Why Incorporate in South Dakota?
The state of South Dakota has a lot to offer including several financing options and incentives for businesses within the state. Provided your corporation meets certain criteria, you may be able to take advantage of these incentives.
For example, the REDI (Revolving Economic and Development Initiative) Fund is South Dakota’s flagship financing tool. This popular fund has been made available to start-up firms, businesses that are expanding or relocating in South Dakota, as well as local economic development corporations.
For many entrepreneurs looking to start a larger business, creating a South Dakota corporation may be the best choice. As a corporation, your business is able to buy and trade stock, and when it comes to excess profits, corporations offer more flexibility than a limited liability company (LLC). A corporation is allowed to pass income and losses to its shareholders, who report taxes on an individual tax return at ordinary levels.
Is an LLC Better Than a Corporation?
It all depends on what your goals are. Limited liability companies are usually better for smaller businesses. An LLC is easier to set up, and it receives many of the same benefits as a corporation, but with less regulation.
Learn more about forming a South Dakota LLC so you can decide which business entity is right for you.
Benefits of Forming a South Dakota C Corp
- The strongest form of liability protection possible by insulating your personal assets and finances from business debts, obligations, damages, bankruptcy or other liabilities
- Several options to create, buy, sell or transfer stock, including publicly
- The ability to issue more than one type of stock
- The ability to raise more funds by issuing more stock
- The ability to sell stock to investors inside and outside the U.S.
Benefits of Forming a South Dakota S Corp
It offers several advantages similar to those provided by a C Corp including, but not limited to:
- Options for creating, transferring and selling stock, though not as many as a C Corp
- The capacity for up to 100 shareholders
- Simpler rules than those applicable to C Corporations
- Easy transfer of ownership simply by selling your stock
- The possibility of saving money by allowing you to pay less self-employment tax
In this guide, you’ll find information on naming your corporation, getting a Registered Agent, the fees you’ll need to pay, business taxes and much more. We also cover what you'll need to register your corporation and how you'll interact with the SD Secretary of State.
Start a Business in South Dakota Checklist
To help you along the way, use our Starting a Business checklist to keep track of everything you need to do to get your business up and running.
How to Form a South Dakota Corporation Yourself in 6 Steps
Step 1 - Choose a Unique Business Name and Complete a State Business Search
Step 2 - Provide an Official Business Address for Your Corporation
Step 3 - Assign a Registered Agent
Step 4 - File Your Articles of Incorporation with the SD Secretary of State
Step 5 - Get an Employer Identification Number (EIN) from the Internal Revenue Service
Step 6 - Write Your Bylaws
1
Choose a Unique Business Name and Complete a State Business Search
Every South Dakota business must have a unique name that hasn't already been claimed by another business in the state. If you can't think of a name, try using our Business Name Generator to gather ideas. You'll also need to follow a few naming rules, which you can read about in detail on the South Dakota Corporation Names page.
Once you’ve landed on a name, you’ll need to make sure it’s available in South Dakota. To learn whether another company in the state is using your preferred business name, use our tool to do a South Dakota entity search.
Alternatively you can carry out a name search on the SD Secretary of State website.
2
Provide an Official Business Address for Your Corporation
Every South Dakota corporation must have a designated address. That could be your residential address (if you’re running the company from your home), a building where your office is located or any physical address of your preference. The address can be outside the state of South Dakota and can be a P.O. Box.
You may also be able to use a virtual mailbox for your business address. Incfile can provide you with a South Dakota virtual mailbox where we'll receive your mail, and scan it for your online review. This can be especially convenient if you run a home-based business and don't want your home address published as part of your business public record.
3
Assign a Registered Agent
Someone who receives official correspondence and is responsible for filing reports with the Secretary of State is known as a Registered Agent. Every South Dakota corporation is required to have a Registered Agent.
You may fill this position yourself, assign another manager in your business or use a Registered Agent service. If your Registered Agent in South Dakota is a person, they must have a physical street address in South Dakota and must be available during business hours to receive important documents on behalf of your company.
You'll appoint your Registered Agent when you file your South Dakota Articles of Incorporation and officially form your corporation with the SD Secretary of State.
All of Incfile’s business formation packages include Registered Agent service. It’s free for the first year and just $119 per year after that. You can also access a digital dashboard to view any document we've received on your behalf.
4
File Your Articles of Incorporation with the SD Secretary of State
Once you've gathered all the information for your corporation, you’ll need to file your Articles of Incorporation with the Secretary of State. This will officially create your business.
Here’s what is typically included:
- Your business name
- Your corporation's purpose
- The corporation’s capital structure (number of shares to be issued, who owns them, pricing, etc.)
- The address of the principal office of the corporation
- Registered Agent's name and address
- The name and address of each incorporator
It is recommended that your Articles of Incorporation be filed online via the Secretary of State's website. You can also print a form and mail it to the Office of the Secretary of State, or Incfile can file it on your behalf. The South Dakota corporation filing fee is $150 if you complete the process online, or $165 if you mail in a paper form.
File by Mail
Secretary of State Office
500 E Capitol Ave
Pierre, SD 57501
You only need to file your SD Articles of Incorporation once, but every year after, you'll also need to file an annual report with the Secretary of State. Incfile can remind you about this every year, or we can do it for you if you have us handle the paperwork.
What are the fees and requirements to incorporate in South Dakota?
| State Fee | State Filing Time | Expedited Filing Time |
| $150* | 3 Weeks | 1 Business Day |
| State Fee | $150* | |
| State Filing Time | 3 Weeks | |
| Expedited Filing Time | 1 Business Day |
*$150 if filed online, $165 if filed via paper form
Annual Report
Frequency
Annually
Due Date
During anniversary month of incorporation.
Filing Fee
$50**$50 if filed online, $65 if filed via paper form
5
Get an Employer Identification Number (EIN) from the Internal Revenue Service
You'll need an EIN to identify your business to the IRS. You'll use this number when filing and paying taxes, when submitting payroll information and payments for your employees and for opening a business bank account. You can obtain one directly from the IRS, or Incfile can get one for you as part of the South Dakota corporation formation process.
6
Write Bylaws
A set of rules that govern how a corporation will be run, bylaws detail how many directors the corporation will have, whether the board of directors will have annual meetings and what the voting requirements are, among other things.
Some states require companies to create bylaws, and South Dakota is one of them. You're not legally required to file them with the state, but you are required to write them and follow them to protect your business from any future changes and events.
South Dakota Corporation Types
C Corporation
When you file to start a corporation, by default, it's a C Corp. This is the choice for large businesses that will trade shares in the stock market.
A South Dakota C Corp will offer you several liability protections, but it will also be required to adhere to numerous strict rules and regulations. It will also likely have a substantial amount of administrative overhead and won't enjoy as many tax advantages as other corporation types.
Learn more about C Corporations.
S Corporation
Technically, an S Corporation isn't a business entity the way LLCs and C Corporations are. It's a tax filing status. An LLC or a C Corporation can be an S Corporation. It's just a matter of filing a form with the IRS.
The main reason to file as an S Corp is to save money on self-employment taxes. To get an idea of how much money you might save, use our S Corp Tax Calculator.
If you want your business to be treated as a South Dakota S Corp, file the IRS Election by a Small Business Corporation form, also known as Form 2553 or an S Corp Election form.
Consult with your tax advisor or accountant to determine whether this is your best option.
Learn more about S Corporations.
Compare S Corp vs. C Corp to learn the benefits and drawbacks of both, and decide which one will best suit your needs.
Professional Corporation
Some states, including South Dakota, allow certain occupations to form Professional Corporations. The state allows specific occupations listed in the South Dakota Codified Laws Title 36 to form a Professional Corporation.
Per South Dakota Codified Laws, Title 36, a few of the professions permitted to form a South Dakota Professional Corporation include, but may not be limited to:
- Physicians
- Chiropractors
- Dentists
- Optometrists
- Podiatrists
- Nurses
- Physical Therapists
- Veterinarians
- Public Accountants
- Psychologists
Check with the SD Secretary of State to confirm whether your business should and can be a Professional Corporation.
Foreign Corporation
If your business operates in another state and you want to expand into South Dakota — or vice versa — you’ll need to form a Foreign Corporation.
Learn more about South Dakota Foreign Corporation registration.
Nonprofit Corporation
Charitable organizations can incorporate as nonprofit corporations. This means all the profits they generate are donated to the organization supported by the charity, minus administrative costs.
A nonprofit corporation is also exempt from federal and state taxes, allowing more of the profit to benefit the charity.
Note: Everything in this guide applies to for-profit corporations, and mostly to C Corps and S Corps. Items listed as requirements for forming a corporation may or may not also apply to nonprofits.
Limited Liability Company
Depending on the type of business you want to form, or your personal circumstances and goals, an LLC may be a better option. For example, you may not need the options to buy and sell stock. Or you may simply want to build a small business with a few employees or even just yourself.
A South Dakota LLC is usually a better option for a smaller business. It's easier to set up, but it still offers you certain advantages you'd get from a corporation. You can even have your LLC treated as an S Corporation for tax purposes to save you money.
Regardless of which direction you decide to go, we can help you with your South Dakota business registration.
Learn more about limited liability companies.
Sole Proprietorship or Partnership
These are the simplest types of businesses to set up. That's because there's no real setup to do. If you don't choose to form a separate business entity, by default, you'll have either a sole proprietorship (just you) or a partnership (you and one or more other people).
Neither of these options provide you with any special benefits or liability protections and can leave your personal assets vulnerable. For these reasons, we don't recommend them.
Compare business entity types to decide which one is best for you.
Helpful Resources from the State of South Dakota
More Information in This Guide
You’ll find plenty more insight and guidance on the other pages of this guide, including:
How to search the state business registry and find the right name. Includes information on naming rules, fictitious names, reserving names and more.
How to appoint, change and search for Registered Agents. Also includes the duties they fulfill and the rules they’re required to follow.
Details the various fees you’ll need to pay, as well as the state and federal requirements you’ll need to meet. Includes details about Employer Identification Numbers (EINs), state and federal business licenses, annual reports and more.
Covers the various taxes you’ll have to pay to the state and federal governments. Includes details about state taxes such as sales and use, and federal taxes such as income and self-employment.
Launch
Your Business with Incfile
No contracts. No surprises.
Only $0 + state fee to launch your business.
Start Now