How to start a South Dakota corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your South Dakota corporation.

How to start a corporation in South Dakota

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your South Dakota corporation

Your corporation’s name should be unique and 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.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a South Dakota S-Corp and 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, however, 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 an 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.

3. Appoint directors and shareholders for your South Dakota corporation

Each state has its own personnel requirements for incorporating. In South Dakota, at least one director is required. The names and addresses of initial directors must be listed on your Articles of Incorporation. There is no requirement that directors must live in South Dakota but directors must be at least 18 years old.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a South Dakota address) or choose one to do that service for you (if you are not located in South Dakota or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of South Dakota

Once you have a business name and registered agent, you can register your business as a South Dakota corporation with the state by filing your Articles of Incorporation. This document may be referred to in other states as "Certificate of Organization," "Certificate of Filing," or "Articles of Organization."

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.

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in South Dakota must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your South Dakota corporation.

What to do after incorporating in South Dakota

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 shareholders. 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.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in South Dakota means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in South Dakota, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, it’s required to keep records – like Bylaws and Meeting Notes – to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state