South Dakota is known as the “Mount Rushmore State” and it is located in the Midwest part of USA. This is the 17th largest American state with a flourishing economy mostly based on agriculture and tourism, considering the major point of attraction, Mount Rushmore. We have prepared a general guide to company incorporation in South Dakota to help foreign investors understand better how business is done in this state. We mention that our company formation agents in USA can offer information and assistance at the time of company registration in any chosen state for future activities.

How to form an LLC in South Dakota

The USA company formation is less bureaucratic and allows foreigners to enter the market in a fast and reliable manner. Limited liability companies in South Dakota are the most preferred business forms which can be easily registered with the Business Division and the Secretary of the State of South Dakota. The abbreviations LLC, L.C., LC or L.L.C. are necessary when choosing the company’s name, but before that, a verification in this sense is mandatory. At the base of any LLC in South Dakota stand the Articles of Association that offer necessary information like:

• the name of the owners, their nationality and the country of residence;
• the activities and the purposes of the LLC formed in South Dakota;
• details about the business address of the company in South Dakota;
• information about the board of managers (the owners can also be directors);
• the name of the registered agent who will represent the business.

Foreign entrepreneurs in South Dakota can ask for the services of our USA company formation specialists who can act as representative agents for companies in this state.

Can I open a branch in South Dakota?

Yes, foreign investors can establish branches in South Dakota as corporations for which all the activities and the financial matters must be reported to the parent company. Comprehensive information about the business from abroad needs to be provided to the Business Division in charge of incorporation.

Can I open a subsidiary in South Dakota?

Yes, foreigners can set up subsidiaries in South Dakota in compliance with the Companies Act of this state and the applicable legislation. This is a separate legal entity which can be easily incorporated, as soon as the Articles of Association are provided. If you want to start a business in USA, we invite you to get in touch with our team of advisors.

Do I need an operating agreement for my company?

Although many US states do not impose such requirements, it is suggested to create an operating agreement for your company in South Dakota with information about the liabilities of the owners, the capital distribution, the voting rights and details about the dissolution methods in case the company closes.

Apply for EIN in South Dakota

The Employer Identification Number is the company’s federal tax ID which proves that the business is registered for tax matters. The application in this sense is made with the IRS (Internal Revenue Service) by providing the documents of the firm. As soon as these are accepted, your business in South Dakota is a taxpayer.

What is the rate of the sales tax in South Dakota?

The sales tax in South Dakota is set at 4% rate. Cities of this state are allowed to collect their own sales tax which cannot exceed 2%. It is good to know that there is no country sale tax in South Dakota, but for more information about the tax structure in this state, please address your inquiries to our advisors.

Should I hire an accountant for my company in South Dakota?

Yes, all companies in South Dakota should benefit from complete accounting services offered by a specialized team of accountants who can help with payroll, annual financial statements, tax advice, tax planning and tax minimization methods among many others.

Economy facts about South Dakota

South Dakota is seen as the 7th best state in the USA from an economic point of view, with well-developed industries that generate important revenues. The agriculture, the tourism, the finance and the retail sectors are the key engines of South Dakota’s diversified economy. The state is known for the largest production of ethanol that serves countries worldwide. Foreign investors can establish their business presence in Pierre, the capital of the state, and also in cities like Sioux Falls, Brookings, Mitchell, Yankton or Rapid City.

For a better understanding of how companies can be set up in South Dakota, please feel free to contact our team of company incorporation consultants in USA.

From the beginning, we mention that South Dakota is the most income-tax friendly state in America because there is are no personal and corporate income taxes imposed. However, it is good to know that there are other business taxes imposed for financial companies in South Dakota. We kindly invite you to get in touch with our team of company formation specialists in USA and discuss the ways in which we can provide help for opening a company in South Dakota. We can also offer information about the taxation regime and the exemptions for a business established in this American state.

What are the tax exemptions in South Dakota?

South Dakota is subject to the same tax exemptions as Ohio, Nevada, Washington, Wyoming, and Texas, meaning that there is no corporate income tax imposed on businesses and no personal income tax. There is no privilege tax and no franchise tax imposed in the state of South Dakota. This is why South Dakota, alongside the above-mentioned states, is considered a tax-friendly state. Having no corporate tax imposed on businesses in South Dakota lets foreign entrepreneurs decide on future investments in the firm. However, if you decide to open a company in South Dakota and activate in the financial sector, it is necessary to pay attention to the bank franchise tax.

What is the bank franchise tax in South Dakota?

The bank franchise tax in South Dakota is imposed on profits of financial companies with activities in this American state. This kind of tax is applicable to the net income of the financial company and assessed at a series of marginal rates. For example, a tax rate of 6% is applicable to incomes of $400 million or less. As for generated incomes of more than $1.2 billion, the bank franchise tax rate is set at 0.25%. It is good to know that a minimum tax of $200 is imposed per each financial business location in South Dakota. However, if your financial companies have branches in other American states, it is best to observe the taxation structure in those states.

Multistate business and nexus for company owners in South Dakota

Even if you do not need to pay taxes in South Dakota, it is important to know that taxes have to be paid in other American states if you have companies established there. In other words, you may have nexus, meaning that if you run companies in other states than South Dakota, you are obliged to pay the taxes applicable in that states. Instead of dealing with misunderstandings in matters of taxation, it is important to consider the support and services of an accounting firm in South Dakota or in any other American state. An experienced accountant can take care of the daily financial activities in the firm like making payments, handling the bookkeeping and payroll and provide support for the annual financial statements. Even though you don’t need to pay taxes in South Dakota, the services of an accounting firm are needed in your company, and in this matter, you can get in touch with our team of consultants and find out the ways in which we can provide information and assistance. Also, we invite you to read the general guide to company incorporation in South Dakota and see how you can open a business in this state.

What is the sales tax rate in South Dakota?

Products and services meant for sale purposes in South Dakota are subject to a standard sales tax of 4.5% rate, one of the lowest in the USA. It is important to know that municipalities in this state can collect their own sales tax not exceeding a 2% rate. The lowest sales tax rate is applicable in the city of Meckling, while the highest one is found in Beresford, South Dakota. Do not hesitate to talk to our team of consultants and find out more details about the sales tax in South Dakota. We can also help you register a company in USA, regardless of the chosen state for business.

Other tax facts in South Dakota

Even though there is no corporate income tax and no personal income tax imposed in South Dakota, it is important to know information about other taxes in this state, like the property tax which represents the main source of revenue for the local authorities. Here are a few facts about other taxes in South Dakota:

• The average property tax rate is set at 1.32% imposed on properties in South Dakota;
• The gas tax, the alcohol tax, and the cigarette tax are also significant when deciding on business in South Dakota;
• As for the inheritance tax, this is not applicable since 2000;
• There is no estate tax imposed in South Dakota.