Form a South Dakota Corporation

Incorporate South Dakota Online: Form a South Dakota (SD) corporation. Incorporate in South Dakota online with the South Dakota incorporation experts at LawInc.com Forming a South Dakota corporation has never been simpler. We will help you form a South Dakota corporation, the right way. To simply incorporate in South Dakota, click on “Order Now.” Please feel free to call us, anytime, with any questions. Incorporate South Dakota today.

Incorporating in South Dakota

Incorporating a South Dakota corporation can be vital to businesses based of South Dakota. At LawInc, we prepare your South Dakota corporation Articles of Incorporation, bylaws, stock certificates, stock ledger and more. We can even obtain your South Dakota corporation Tax ID number and file your South Dakota S corporation election with the IRS.

South Dakota Incorporation Information

The following South Dakota incorporation information will likely be helpful when deciding to incorporate in South Dakota.

South Dakota Corporation Name

The first step in forming a South Dakota corporation is selecting the business name. South Dakota corporation names:

• Must contain “Corporation”, “Incorporated”, “Company”, “Limited,” “Corp.”, “Inc.,” “Co.” or “Ltd.”
• May not contain language stating or implying that the corporation is organized for a purpose other than that permitted by SD Business Corporation Act and its articles of incorporation.
• Must be distinguishable upon the records of the Office of the South Dakota Secretary of State from the name of another entity reserved or registered or authorized to transact business in the State of South Dakota.

An available South Dakota corporation name may be reserved with the South Dakota Secretary of State for a 120 day period.

LawInc.com permits you to choose up to three names and will conduct a name search for your South Dakota corporation, prior to filing.

South Dakota Corporation Formation

South Dakota Filing Procedure: To incorporate in South Dakota, you must file South Dakota Articles of Incorporation with the South Dakota Secretary of State.

South Dakota Corporation Charter: The South Dakota corporation charter should include:

• Name of the South Dakota corporation.
• Number shares the South Dakota corporation will have the authority to issue.
• Address of South Dakota corporation’s principal office.
• Name and physical address of the South Dakota corporation’s registered agent.
• Name and signature of South Dakota corporation incorporators.

South Dakota Corporation Filing Fee: The South Dakota corporation filing fee is $150.

South Dakota Corporation Authorized Shares: There is no minimum or maximum number of authorized shares since state incorporation fees are not based on the share structure.

South Dakota Corporation Incorporator: Minimum number of incorporators is one (1) person (defined as individual or entity), and there is no requirement that the incorporator be a resident of South Dakota.

South Dakota Corporation Limitation of Liability: The articles of incorporation may contain, within the limitations prescribed by the South Dakota Business Corporation Act, a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for any action taken, or any failure to take any action, as a director, except liability for the amount of a financial benefit received by a director to which the director is not entitled; an intentional infliction of harm on the corporation or the shareholders; unlawful distributions; or an intentional violation of criminal law.

South Dakota Corporation Directors: Minimum number of directors is one (1).

South Dakota Corporation Purpose: It is acceptable to state either alone or with a specific purpose clause, “The purposes for which the corporation is organized shall be to transact any and all lawful business for which corporations may be incorporated pursuant to the provisions of the South Dakota Revised Business Corporation Act.”

South Dakota Corporation Authorized Shares: There is no minimum or maximum number of authorized shares since state incorporation fees are not based on the share structure.

South Dakota Corporation 1244 Stock: Election to have stock classified as IRC Section 1244 stock allows for a substantially larger application of the deduction from business losses to ordinary income than regular stock. With regular stock, you can only offset $3,000 against ordinary income. With the issuance of Section 1244 Stock, the corporation can claim an ordinary loss deduction of as much $100,000.

South Dakota Registered Agent: When incorporating in South Dakota, a South Dakota corporation must maintain a registered agent and office to receive service of process in South Dakota. The South Dakota registered agent should be available, at a South Dakota physical address, during normal business hours to accept important legal and tax documents on behalf of the South Dakota corporation. The registered agent can either be (1) an individual with a physical South Dakota address or (2) a corporation authorized to serve as registered agent.

South Dakota Corporation Post-Filing Requirements

South Dakota Corporation Annual Report: South Dakota corporations must file an annual report which is due at the end of the incorporation anniversary month. For example, if the Virginia corporation is formed on January 10th, the annual report (after the first year) would be due on January 31st. The fee is $50. There is no late filing fee. However, failing to file within 60 days of receiving a delinquency notice, the South Dakota corporation will be administratively dissolved. To file the South Dakota corporation annual report, visit: http://sdsos.gov.

South Dakota Corporate Minutes: South Dakota corporations should hold and document annual shareholder and director meetings.

South Dakota Corporation Taxes

South Dakota Corporation Taxes: South Dakota does not impose income tax. For information on other taxes, including sales tax, visit: www.state.sd.us/drr2/revenue.html.

South Dakota C Corporation: When incorporating in South Dakota, all South Dakota corporations formed by default are “C” corporations. A South Dakota C corporation is a South Dakota corporation that has not made an election to be an “S” corporation. The term C corporation is specifically used because the entity is taxed under subsection C of the IRS code. South Dakota C corporations are taxed at two levels (“double taxation”). This means that the corporation itself pays its own tax when it makes money (the first tax). The owners or shareholders are then taxed again when they are paid a salary or dividend by the corporation (the second tax). Despite double taxation, South Dakota C corporations offer many planning and benefit opportunities.

South Dakota S Corporation: A South Dakota S corporation is a corporation that has made an election with the IRS to be treated for tax purposes as a “pass-through entity.” This means that corporate profits and losses are passed through to the shareholders (owners) who report them on their own personal tax returns and pay the tax at the individual level. The corporation pays no federal income tax at the corporate level. South Dakota S corporations are not subject to the double taxation C corporations encounter. As South Dakota does not impose personal income tax, a Subchapter S election has federal tax law implications, but not South Dakota tax implications, for South Dakota corporations with South Dakota based shareholders.

These are the 3 main advantages of forming a South Dakota S corporation:

1. No double taxation: One of the main advantages of South Dakota S corporation status is that it avoids the double taxation that occurs with a regular South Dakota C corporation. In a South Dakota C corporation, the corporation pays income tax on its profits and, if those profits are distributed to shareholders, the shareholders pay income tax on the distribution.
2. Loss deductions: The availability of losses. Shareholders of a South Dakota S corporation generally may deduct their share of the corporation’s net operating loss on their individual tax returns in the year the loss occurs. Losses of a South Dakota C corporation, however, may offset only the corporation’s earnings.
3. Self-employment tax savings: By electing S corporation status, only the earnings actually paid out to you as salary are subject to payroll taxes; money left in the business is not subject to payroll taxes or self-employment tax. All income passes through, but its tax status depends on whether it is classified as salary or ordinary income.

Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. When incorporating in South Dakota, South Dakota corporations should obtain an EIN. The federal taxpayer identification number of the corporation should be included in the Articles of Incorporation. However, the failure to include the number will not cause the Secretary of State to reject the Articles of Incorporation for filing.

South Dakota Corporation Dissolution

South Dakota Corporation State Dissolution Requirements: A South Dakota corporation can be voluntarily dissolved by filing Articles of Dissolution with the South Dakota Secretary of State. The fee is $10.

South Dakota Corporation Federal/IRS Dissolution Requirements: Corporations are required to file IRS Form 966, Corporate Dissolution or Liquidation. A final tax return should be filed with the IRS. Form 966 should be filed along with the final tax return. Final state tax returns may also need to be filed. Follow up with an accountant regarding all tax related requirements.