not heard from them by that time you can call 877-829-5500 to enquire about your application.

Protect Your Nonprofit

Get Business Insurance

As with any other business, there may be risks involved in running the nonprofit. Getting insurance for your nonprofit allows you to focus on your passion while minimizing your liability.

Here are some of the common types of insurance you may want to consider for your organization:

  • General Liability Coverage
  • Directors and Officers Coverage
  • Social Service Professional Coverage

Your coverage needs will vary based on your organization and the work you do.

Properly Sign Legal Documents

There will be times when you will be signing a document on behalf of your nonprofit. It is important that these times are easily distinguishable from when you are signing a document as an individual. If a document isn’t properly signed, you might suddenly find yourself personally responsible for something the organization should have been liable for.

To avoid such confusion we recommend you and all the members of your organization follow the following format:

  • The official name of your nonprofit
  • Your signature
  • Your full legal name
  • Your position in the organization

How To Keep Your Nonprofit Compliant

Get A Registered Agent

Nonprofits that have incorporated are required to maintain a registered agent with an office address in South Dakota.

If the agent or the office address changes, you must file a Statement of Change with the Secretary of State to effect a change to the articles of incorporation. This form can be submitted online or via mail. Paper forms can be mailed to the address found below:

Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501

For more information, you can call the Secretary of State at (605) 773-4845 or email them at corpinfo@state.sd.us.

File Required Periodic Reports

The Secretary of State requires nonprofits to submit an annual report, due yearly by the first day of the registration anniversary month. Annual reports can be completed online or submitted via mail. Paper forms can be mailed to the address found below:

Secretary of State
State Capitol
500 E. Capitol
Pierre, SD 57501

Filing Fee: $10

For more information, you can call the Secretary of State at (605) 773-3537 or visit them at their website.

Determine South Dakota Business Permits and Licenses

As a nonprofit in the state of South Dakota, your organization will not need a general business license. You should check with your city/county to determine if there are any local licenses you will need to obtain.

If your nonprofit plans to conduct charitable gaming of any kind (bingo, raffles, etc.), read this information provided by the South Dakota Office of the Attorney General - Office of Consumer Protection.

For more information, you can call the Secretary of State at (605) 773-3537 OR call the Attorney General's Office - Division of Consumer Protection at 1 (800) 300-1986.

Fundraising

If your nonprofit is a charity, it will not be required to register as a charitable organization at the state level.

Your city/county may have specific requirements for charities who will solicit charitable contributions and you should check with them before proceeding.

Employees

If your organization will have employees you must register with the South Dakota Department of Labor & Regulation - Unemployment Insurance Tax Unit.

You can easily register online or fill out the Form 1 application and submit it by mail. Printed forms can be mailed to the address found below:

South Dakota Department of Labor and Regulation
Unemployment Insurance Division
P.O. Box 4730
Aberdeen, SD 57402

For more information, you can contact the Unemployment Insurance Tax Unit at (605) 626-2312, email them, or visit them at their website.

Public Inspection Rules for 501(c)(3) Organizations

Organizations that have been granted the 501(c)(3) status are required to disclose the following documents to the public when requested:

  • Annual returns for 3 years after the due date (this includes returns like Form 990, 990-EZ, 990-PF, and any Forms 990-T)
  • All Form 990 Schedules (except portions of Schedule B), attachments and supporting documents.
  • Application of exemption and all supporting documents such as Form 1023
  • The official paperwork from the IRS that shows that your organization has tax-exempt status.

The following do NOT need to be shared with the public

  • Portions of Schedule B of Form 990/990-EZ that identify the contributors. ( You only need to disclose the amount contributed and the nature of the contributions)
  • Any unfavorable rulings such as an earlier denial of tax-exempt status.
  • Any information the IRS has said you can withhold. This may include things like sensitive patents and trade secrets.

Documentation FAQ:

How long do I have to produce these documents if requested?
Ideally within the same day. If your organization doesn’t have an office or maintains limited hours during parts of the year, the information should be made available within two weeks.

Do I need to provide copies of the documents?
If someone asks for copies in person or in writing you must provide them with copies.

Can I charge for copies?
You can charge a reasonable amount for making copies of the documents requested.

NOTE: It may be easiest to have the documents available on your website so that anyone who requests copies can be sent to the site. This allows you to stay compliant without having to spend a lot of time dealing with document requests.

Annual Returns for Tax-Exempt Organizations

Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Click here for a list of exceptions).

Which form you should use to file the annual returns depend on the annual gross receipt amounts for your organization.

‘Gross receipt’ is defined by the IRS as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses”

  • For gross receipts < $50,000 --- File 990-N
  • Gross receipts <$200,000 and total assets <$500,000 --- File 990-EZ
  • Gross receipts > $200,000 or Total assets > $500,00 --- File 990

For any questions, you can call the IRS at

  1. (800) 829-3676 (Form-related questions)
  2. (800) 829-1040 (General information)

When is form 990 due?

You have a little over 4 months after your taxable year comes to an end to file Form 990. It is due on the 15th day of the 5th month. So if your taxable year ends on Dec 31st, your form 990 is due on May 15th.

NOTE: If your organization fails to file form 990 for 3 consecutive years, it will automatically lose its tax-exempt status.

Report Unrelated Business Income

If your organization has a gross income of >$1000 from a trade or business that is not related to the stated purpose of the organization, then it must file Form 990-T to pay tax on that income.

If you expect to pay $500 or more for the year in taxes on unrelated business income, your organization must pay a quarterly estimated tax on the unrelated business income using Form 990-W.

State of South Dakota Nonprofit Quicklinks