If you want to start and run a South Dakota limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for South Dakota LLCs.
The State of South Dakota requires you to file an annual report for your LLC. You can mail in the report or complete it online through the Secretary of State website. You can download a blank report form from the SOS website. Only a few pieces of information, such as your LLC's name and state-issued ID number, the address of its principal office, the name and street address of its registered agent, and the names and addresses of the LLC's managers (if the business isn't member-managed), are required to complete the report.
The annual report must be filed each year by the first day of the second month following the month in which the LLC was created. The filing fee is $50. You should receive a notice from the SOS at least 30 days before an annual report is due.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members.
South Dakota is one of only a very few states that does not have a personal income tax or a corporation income tax. Consequently, for most LLCs, including those that may have elected to be taxed as corporations, no state income taxes are due. Moreover, because South Dakota also doesn't have a personal income tax, LLC members generally will owe no state tax on income they earn from a South Dakota LLC.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, South Dakota employers also may have to pay taxes to the state.
More specifically, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through South Dakota's Department of Labor and Regulation (DLR). You can register for these taxes online or by mail using DLR Form 1. Then, each quarter, use DLR Form 21 to report on wages and pay the UI taxes. For more information, check the DLR website.
If your LLC will sell goods to customers in South Dakota, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online. After you've registered, you'll be sent a sales tax license. Then, on a periodic basis, you must submit sales tax returns to the DOR. You can download a blank sales tax return from the DOR website. For more information, check the DOR website.
If you will be doing business in states other than South Dakota, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in South Dakota, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.