What Is a South Dakota LLC Operating Agreement?
A South Dakota LLC operating agreement explains how your LLC will run and how members will make decisions. It can cover who manages the business, what rights members have, and how members and managers work together (SD Codified L § 47-34A-103).
South Dakota law allows operating agreements to be written or oral. A written agreement is still the better choice. It gives members one place to review the rules for ownership, voting, profit sharing, and daily management.
The agreement can work for single-member and multi-member LLCs. It can also include changes and updates, so members can revise the rules as the business grows (SD Codified L § 47-34A-101(1)).
Notarizing a South Dakota LLC Operating Agreement
A South Dakota LLC operating agreement is valid without notarization. However, you can have the signers’ signatures notarized for extra confirmation. Use Legal Templates’ notary acknowledgment form to complete this step.
Is an Operating Agreement Required in South Dakota?
South Dakota doesn’t require an operating agreement to form an LLC. To start one, you file articles of organization with the Secretary of State. The LLC usually starts when the state files those articles, unless the filing lists a later start date (SD Codified L § 47-34A-202.1).
Still, an operating agreement is worth having. It lets members decide how the LLC will run, including who manages it, how decisions are made, and how members work together. Without those rules, South Dakota’s default LLC laws will apply instead (SD Codified L § 47-34A-103.1).
A written agreement can also help members:
- Keep the LLC separate from its owners: A written agreement helps show that the business stands on its own.
- Make bank and loan requests easier: Banks and lenders may ask for an operating agreement to review the company’s structure.
- Plan for the future: The agreement can explain how members will handle changes that may affect the LLC over time.
For most LLCs, putting the agreement in writing is a smart early step. It gives members a practical document they can return to as the business grows.
South Dakota’s freedom of contract rule gives LLC members room to set their own operating agreement terms. A written agreement lets you create many of your LLC’s rules instead of relying on South Dakota’s default laws (SD Codified L § 47-34A-114).
South Dakota LLC Requirements You Should Know
When you create a South Dakota LLC operating agreement, keep these state rules in mind:
- LLCs can be member-managed or manager-managed. South Dakota LLCs can be run by members or by appointed managers (SD Codified L § 47-34A-404.1). In a member-managed LLC, each member usually has a role in management unless the agreement says otherwise. In a manager-managed LLC, managers usually handle daily business decisions.
- Some major decisions need every member’s approval by default. These may include changing the operating agreement, adding a new member, closing the LLC, or selling most of the company’s property. If members need to update the agreement later, they can use an LLC operating agreement amendment.
- Profits are split equally unless the agreement says otherwise. South Dakota’s default rule divides profits and other distributions equally among members unless the operating agreement sets a different plan (SD Codified Laws § 47-34A-405).
South Dakota law fills in the gaps when an agreement leaves out a key issue. A written agreement gives members more control, so they do not have to rely on default rules for major decisions. Legal Templates helps you write out your LLC’s management structure, voting rules, and profit-sharing terms.
If an official LLC filing says one thing and the operating agreement says another, the operating agreement usually controls for members, former members, transferees, and managers (SD Codified L § 47-34A-103.1).
Sample South Dakota LLC Operating Agreement
View a sample South Dakota LLC operating agreement to see how the document is usually structured. Then customize and download your template in Word and PDF.
