A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.

Here are the steps you need to take to form an LLC in South Dakota. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.

1. Choose a Name for Your LLC

Under South Dakota law, an LLC name 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 abbreviated as "Ltd." and the word "Company" may be abbreviated as "Co."

Your LLC's name must be distinguishable from the names of other business entities already on file with the South Dakota Secretary of State. Names may be checked for availability at the South Dakota Secretary of State business name database.

You may reserve a name for 120 days by filing an Application for Reservation of Name with the South Dakota Secretary of State. The reservation must be filed by mail.

2. Appoint a Registered Agent

Every South Dakota LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC's behalf if it is sued. The registered agent may be an South Dakota resident or a business entity authorized to do business in South Dakota. The registered agent must have a physical street address in South Dakota. A list of registered agents is available at the Secretary of State website.

3. File Articles of Organization

A South Dakota LLC is created by filing Articles of Organization with the Secretary of State. The articles must include:

• the LLC's name
• the LLC's purpose (optional)
• the LLC's office address
• the name and address of the LLC's registered agent
• the name and address of each of the LLC's organizers
• the LLC's duration, if not perpetual
• whether the LLC will be member-managed or manager-managed
• if the LLC is manager-managed, the managers' names and addresses
• whether one or more members will be liable for the LLC's debts, and
• the signature of the LLC's organizer.

The articles may be filed online or by postal mail.

4. Prepare an Operating Agreement

An LLC operating agreement is not required in South Dakota, but is highly advisable. The Operating Agreement is the primary document that establishes the rights, powers, duties, liabilities, and obligations of the members. The Operating Agreement is purely an internal document and is not filed with the Secretary of State. If an existing or newly created LLC does not adopt an operating agreement, its existing articles of organization, bylaws or operating agreement, and/or its member control or limited liability company agreement will collectively become its operating agreement.

5. Obtain an EIN

If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.

6. File Annual Reports

All South Dakota LLCs and foreign LLCs authorized to do business in the state must file an Annual Report with the South Dakota Secretary of State. The first annual report must be filed before the first day of the second month of the year following the year in which the LLC was authorized to transact business. Subsequent annual reports must be filed by the same date each subsequent year. The Secretary of State's office will mail a reminder to the LLC registered agent's address on file prior to the filing month. The annual report may be filed online or by postal mail.