Introduction:

In order to protect your business and liabilities from extra taxation burden, corporation often comes up with the concept of LLC.
 
WHAT IS AN LLC:

A limited liability company is a business formed by an organizer who may, but need not be a member. It is a business entity separate from its members and liability is limited to the financial contribution. An LLC is a hybrid type of business structure i.e. combination of partnership and corporations. LLC members can be an individual business owner, several partners, or other businesses. It helps the businesses pass their business income and losses to the personal income tax return. LLC is said to be the combination of partnership and corporation. LLC is a legal entity like a corporation and has less federal formalities like partnership.

PURPOSE TO FORM LLC:

Limited liability companies are formed for the purpose of generating profit, while limiting taxes and liability. Limited liability companies have all the powers granted to a corporation.

 INITIAL DOCUMENTATION FOR FORMING LLC:

• The Articles of organization or Certificate of Formation of Limited Liability Company LLC must be filed with the state to register the Limited Liability Company in South Dakota. Following information must be mentioned in the Articles of organization for LLC:
• The name must contain Limited Liability Company, limited company or the abbreviation L.L.C., LLC, L.C. or LC. Limited may be abbreviated as Ltd. and company may be abbreviated as Co.
  
• The duration of the company if other than perpetual must be mentioned.
  
• The address of the initial designated office in or out of the State of South Dakota where the company conducts its business.
  
• Any other provisions not inconsistent with law, which the members elect to set out in the articles of organisation must be disclosed.
  
• Provide members' information, including name and address.
  
• Provide social security number of at least one member to apply for the employer identification number (Not applicable for a non US resident).
  
• Principal Office requirements include street number, street, city, state and zip code. (PO Box is not acceptable).
  
• Nature of business: It is sufficient to state the purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be formed under the South Dakota limited liability company act.
  

PRELIMINARY REQUIREMENTS TO FORM LLC IN SOUTH DACOTA:

• LLCs in South Dakota are easy to form and have very few formation requirements.
• The LLC must be incorporated in the state of South Dakota to conduct business.
  
• South Dakota LLC can be incorporated with one member/owner only.
  

•  South Dakota LLC can be registered as a member managed or manager managed. The member(s) of the LLC will manage the LLC daily affairs if you have selected LLC to a member managed or otherwise the member(s) of the LLC will retain a manager to look after daily affairs.

 

HOW TO REGISTER LLC:

• Limited Liability Companies are registered with the Secretary of State South Dakota.
• File South Dakota LLC Name Search before filing to ensure the name is available to avoid any delay in filing process due to the rejection by the state.
  
• You can also Reserve South Dakota LLC Name if you are not ready to incorporate it now.

APPOINTMENT OF STATUTORY AGENT FOR THE PROCESS:

• The limited liability company may not be its own agent. An individual or entity (other than LLC) must be appointed to accept legal process.
• Notice or demand is served upon the limited liability company.
  
• The agent may be either:
  
• Any individual who is a resident of South Dakota, including a manager or member of the LLC. That individual must provide the complete street address of his or her business and a South Dakota residence address. (If no business address, must state none).
  

• The agent may be either:

• Any individual who is a resident of South Dakota, including a manager or member of the LLC. That individual must provide the complete street address of his or her business and a South Dakota residence address. (If no business address, must state none).

• The agent must sign accepting the appointment for one of the following business types, on record with this office, with a South Dakota address:

   

  - A South Dakota corporation, limited liability company, limited liability partnership or statutory trust.
  

  -A foreign corporation, limited liability company, limited liability partnership or statutory trust, which has obtained a certificate of authority to transact business in South Dakota and has a South Dakota address on file with this office.

• The agent provides the South Dakota principal office address in the block designated for “Business address”.
• The agent must sign accepting the appointment and the person signing on behalf of a business must print his/her name and title next to his/her signature.
  

Employer Identification Number

All LLCs are registered in SD required to obtain an EIN to open bank account and filing taxes.
 

Renewal of Registered Agent

The registered agent must be renewed every year to maintain the address.
 

Filing of necessary documentation:

The South Dakota Articles of amendment must be filed if there is any change in the business name or members of the LLC.

Taxes:

LLCs are not taxed on federal level but there are some states where LLCs’ income is taxed. Tax also depends upon the types of services LLC offers.

PROCESSING TIME:

You can check the state current estimated time to process your LLC application either online at InfoTaxSquare.com website or contact us.

Annual Report Filing

LLCs are required to file Annual Report every year to keep the status in Good Standing. The South Dakota Secretary of State has a right to dissolve the Limited Liability Company, if you do not file it ontime or will be subject to penalty if late filing.

WHAT STEPS COME NEXT TO BE TAKEN CARE:

Apply for an Employer Identification Number EIN:

You can get your EIN online. Particulars in the application include:

• Legal structure of your business entity
• Tax structure of your business entity
  
• Information about member
  
• Reason for requesting EIN
  
• Describe a business contact person.
  

Maintain a separate bank account:

After having your EIN, most real estate investors maintain a separate business bank account. This step separates your personal finances from your business finances.

Obtain your business license and permit:

Your business license helps the government to keep track of your business activities, revenue and taxation. You will be charged a fine if operates without obtaining a business license. You should contact your municipality for further clarifications on obtaining license and permit.

Useful Link:

https://sdsos.gov/default.aspx

Author: Sumaira Sharafat
The Author of this article is a Chartered Accountant (Finalist) and APFA (Associate Public Finance Accountant).

This article is written for the informational purposes only and you cannot consider the contents in this  article a legal advice. The author has shared her opinion , not InfoTaxSquare.com.