Form a S-Corp in South Dakota
Everything you need to know about forming a S-Corp in South Dakota. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Corporate Name
Select a unique business name that includes a corporate designator such as 'Corporation,' 'Incorporated,' 'Corp.,' or 'Inc.' Search the South Dakota Secretary of State business name database to confirm availability.
30 minutes
Appoint a Registered Agent
Designate a registered agent with a physical street address in South Dakota who is available during normal business hours to receive legal and official documents on behalf of the corporation.
15-30 minutes
File Articles of Incorporation
File the Articles of Incorporation with the South Dakota Secretary of State online, by mail, or in person, paying the $150 filing fee. The articles must include the corporate name, registered agent details, number of authorized shares, and incorporator information.
30-60 minutes
Appoint Directors and Hold Organizational Meeting
Appoint the initial board of directors and hold an organizational meeting to adopt bylaws, issue shares of stock, and establish corporate structure. Bylaws are not filed with the state but are an essential internal governance document.
1-2 hours
What's Next After Filing
Once your S-Corp is officially formed, you'll want to complete these important steps:
- •Obtain an EIN from the IRS — Apply for a federal Employer Identification Number (EIN) through the IRS website at no cost. The EIN is required for tax filings, opening a business bank account, and making the S-Corp election.
- •File IRS Form 2553 for S-Corp Election — Submit IRS Form 2553 to elect S-Corporation tax status. The form must be filed no later than two months and 15 days after the beginning of the tax year in which the election is to take effect, and all shareholders must sign.
- •Register for State Taxes and Licenses — Register with the South Dakota Department of Revenue for any applicable state taxes such as sales tax or use tax. Obtain any required local or industry-specific business licenses or permits to legally operate in South Dakota.
Advantages
- ✓South Dakota has no state corporate income tax, personal income tax, or franchise tax, allowing S-Corp shareholders to retain more earnings.
- ✓Pass-through taxation at the federal level avoids double taxation, with profits and losses reported on shareholders' personal tax returns.
- ✓Shareholders who are active in the business may reduce self-employment tax by splitting income between reasonable salary and distributions.
- ✓South Dakota has minimal regulatory burden and low annual compliance costs, with a simple $50 annual report requirement and no complex state tax filings.
Considerations
- •S-Corporation status comes with strict IRS eligibility requirements: limited to 100 shareholders, only one class of stock allowed, and shareholders must be U.S. citizens or permanent residents.
- •More administrative complexity than a sole proprietorship or LLC, including requirements to hold regular director and shareholder meetings and maintain detailed corporate records.
- •The IRS requires S-Corp shareholder-employees to receive a 'reasonable salary,' which is subject to payroll taxes, adding payroll administration costs and responsibilities.
Annual Obligations
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