When an LLC or Limited Liability Company is established in South Dakota, an LLC operating agreement can be used for a new company to create and enforce business policies agreed upon by all owning parties. In order for it to be a legal company, there must be documentation on file with the Secretary of State’s office.
It is important to understand what this document entails, its legality, and how to move forward with one in South Dakota. Below are the laws surrounding LLCs in South Dakota and what your steps are moving forward.
Is an LLC Operating Agreement Required in South Dakota?
South Dakota does not require an LLC operating agreement in order for any business to start in the state. Although it is not required, there are some consequences of not having one as a business owner. With an LLC operating agreement, you and any partners you have with the business will have certain responsibilities outlined, operations that are essential to the business, and rights as owners.
If you do decide to move forward with developing an LLC operating agreement for the business, it is critical that everyone signing and agreeing to the document understands the terms and language that is included in the document. Not having an understanding of what is outlined can make for some unwanted surprises should the business have issues that require it to refer to the operating agreement.
South Dakota Operating Agreement Laws
In South Dakota, the operating agreement law of Section 47-34A-103 offers any resident who wants to start a business in the state the opportunity to enact an operating agreement when there are partners or as a sole owner. LLC operating agreements reduce the arguments and settle outcomes between business partners which is why it is highly encouraged in the state. This law also states that while you may have an oral operating agreement, it cannot be enforced under the law unless there is a written statement with all signatures present.
How Much Does it Cost to Form an LLC in South Dakota?
The cost for filing an LLC in South Dakota is $150 in its initial submission. If you are not a resident of South Dakota but want to start a business within the state, your fee is $750. It can be easily submitted online to the South Dakota Secretary of State’s office. After the first year, there is an annual filing fee of $50 for each LLC through
How to form an LLC in South Dakota?
If you are ready to move forward with filing your LLC operating agreement in South Dakota, follow the steps below.
Step 1 – Name Search Your Business for Availability
While you may like the current business name you have, you need to check the system and search to make sure it is not already being used by another business. If you submit an LLC application with a name that is the same or too similar, it will be rejected. If your business name is already being used somewhere in the state, speak with any partners you have and update your documentation to include the new business name that is available.
Ensure you business name meets the state requirements: it must contain the words ‘Limited Liability Company’ or ‘Limited Company’, or the abbreviations ‘L.L.C.’, ‘LLC’, ‘LC’, or ‘L.C’. The word ‘Limited’ may be ‘Ltd.’ and the word ‘Company’ may be ‘Co’.
Step 2 – Identify Your Registered Agent
A registered agent is someone in your company that is elected to be the accepting party of any legal documents regarding your LLC. These documents could be tax information, subpoenas, and court summons.
Your registered agent must meet all the following requirements:
- Be an adult at or above the age of 18
- An individual that resides with a legal address in the state of South Dakota
- Be a registered business with an active business license in South Dakota
Step 3 – Complete the LLC Application for South Dakota
If you are forming the LLC within the state, meaning you are a resident, then you will choose the Domestic LLC Articles of Organization. You can then choose to send this in through mail or submit online.
If you are not a resident and want to start a business within South Dakota, you will need to complete the Foreign LLC Certificate of Authority. Again, choose between mail or submitting the document online.
Step 4 – Pay Your Fee
Depending on whether you are filing as domestic or foreign, you will need to pay the $150 or $750 at this time. If you are paying by mail, make sure to include an additional $15 for a processing fee. The address is below:
Secretary of State Office
500 E Capitol Ave
Pierre SD 57501
Step 5 – Create Your LLC Agreement
You can use a free document template to create your LLC agreement or have one drawn up with your legal representation. In that document, you need to include all information that underlined, filling in what works for your business and is agreed upon by all the partners. This will save you money since you do not need a lawyer to create this document.
South Dakota LLC Operating Agreement Template
Use the below template to help you create your South Dakota LLC operating agreement:
LLC Operating Agreeement