Starting a company in South Dakota may be accomplished in a number of ways. A limited liability company (LLC), a corporation, or a limited liability partnership all provide personal asset protection. Each structure has both positive and negative qualities. Depending on what you want to accomplish and how much money you have to spend, one kind of business may be ideal for you than another.
Making a Selection for an Entity
A company in South Dakota can be registered easily through an online application if you elect to set up a South Dakota limited liability company, limited liability partnership, or corporation. Any of these formations will allow you to fully enjoy personal asset protection as well as keep you legally compliant and organized.
A South Dakota Limited Liability Company (LLC)
In South Carolina, an LLC is popular as it features pass-through taxation and personal liability protection, thereby making it a business-friendly enterprise. Moreover, you can set up an LLC as an individual, another LLC, a trust or estate, or a corporation. Therefore, this type of entity has plenty of flexibility and few restrictions.
Also, LLC members are not responsible for any obligations beyond what they’ve invested in the business. LLCs may be member-managed or may opt to hire a manager for their company in South Dakota. In these instances, the LLC is defined as being manager-managed.
South Dakota Partnerships
South Dakota partnerships may exercise personal asset protection if they’re set up as limited liability South Dakota partnerships. Therefore, a domestic LLC may be established when it has two or more members. Members of a limited liability partnership must still pay partnership taxes by filing IRS Form 1065.
South Dakota Corporations
Members of South Dakota corporations are shareholders who are not responsible for the company’s debts. However, they are responsible for electing the company’s board of directors. They also share in the company’s profits and are taxed on those profits. Even as employees, they are subject to taxes, even if they earn an income in the form of dividends or distributions instead of wages.
Setting Up a Corporation or Limited Liability Company in South Dakota
You’ll need to take the following steps when setting up a corporation, or limited liability company in South Dakota. Registering your business will not only save your personal assets from lawsuits, but it will also establish your professional credibility. This is easily done by submitting an application form online.
- Get a unique name for your firm. Go through the Secretary of State (SOS) business search website for South Dakota to obtain a unique business name.
- Retain the services of a registered agent–a person or firm–that is allowed to submit and receive business legal documents for you during normal business hours.
- Choose a Board of Directors, if you plan to incorporate.
- File Articles of Incorporation to form your corporation.
- File Articles of Organization to create your South Dakota LLC.
- Write an Operating Agreement for your LLC so any internal difficulties can be resolved easily.
- Draft Your Corporate Bylaws (when establishing a corporation), which is similar to the LLC Operating Agreement. This document will be kept in-house and will be used to create your policies and procedures. South Dakota requires that South Dakota corporations draft Bylaws. The document should include a clear statement of purpose, the names of the corporate founders, and each of their responsibilities.
- Obtain an Employer Identification Number or EIN to pay your employees and open a business bank account.
- Open a business bank account and set up an accounting system.
- Make sure you have the proper licenses and permits.
Creating a Business Plan for Your Company in South Dakota
To organize yourself as a business, you’ll need a plan of action called a business plan. You can follow the formats offered on the Small Business Administration (SBA) website.
You’ll need to create sections that include an Executive Summary, Company Description, and Market Research and Analysis.
The Executive Summary will allow you to describe the goal of your business and provide details about finances and growth ideas.
The Company Description is designed to discuss how your business will benefit customers and answer their problems reliability and quickly. You can also add the names of company professionals and the location of your company.
The Market Research section will show how you’ll address the market and manage the marketplace.
By creating an LLC, corporation, or limited liability partnership, you can further explain, in your plan, how you’ll use the entity to operate successfully.
If you wish to stay ahead of other competitors, you have to show you mean business. You can form a company in South Dakota more easily by asking for assistance when forming your company.
Call the Corporation Center to Launch Your Business in South Dakota Today
Call the Corporation Center at (800) 580-4870 to begin a successful company in South Dakota today. Fill out the online application to begin the process now.