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Business Information & Rankings

• Ranked 3rd for Best Corporate Business Climate (Pollina Corporate Real Estate, 2005)
• Ranked 1st for Best State Business Tax Climate (Tax Foundation, 2005)
• Ranked 1st for Entrepreneurial Friendliness (Small Business Survival Foundation, 2004)
• Ranked 50th for Cost of Doing Business Index (Milken Institute, 2005) ? has the lowest cost of doing business than any other state.

Cost of Living Index

Crime Rate

South Dakota has the second lowest crime rate in the U.S. (FBI, 2003)

Fees & Taxes

Business Inventory Tax
South Dakota does not tax business inventories.

Income and Franchise Tax
South Dakota has long held the position that if you earn money, you should be allowed to keep it. Therefore, the state does not tax corporate or personal income. Additionally, the state does not impose a corporate franchise tax.

Municipal Sales Tax
Approximately 53% of the cities/towns in South Dakota have a tax that is in addition to the state sales tax. The amount of the municipal tax varies from city to city.

Personal Property Tax
South Dakota has not taxed personal property since 1979. The only property tax you must pay is local taxes on real property, land and buildings.

Real Property Taxes
Local real property taxes in South Dakota vary from 1 ? 4% of the actual value of the structure, with most rates falling between 2-3% percent. However, five-year property tax abatements are available on new structures or additions to existing ones.

State Sales and Use Tax
Base rate: 4%
Machinery rate: 4%

A tax refund (sales, use, and contractor?s excise taxes) is available for new and expanding businesses with project costs exceeding $10 million. A refund of retail sales and service tax, use tax, and contractor?s excise taxes is also available for taxes attributed to the construction of a new business or expanded facility constructed for the processing of agricultural commodity, product or by-product. The project costs must be a minimum of $4.5 million.

Unemployment Insurance
South Dakota has the second lowest unemployment rate in the nation. The new employers’ rate is 1.9% for the first year and 1.7% for the second year.
Special Licenses, Permits and Registrations

A special license or registration at the city, county, or state level may be needed depending upon the type of business you will operate.

A report by Wall Street 24/7 has revealed that South Dakota is indeed the 2nd most pro-business state in the nation. Does that mean incorporation in South Dakota is a good decision? The fact is that SD has much more to offer than just the business climate. Its economic conditions are strong and showing positive growth, there is a high availability of skilled and dedicated workforce, there are opportunities for expansion in technology and innovation, and there is no dearth of business support programs like the rural entrepreneurship support program – Dakota Rising!

Why Choose South Dakota for Incorporation?

The Mount Rushmore State is home to several industries that play a key role in driving the economy with agriculture, tourism, durable goods manufacturing, health care, food processing, and oil and natural gas being the top industries. One of the reasons why a large number of company incorporation in South Dakota take place is because of the advantages or benefits both small and medium sized businesses derives.

Now let’s take a look at some of the salient benefits that are responsible for fuelling growth of small businesses:

Financial Support Incentive Programs

If you are planning to set up company in South Dakota, financial support and guidance towards starting up your new business are two areas that you don’t have to worry about. The Governor’s Office of Economic Development (GOED) has implemented several programs that provide the much needed financial support in the form of loans and grants. Some of the popular programs include:

• Revolving Economic Development & Initiative (REDI) Fund
• Economic Development Finance Authority (EDFA)
• SBA 504
• South Dakota Microloan/ Microloan Express
• South Dakota Works
• South Dakota Jobs Program
• Dakota Seeds
• Workforce Development Program

Know More about these Programs

South Dakota Opportunity Zones (SDOZ)

There are 25 designated opportunity zones in the state of South Dakota and these include 23 low-income communities as well as 2 non low-income contiguous tracts. The good news is that business incorporation in South Dakota OZ can provide you with tax breaks like no other. If you make any investments within the opportunity zones and it is held for 10 years or more, then your investments will be free of capital gains taxes. List of Opportunity Zones

How do you incorporate in South Dakota?

What is the process of incorporation in South Dakota? What type of documentation is required? These are some of the common questions that you will be confronted with if you are planning to start a new business in the state. The following steps will enable understanding of the entire process:

Business Type

The first step towards incorporation in South Dakota is choosing the type of business you want to form. The different types of business structures that you can form in the Mount Rushmore State include Business Corporation (C & S Corporation), Non-Profit Corporation, Limited Liability Company (LLC), Limited Partnership (LP), Limited Liability Partnership (LLP), Co-operative, and Business Trusts.

The type of business entity you want to form can be either domestic or foreign. The forms and fee will be different for each type of entity.

Company name

What is the next step towards company incorporation in South Dakota? The next step is to identify and reserve a name and this can be done as follows:

1. Naming Requirements: According to SD Codified L § 47-34A-105 (through 2011) for LLC and SD Codified L § 47-1A-401 to 47-1A-401.2 for corporation, a business name should contain the words “corporation”, “incorporated”, “limited liability company” or abbreviations like “corp.”, “inc.”, “ltd.”, “L.L.C.”, ”Ltd., ” or similar abbreviation.
2. Business name search: You need to search for a business name that is not in use currently. You can conduct a name availability search here.
3. Name Reservation: Once you have identified a business entity name, you will have to reserve the name pursuant to SD Codified L § 47-34A-106 (through 2011) for LLC and SD Codified L § 47-1A-402 (2014) for corporations as a part of the process of incorporation in South Dakota. You can reserve the name for a period of 120 days with the office of the South Dakota Secretary of State.
4. Name Registration: If your business is a foreign entity then name registration is required pursuant to SD Codified L § 47-34A-107 (through 2011) for LLC and SD Codified L § 47-1A-403 (2014) for business corporations.

Choose a Registered Agent

Whether you form a corporation or an LLC business entity, in order to transact business in the state of South Dakota, you will have to maintain a registered agent pursuant to 2011 South Dakota Code, Title 59 – Agency, Chapter 11. Model Registered Agents Act §59-11-6.

We are one of the respected registered agents in South Dakota and will be responsible towards initiating incorporation in South Dakota through processing of your Articles of Organization and Certificate of Authority for LLCs and Articles of Incorporation and Certificate of Authority for business corporations.

Articles of Incorporation and Certificate of Authority

You will be required to file “Articles of Incorporation” pursuant to SD Codified L § 47-1A-203 (2014), if your business is a domestic corporation. You will have to file a “Certificate for Authority” pursuant to SD Codified L § 47-1A-921.3 (2014), if it is a foreign business entity. In order to streamline the process of incorporation in South Dakota, we can file documents on your behalf through the online process or through an expedited process.

Date Stamped Copies

As a part of the process of company incorporation in South Dakota, we will ensure, you receive date-stamped and filed copies that verifies that the state has filed as well as formed your corporation.

Costs and Fees associated with South Dakota Incorporation

What would it cost to set up a company in South Dakota? Check Fees here!

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The Mount Rushmore State requires every new business registering in South Dakota to obtain a business license from the state, city or county in order to become operational. A business may require a license or even a permit while some businesses may not require any license at all.

Regulatory business licenses in South Dakota and permits are issued by different state agencies. It is important to note that if you fail to license your business as per requirement then it can most certainly lead to penalties. Most of the state licenses are issued by the following state agencies:

• South Dakota Animal Industry Board
• Department of Environment and Natural Resources
• Department of Agriculture
• Department of Game, Fish and Parks
• Department of Labor & Regulation
• Department of Health
• Department of Public Safety
• Department of Social Services
• Department of Revenue
• Department of Transportation

The question is how to begin the process?

Step-by-Step Guide to a Business License in South Dakota

Where and how do you apply for a South Dakota company license? Does your business entity require multiple permits or licenses? Does your business require a license or a permit? The only way to answer these questions is through an understanding of the process of business licensing.

Here is a step-by-step approach towards acquiring a business license in the state of South Dakota:

Step#1: The Industry or Business Type

How would you know what type of business or professional license is required to operate in South Dakota? The type of industry or the activities of a business entity helps in identifying the type of business license required.

Let’s take a look at some examples to understand this better:

Auction Agency – Livestock

According to the provisions of Chapter 40-15 of the South Dakota Code of Law, a Livestock Auction Agency will have to apply for a business license in order to conduct their business in the state.

• License is issued by: South Dakota Animal Industry Board
• License Fee: $100

License Application Form

Some of the other business activities for which the South Dakota Animal Industry Board issues a license include Livestock Dealers, Meat Plant, and Rendering Plant among others.

Food Service

You will require a South Dakota company license if you are planning to start a business in the food service industry. The different types of businesses that fall under this category include Food Service Establishments, Temporary Food Services or food being served at temporary events, Mobile Food Services, Catering, Drive-in or Carry-out, Limited Menu Mobile Food, and Convenience Store.

• License is issued by: South Dakota Department of health
• Fee: The fee is dependent on the type of food service. For instance, the fee for a restaurant will depend on the seating capacity. You can also choose to apply for a full year fee (January 1 – December 31) or a half yearly fee (July 1 – December 31).

A restaurant with a seating capacity of 51-100 seats will require a business license fee of $230 annually while the fee for a Mobile Food Service and Limited Menu Mobile Food will be $88 annually. There will also be an initial license fee of $100 for all types of food services.

Sample Application

Step#2: Licenses issued by City/County

It is important to know that a business license in South Dakota is not always issued by the state agencies; sometimes they are issued by the city or county. Let’s look at an example to understand this:

If you are planning to set up business in the City of Sioux Falls, SD then you will have to apply for a license with the agency under which your business falls under. For example Family Daycare and Pest Control Agencies are regulated by the Sioux Falls Health Department – Environmental. According to the Zoning Department, Day Cares are classified as:

• Day Care Facility
• Day Care, Home
• Day Care, Family
• Day Care, Center

Similarly, if you were in the business of “Food Selling and Food Processing”, a permit will be issued instead of a business license by the Health Department of the City of Sioux Falls.

The permit would be valid from January 1 through December 31 and you will have to apply for renewal of the permit prior to December 31.

The annual permit fee is $181 although it can vary depending on the total square footage area.

Know More about License Information

Step#3: Issuance of a Business License

A business license in South Dakota will be issued by different state agencies and all you have to do is to complete the following process:

1. Identify the type of business or industry
2. Identify whether you need a license or a permit or both
3. Identify whether it will be issued by the state or the city or county

Once you have identified the above, all you need to do is either download the application online or contact the concerned state department or city agency or clerk office.

It is important to note that a business license or permit will have to be renewed annually unless specific dates have been mentioned, to keep the business operational.

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Whether you are planning to incorporate a startup company South Dakota or expand an existing company, it is important to know that the Mount Rushmore State has much more to offer in terms of advantages and benefits for a variety of businesses. It is home to big corporations and large enterprises including Avera Health, Regional Health, Black Hills, Daktronics, NorthWestern Energy, First PREMIER Bank, and Raven Industries among others. There are several industries and each industry has its own set of regulations and business incentives. Although, agriculture with a $20 billion impact on state economy is the largest industry there are other sectors also doing well. For instance advanced manufacturing, financial services, bioscience, and tourism.

Drivers of Business Growth for Start-ups

If you want to take advantage of the various incentive programs offered in the state, you will need to register a new company in South Dakota. You can form different types of companies although the most common are Limited Liability Companies and Corporations. Let’s take a look at some of the advantages of these two business entities:

Advantage#1: The benefits of Incorporation or LLC formation

C or S Corporation

• South Dakota Tax Incentives: If you register a new company in South Dakota then you will be able to benefit from the variety of tax incentives available. South Dakota businesses can enjoy a definite competitive edge over businesses based in other states in the nation. You can benefit from the following tax advantages:
  – No corporate income tax
  – No personal property tax
  – No personal income tax
  – No inheritance tax
  – No business inventory tax
  Apart from this, there are several other forms of tax credits and incentives that can ensure your business is able to focus on growth. For instance, motor vehicles will not be subjected to state and local sales tax.
• Independent life: When you register a new business in South Dakota as an S Corporation, it will enjoy an independent life. This means that the incapacitation or death of a stockholder will not have a negative impact on the business operations.
• Federal taxation: If you register a new company in South Dakota as an S corporation then the corporation or firm will not pay any income tax. Instead, each shareholder or owners in the company will be liable to pay tax on their personal tax returns.

Limited Liability Company

• Financing options for New Businesses: It is a known fact that if you register a new business in South Dakota or any other state, financing options play a critical role in ensuring your business is able to sustain itself in the starting phase. Several financial programs have been initiated by the South Dakota Governor’s Office of Economic Development. The programs that you can benefit from include:
  – Revolving Economic Development & Initiative (REDI) Fund
  – SBA 504
  – Economic Development Finance Authority (EDFA)
  – South Dakota WORKS
  – South Dakota Microloan Express
  – South Dakota Jobs Grant Program
  – Reinvestment Payment Program
  – Proof of Concept Fund
  – Dakota Seeds
• Limited Liability: As an owner of a South Dakota LLC, you will be able to enjoy limited liability protection quite similar to what a corporation enjoys.
• Flexible Profit Distribution: A start-up company in South Dakota as an LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is 50-50.

Advantage#2: South Dakota Business Incentives

Once you register a new company in South Dakota, there are several business incentives and programs that your business entity can benefit from. Let’s take a look at some of the most popular programs:

• Reinvestment Payment Program: A start-up company in South Dakota as well as individuals can take advantage of the Reinvestment Payment Program, Which is a program that assists businesses in offsetting their upfront cost or expenses associated with expanding or relocating operations as well as upgrading machinery or equipment. Through this program, businesses can receive a reinvestment payment that should not exceed South Dakota sales and use tax paid on the project cost. Businesses have to apply to the Board of Economic Development to avail of the benefits of this program. Program Information Guide
• South Dakota Variety Business Benefit Programs: There are several other programs that cater to the needs of both new as well as existing businesses in the state. If you register a new company in South Dakota then you can take advantage of the following programs:
  – New South Dakotans Initiative: This program ensures half the cost of employee recruitment is provided for and it is applicable to specific high-need and high-impact industries.
  – Economic Development Finance Authority (EDFA): This is a program designed for capital-intensive projects. You can benefit from the issuance of tax exempt bonds targeted at a start-up company in South Dakota or small businesses that are planning to purchase new equipment and machinery.
  – South Dakota WORKS: This is a program wherein business or commercial loans are available to businesses that require working capital as a part of their payroll, start-up costs, construction on new buildings, etc.
  More Information

Are there any Disadvantages of Incorporating in South Dakota?

What disadvantages could possibly be there for a start-up company in South Dakota? In reality there is none except a few that are common to different types of businesses. For instance the processing of incorporation can be time consuming and corporations would require more paperwork while LLC formation in South Dakota has the disadvantage of a limited life. These are small disadvantages compared to the many incentives the Mount Rushmore State has to offer.

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What is the business formation process like in South Dakota? Is it a lengthy process? Do you have to submit too many documents to form a South Dakota business? These are some of the important questions that you might face before taking the big decision. This is the reason we have created a guide that will provide you with an insight into what is required to form a Limited Liability Company (LLC) or a Business Corporation in the state.

How can you form a South Dakota business LLC or Corporation? We as one of the top South Dakota registered agents can assist you with the successful registration of your business entity in the state.

South Dakota LLC Registration and Formation

LLC company formation in South Dakota is governed by 2011 South Dakota Code, Title 47 CORPORATIONS, Chapter 34A of the Uniform Limited Liability Company Act. The procedure for registration and formation of LLCs is as follows:

Step#1: Maintain a registered agent

If you are planning to form a Limited Liability Company in South Dakota then you will be required to continuously maintain a registered agent in the state pursuant to 2011 South Dakota Code, Title 59 – Agency, Chapter 11. Model Registered Agents Act §59-11-6. This law is applicable to domestic limited liability companies as well as foreign limited liability companies.

We would take this opportunity to share with you the fact that we are one of the top registered agents in the state and have been responsible for over 11,494 businesses set up in South Dakota. We can assist you to form a South Dakota business LLC.

Step#2: LLC Name Reservation

One of the foremost steps towards company formation in South Dakota is identifying a name for your business entity. The process is as follows:

1. Identify a unique name for your business entity
2. According to SD Codified L § 47-34A-105 (through 2011), the name should contain the phrase or words “limited liability Company” or the abbreviations “L.L.C.”, or “LLC”.
3. The chosen name should be distinguishable and should not be deceptively similar to the name of any limited partnership, corporation, or limited liability company
4. Apply for reservation of name pursuant to the provisions of SD Codified L § 47-34A-106 (through 2011)
5. Submit the form though mail or online with the Office of the Secretary of State of South Dakota along with the applicable fee. An LLC can reserve its name for a period of 120 days.

Step#3: Articles of Organization and Certificate of Authority

If you are planning to form a South Dakota business LLC then the most important step is to prepare and file the proper documents for a Limited Liability Company. The steps are:

• If you want to register a domestic LLC then you will be required to file “Articles of Organization” governed by SD Codified L § 47-34A-203 (through 2011).
• If your business entity is a foreign LLC then you will be required to file “Certificate of Authority” for a Foreign Limited Liability Company pursuant to SD Codified L § 47-34A-208 (through 2011).
• The Articles of Organization and Certificate of Authority of domestic and foreign LLC can be filed with the office of the Secretary of State, through mail or by hand.

We can file the form on your behalf as your registered agent in the state and provide you with certified copies of the LLC registration.

In case, you have any questions regarding how to form a South Dakota business, feel free to call us on 702-871-8678.

South Dakota Corporation Registration and Formation

If you are planning to form a Corporation in South Dakota then the procedure for registration and formation is as follows:

Step#1: Maintain a Registered Agent

If you are planning to form a business or professional corporation in South Dakota then you will be required to continuously maintain a registered agent in the state pursuant to 2011 South Dakota Code, Title 59 – Agency, Chapter 11. Model Registered Agents Act §59-11-6. This law is applicable to domestic as well as foreign corporations.

We would take this opportunity to share with you the fact that we are one of the top registered agents in the state and have been responsible for over 11,494 businesses set up in South Dakota. We can assist you to form a South Dakota business as we are in compliance with all regulations in the State of South Dakota.

Step#2: Corporate Name Reservation

In order to form a corporation in South Dakota, one of the key steps is identifying a name for your business entity. The process is as follows:

1. Identify a name for your business entity
2. According to SD Codified L § 47-1A-401 to 47-1A-401.2, a corporate name should contain the phrase or words “corporation”, “company”, “incorporated”, or the abbreviations “Corp.”, or “Inc.”
3. The chosen name should be distinguishable and should not be deceptively similar to the name of any limited liability company, limited partnership, or any other corporation
4. Apply for reservation of name pursuant to SD Codified L § 47-1A-402 (2014).
5. Submit the form through mail with the Secretary of State of South Dakota along with the applicable fee. A business corporation can reserve its name for a period of 120 days.

Step#3: Articles of Incorporation and Certificate of Authority

If you are planning to form a corporation in South Dakota, then the most important step is to prepare and file the proper documents for a business corporation. The steps are:

• If you want to register a domestic corporation then you will be required to file “Articles of Incorporation” pursuant to SD Codified L § 47-1A-203 (2014).
• If your business entity is a foreign corporation then you will be required to file a “Certificate of Authority” to transact business in the state pursuant to SD Codified L § 47-1A-921.3 (2014).
• The application or documentation for registration of a corporation can be filed with the Office of the Secretary of State – through mail or by hand.

We can file the form on your behalf as your registered agent in the state and provide you with certified copies of the incorporation.

If you have any questions regarding South Dakota incorporation or LLC formation, you can simply visit the South Dakota Business formation page.

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