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How to Incorporate in South Dakota (May 2024 Update)

Meow Technologies, Inc.

Meow Technologies, Inc.

Incorporating your business in South Dakota offers many advantages, from tax benefits to ease of investment. This comprehensive guide will walk you through everything you need to know to form a corporation in the state.

Why South Dakota?

South Dakota is one of the most business-friendly states in the country. Here are some of the main reasons to incorporate there:

Minimal Taxes

South Dakota does not have a corporate income tax or personal income tax. There is also no franchise tax or business inventory tax, with the exception of certain financial companies. This saves corporations a significant amount in annual taxes.

Investor Appeal

The corporation structure makes it simpler for investors to fund businesses. Investors are accustomed to buying and selling corporate stocks. Certain corporate stocks also offer guarantees like mandatory dividends, which ensures shareholders receive payouts.

Perpetual Existence

A corporation continues existing despite changes to its ownership over time. The retirement or death of shareholders does not dissolve the business. This makes corporations more stable long-term.

Transferable Ownership

Corporations allow shareholders to easily transfer parts of their ownership by selling shares of stock. This is not always possible with other entity structures.

Steps to Forming a South Dakota Corporation

Follow these key steps to incorporate in South Dakota:

1. Choose a Business Structure

Common corporation structures include C corporations, S corporations, B corporations, and non-profit corporations. Consider the taxation, ownership flexibility, and fundraising needs of your business.

2. Check Name Availability

Verify your desired business name is distinguishable from other names registered with the Secretary of State. You can reserve a name for 120 days for a $25 fee.

3. Appoint a Registered Agent

Your corporation must have an agent authorized to receive legal documents. Agents need a South Dakota address available during business hours. Using a commercial registered agent service can provide privacy benefits.

4. File Articles of Incorporation

The articles establish your corporation with the state. File online for the fastest processing. Key details to include:

  • Corporate name
  • Purpose
  • Number of shares
  • Principal address
  • Registered agent info
  • Incorporator names

5. Create Corporate Bylaws

Bylaws outline internal governing rules like meetings, voting procedures, director powers, and amendments. While not filed with the state, bylaws help avoid disputes on operations.

6. Hold an Organizational Meeting

Directors typically hold an initial meeting to appoint officers, adopt bylaws, issue stock certificates, and conduct other business. Record meeting minutes for the corporate records.

7. Obtain an Employer Identification Number (EIN)

Apply online with the IRS for free to get this unique tax ID number used for payroll, banking, and tax filings.

For more information, take a look at the following article: What is an Employer Identification Number (EIN)?

8. Apply for Licenses and Permits

Research if your industry requires special state or local licensing to operate legally. Common examples include sales tax permits, food safety permits, and professional licenses.

9. Open a Bank Account

Keep your business finances separate with a corporate bank account. Bring your EIN, articles of incorporation, and corporate bylaws to the bank.

For more information, take a look at our article on the key benefits of business checking accounts.

10. File Annual Report and Taxes

Submit an annual report to the Secretary of State to retain good legal standing. As a corporation, you will file business taxes separately from personal taxes.

Ongoing Corporation Maintenance

Once successfully formed, continue meeting state and federal compliance requirements:

  • File an annual report with current director and officer information
  • Maintain thorough corporate records and meeting minutes
  • Issue stock certificates and voting rights to shareholders
  • Pay registration or licensing fees as needed
  • Submit annual income taxes

For example, South Dakota corporations must file an annual report each year by the anniversary of incorporation for a $50 fee. There is no state corporate income tax to file. However, you still must submit annual federal tax returns.

Correcting a Filing with Amendments

If you make a mistake like listing an incorrect name or office address, you can file articles of amendment with the Secretary of State to correct it for a $60 processing fee.

Closing a South Dakota Corporation

When it comes time to dissolve your corporation, submit articles of dissolution to the Secretary of State with the required fee. Remember to also close your corporate bank accounts, contact the IRS about final tax filings, notify creditors, pay off remaining debts, and distribute remaining assets to shareholders per your bylaws.

Is South Dakota Right for You?

While South Dakota does offer multiple incorporation advantages, also consider your specific business needs. Factors like where you will physically operate, intend to raise investment funds, or plan to pay owners can influence which state may be a better fit.

For example, Delaware leads the country in total corporations registered despite its small size due to market-leading corporate laws. However, South Dakota beats out Delaware when it comes to lower business taxes and fees.

The Bottom Line

By taking the time to properly form and structure your corporation, you ensure full limited liability protections for owners and position the business for future funding opportunities. For tax savings and operational flexibility, South Dakota makes starting and growing a successful corporation accessible. Carefully weigh the pros and cons to decide if incorporating here matches your entrepreneurship goals.

Meow Technologies is a financial technology company, not a bank or FDIC-depository insured institution. Likewise, Meow Technologies is not an investment adviser and none of the information presented herein should be relied upon as financial advice or a recommendation to make any financial decision nor should it be considered to be tax or legal advice. The information is the opinion of Meow Technologies for educational purposes and may not be suitable for all companies. Products, like the one described herein, are offered through Meow Technologies and are not advisory services which are only offered through Meow Advisory, LLC.** The FDIC’s deposit insurance coverage only protects against the failure of an FDIC-insured bank.**

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*Disclaimer: Meow Advisory LLC is a registered investment adviser. Registration as an investment adviser does not imply any level of skill or training.
For accounts opened through Atomic Brokerage LLC: Meow Advisory LLC has an engagement with Atomic Brokerage LLC (“Atomic Brokerage”), a registered broker-dealer and member of FINRA and SIPC , to bring you the opportunity to open a brokerage account. Brokerage services for customers of Meow Advisory LLC are provided by Atomic Brokerage. For more details about Atomic Brokerage, please see the Form CRS, General Disclosures, and the Privacy Policy. Check the background of Atomic Brokerage on FINRA’s BrokerCheck.
For subadvisory services for accounts opened through Atomic Invest LLC: Meow Advisory LLC has an engagement with Atomic Invest, LLC (“Atomic Invest”), an SEC-registered investment adviser, to bring you the opportunity to open an investment advisory account. Investment advisory services are provided by Atomic Invest. Companies which are engaged by Atomic Invest receive compensation of 0% to 0.85% annualized, payable monthly, based upon assets under management for each referred client who establishes an account with Atomic Invest (i.e., exact payment will differ). Atomic Invest also shares a percentage of compensation received from margin interest and free cash interest earned by customers with Meow Advisory LLC. Meow Advisory LLC is not a client of Atomic Invest, but our engagement with Atomic invest gives us an incentive to refer you to Atomic Invest instead of another investment adviser. This conflict of interest affects our ability to provide you with unbiased, objective information about the services of Atomic Invest. This could mean that the services of another investment adviser with whom we are not engaged could be more appropriate for you than Atomic invest. Advisory services through Atomic Invest are designed to assist clients in achieving a favorable outcome in their investment portfolio. They are not intended to provide tax advice or financial planning with respect to every aspect of a client’s financial situation and do not include investments that clients may hold outside of Atomic Invest. For more details about Atomic Invest, please see the Form CRS, Form ADV Part 2A, the Privacy Policy, and other disclosures. Brokerage services for Atomic Invest are provided by Pershing Advisor Solutions LLC (“PAS”), a registered broker-dealer and member of FINRA and SIPC.
Neither Atomic Invest nor Atomic Brokerage, nor any of their affiliates, is a bank. Investments in securities are Not FDIC insured, Not Bank Guaranteed, and May Lose Value. Investing involves risk, including the possible loss of principal. Before investing, consider your investment objectives and the fees and expenses charged by Atomic Brokerage and/or Atomic Invest.
See the Legal Section within the Meow website for additional agreements.

U.K. Gilt pricing quoted net of fees. ~5% U.K. Gilt yield is sourced from Investing.com December 2023 6-month United Kingdom 6-Month Bond Yield. ~5% Treasury Bill yield is sourced from treasurydirect.gov December 2023 12-week U.S. Treasury Bill auction.

**Disclaimer: Meow Technologies is a financial technology company, not a depository, bank or credit union, and your account at Meow is not, itself, an FDIC-insured product.

Meow currently partners with three banking providers. Banking services are provided by Third Coast Bank SSB; Member FDIC, Grasshopper Bank, N.A; Member FDIC, and FirstBank, a Tennessee corporation; Member FDIC.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Grasshopper Bank, N.A, you deposit your funds into a deposit account at Grasshopper Bank, N.A. which sweeps those funds into deposit accounts across a network of Federal Deposit Insurance Corporation (“FDIC”)-insured banks, for up to the current standard maximum deposit insurance amount (“SMDIA”) of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including Grasshopper's ICS Deposit Placement Agreement. Grasshopper Bank, N.A. uses a third-party vendor and agent to help administer this sweep process. Visit https://www.intrafi.com/network-banks/ for a list of the banks and savings associations with which we/Grasshopper, N.A. have a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Grasshopper, N.A. or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of Grasshopper Bank, N.A, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheets for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by Third Coast Bank SSB, you deposit your funds into a deposit account at Third Coast Bank SSB. If you also hold funds in a sweep program with Third Coast Bank SSB, Third Coast Bank SSB sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per receiving bank, for each ownership capacity or category, including any other balances you may hold at that receiving bank directly or indirectly through other intermediaries, including broker-dealers. Third Coast Bank SSB uses a third-party vendor and agent to help administer this sweep process. Visit Third Coast Bank SSB for a list of the banks and savings associations with which we/Third Coast Bank SSB have a business relationship for the placement of deposits at receiving banks, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by Third Coast Bank or you). The current maximum deposit insurance amount for your funds is up to $50 Million in FDIC insurance through the sweep network of Third Coast Bank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and conditions and refer to the applicable rate sheet for additional information.

By opening a Maximum Checking account through Meow and if you choose to receive banking services provided by FirstBank, a Tennessee corporation, you deposit your funds into a deposit account at FirstBank, which sweeps those funds into deposit accounts across a network of FDIC-insured banks, for up to the current SMDIA of $250,000 per eligible depositor, per destination institution, for each ownership capacity or category, subject to applicable terms and conditions, including FirstBank's ICS Deposit Placement Agreement. FirstBank uses a third-party vendor and agent to help administer this sweep process. Visit IntraFi for a list of the banks and savings associations with which FirstBank has a business relationship for the placement of deposits at destination institutions, and into which your deposits may be placed (subject to applicable terms with you, and any opt-outs by FirstBank or you). The current maximum deposit insurance amount for your funds is up to $125 million in FDIC insurance through the sweep network of FirstBank, subject to change at any time with notice from Meow and/or pursuant to applicable law. Terms and restrictions apply. Subject to applicable rate sheet. Interest rate on checking products quoted in Annual Percentage Yield (APY). Interest rates and yields are effective as per the date on the applicable rate sheet. See applicable terms and restrictions and refer to the applicable rate sheet for additional information.

***FDIC insurance coverage is only available to protect you against the failure of an FDIC-insured bank that holds your deposits (and does not protect you against the failure of Meow or other third party). Your account with Meow and all services provided to you are subject to the Meow Terms of Service (“Account Agreements”) and other applicable terms and no other representations or warranties, express or implied, are provided to you except as expressly set forth in those written Account Agreements. If you have any questions regarding your account, please contact team@meow.com.

FirstBank Funds Availability Notice

FirstBank’s general policy is to allow you to withdraw funds deposited in your account on the first business day after the day we receive your deposit. Funds from electronic deposits will be available on the day we receive the deposit. In some cases, we may delay your ability to withdraw funds beyond the first business day. Then, the funds will generally be available by the SECOND business day after the day of deposit.