CobaltProsper

How to start an LLC in South Dakota

By Brent Chudoba, editor Updated

Forming an LLC in South Dakota costs $150 to file the Articles of Organization with the South Dakota Secretary of State. After that you file an annual report of $55. South Dakota charges no franchise tax on a standard LLC. Online Articles of Organization filing is $150; paper filing is $165 (a $15 paper surcharge). The annual report is $55 online but $70 by paper (also a $15 surcharge). Registered agent must be a South Dakota resident with a physical street address in South Dakota; a PO Box alone is not permitted.

How much does it cost to start an LLC in South Dakota?

South Dakota LLC costs (reviewed August 29, 2026)
ItemCost
Filing fee (Articles of Organization)$150
Annual report$55/year
Franchise or business taxNone
Registered agentRequired

Source: South Dakota Secretary of State, fee schedule reviewed August 29, 2026.

What are the steps to form an LLC in South Dakota?

  1. Name your LLC. Pick a name that is available and meets South Dakota naming rules, then check it against the Secretary of State's business database.
  2. Appoint a registered agent. South Dakota requires a registered agent with a physical in-state address to receive legal mail. You can be your own agent, or hire a service.
  3. File the Articles of Organization. Submit it to the South Dakota Secretary of State and pay the $150 fee. This is the step that legally creates the LLC.
  4. Get an EIN from the IRS. It is free and takes minutes. Do not pay a service for it. See how to get an EIN free from the IRS.
  5. Calendar your annual report. South Dakota charges $55 to keep the LLC in good standing. Missing it risks penalties or administrative dissolution.
  6. Open a business bank account. Keep business money separate from personal money so your liability protection holds up.

Does South Dakota have a franchise tax on an LLC?

No. No general franchise tax on LLCs. South Dakota only imposes a narrow bank franchise tax on financial institutions (SDCL 10-43), confirmed via the SD Dept. of Revenue's dedicated Bank Franchise Tax page, this applies only to chartered banks, savings and loans, and production credit associations, not ordinary LLCs.

How is an LLC taxed in South Dakota?

By default, an LLC is a pass-through entity: it pays no income tax itself, and the profits flow to the owners' personal returns. South Dakota has no state individual income tax, so those pass-through profits face no state income tax, only federal tax. That is one reason South Dakota is a popular state to form in.

An LLC can also elect to be taxed as an S-corp, which changes how owners pay self-employment tax. See LLC vs S-corp vs sole proprietorship and how self-employment tax works.

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