State Processing Times and Fees
Nearly every state has standard processing times for corporation filings, but not all provide expedited processing. We have the average wait times for both standard and expedited filings from state to state.
South Dakota charges a filing fee for incorporating. Visit “compare pricing” in our incorporation center to see all state fees for South Dakota.
Deciding Between a South Dakota S-Corp and a C-Corp Tax Designation
There are similarities between a South Dakota S Corp and a C Corp regarding personal liability, management, structure and compliance. The differences come down to the following:
- Ownership Rules: A C Corp is taxed as a separate entity. Shareholders must also report and pay taxes on what the corporation pays them. An S Corp is taxed like a partnership with a “pass-through” structure. It's not doubly taxed because the corporation can pass corporate income, losses, deductions and credits to shareholders. Corporate owners pay taxes on their share of the corporation’s profits, but they pay at their individual tax rates.
- Documents: If you want to form a S Corp, you must file IRS Form 2553 to elect this status within 45 days of incorporating. To qualify as an S Corp, your business must be a domestic corporation, provide only one class of shares, have no more than 100 shareholders, and your shareholders can include only individuals, certain trusts and estates.
Every state has its own personnel requirements for incorporating. In South Dakota, they include the following:
- Age requirement: Directors must be at least 18 years old.
- Number of directors: At least one director is required.
- Residency: There is no requirement that directors must live in South Dakota.
- Listing: The names and addresses of initial directors must be listed.
Other Requirements for Your Articles of Incorporation
In addition to personnel requirements, your South Dakota Articles of Incorporation must also include the following
Your corporation must appoint a registered agent. A registered agent is a person or business who receives important tax, government and legal documents for your corporation, including service of process of lawsuits. Your agent must be available during normal business hours. You can act as your own registered agent, but you might want the privacy afforded by retaining an independent registered agent. South Dakota requires that you include your registered agent's name in your Articles of Incorporation. The agent have a physical address in the state. We can help you designate your registered agent when you incorporate with us.
You must also include the following in your Articles of Incorporation in South Dakota:
- The number of shares authorized to be issued.
- The par value of shares, or a statement that they have no par value, if your corporation has only one class of shares.
- Designation of each class of shares, and a statement of the rights and limitations of the shares, if you have more than one class or series of authorized shares.
- The address of your corporate office.
Other Required Paperwork
South Dakota requires that corporations file additional paperwork with their Articles of Incorporation. You must file an annual report during the corporation’s anniversary month.
Guidelines for Your Name
Your corporate name must be unique, and it should should make a statement about your business. Make sure it complies with the following South Dakota requirements:
- Your name should be distinguishable from that of any other registered business in South Dakota. It must end with “Company,” “Corporation,” “Corp.,” “Incorporated,” “Limited,” or an abbreviation of one of these terms. .
- Your name cannot be deceptive. If you're selling farm implements, don't name your company "Mary’s South Dakota Internet Sales."
- Ensure that your name is distinguishable from that of any other existing corporation.
South Dakota Corporate Taxes & Reports
Yes, you do have to pay taxes for your new corporation. Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees require an EIN. An EIN is similar to a Social Security number, but it's for businesses. You will also need an EIN to open a corporate bank account.
The tax structure for an S Corp can be complicated, but these corporations are generally exempt from federal income taxes, so your business can elect to retain its profits as operating capital. A C-Corp provides more flexibility in tax structure, but you'll have additional tax implications, such as double taxation. However, there are ways to minimize your tax obligations.
Keeping Corporate Records and Ongoing Filing Requirements
South Dakota requires that corporations create certain records to maintain corporate status. The most common of these are bylaws and corporate minutes. Bylaws set forth your company’s internal operating rules and procedures. They define the responsibilities of your directors, the rights and powers of your shareholders, and they can address all other corporate matters. You don't have to file your corporation's bylaws with the state, but you'll need them to demonstrate to banks, lending institutions, creditors, the IRS and the courts that your corporation is valid and legitimate. Bylaws also help to establish rules so you can keep your corporate assets and debts separate from your personal ones.
Keeping minutes of your director and shareholder meetings is also required in South Dakota. Your minutes should be maintained at your corporate office along with your other company records. Other records include the names and addresses of the officers and directors, a copy of your Articles of Incorporation and its amendments, and a list of current shareholder. Minutes keep track of all votes on important business decisions and they help secure your corporate status.
We have more detailed information about South Dakota's requirements for bylaws and corporate meeting minutes.
Best of luck with your new South Dakota corporation. We have all the legal documents, filing and tax information you'll need to get started.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.