Incorporate in South Dakota for FREE^*

Incorporation is the process of registering a business as a corporation and making it recognizable under law as its own legal entity. Incorporating a business can be a complicated process because each state has its own requirements for registering and operating a business as a corporation. Knowing the necessary steps and forms, however, will help keep you organized and stress-free. 

With our easy business registration service, you simply answer a few questions and we create your initial paperwork and file it with the state for you. The first business entity registration is free for Rocket Legal+ members—you pay only the state filing fees. Then, you can make and personalize all the legal documents you need for your business. Store everything online in your Rocket Lawyer account.

What is a C-Corp? 

A C-Corp, or C-Corporation, is a common business entity type. More specifically, a C-Corp is a corporation taxed under Subchapter C of the U.S. Code. Under Subchapter C, corporations are subject to tax at both the corporate and individual level (sometimes called “double taxation”). Depending on the situation, this may result in lower or higher tax burdens for the shareholders. 

C-Corps allow for anyone to be an investor and for an unlimited number of shareholders and multiple share classes.

As with other types of corporations, C-Corporations provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. Except for certain instances of fraud or misconduct, a shareholder is not liable for the debts or obligations of a corporation beyond the shareholder's investment into the corporation.

Corporations are treated as a C-Corp by default, unless another type of tax treatment is selected, such as an S-Corp.

What is an S-Corp? 

Like C-Corps, S-Corps provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. However, S-Corps have two main differences from C-Corps: they are taxed differently and they have more restrictions with shares.

An S-Corporation, or S-Corp, is an IRS election that allows a company to be treated like an LLC for income tax purposes, that is, as a “pass-through" entity. Instead of income taxes being owed at both the company and individual level, the income of an S-Corp is only taxed at the individual level, which means it passes through the company directly to the owners and shareholders. Again, this may result in lower or higher tax burdens for the shareholders depending on the situation.

S-Corps have more restrictions regarding shares and shareholders than C-Corps. Specifically, S-Corps can have no more than 100 shareholders, only one class of shares, and only U.S. residents or citizens as investors.

One area of common confusion is what type of entity can elect S-Corp status. Remember that this election is simply a tax choice, not a governance or legal structure choice. Both limited liability companies (LLCs) and corporations can choose S-Corp status if they qualify under the IRS's guidelines.

There are similarities between a South Dakota S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences in South Dakota, however, come down to the following:

• Ownership Rules: A C-Corp is taxed as a separate entity. Shareholders must also report and pay taxes on what the corporation pays them. An S-Corp is taxed like a partnership with a "pass through" structure. It's not doubly taxed because the corporation can pass corporate income, losses, deductions, and credits to shareholders. Corporate owners pay taxes on their share of the corporation's profits, but they pay at their individual tax rates.
• Documents: If you want to form an S-Corp, you must file IRS Form 2553 to elect this status within 45 days of incorporating. To qualify as an S-Corp, your business must be a domestic corporation, provide only one class of shares, have no more than 100 shareholders, and your shareholders can include only individuals, certain trusts, and estates.

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following South Dakota requirements:

• Your name should be distinguishable from that of any other registered business in South Dakota. It must end with "Company," "Corporation," "Corp.," "Incorporated," "Limited," or an abbreviation of one of these terms.
• Your name cannot be deceptive. If you're selling farm implements, don't name your company "Mary's South Dakota Internet Sales."
• Ensure that your name is distinguishable from that of any other existing corporation.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

Each state has its own personnel requirements for incorporating. In South Dakota, at least one director is required. The names and addresses of initial directors must be listed on your Articles of Incorporation. There is no requirement that directors must live in South Dakota but directors must be at least 18 years old.

South Dakota requires that you appoint a registered agent and that you include your registered agent's name in your Articles of Incorporation. A registered agent is a person or business who receives important tax, government, and legal documents for your corporation, including service of process of lawsuits. Your agent must be available during normal business hours and have a physical address in the state. 

Although your corporation cannot act as its own agent, a director or officer of the corporation can. In this case, their name and address will be recorded in public records as the registered agent. A common alternative is to use a registered agent service so your personal business address can remain private and you can avoid unwanted third-party solicitations.  Rocket Lawyer can help you designate your registered agent when you register your business with us.

You must also include the following in your Articles of Incorporation in South Dakota:

• The number of shares authorized to be issued.
• The par value of shares, or a statement that they have no par value, if your corporation has only one class of shares.
• Designation of each class of shares, and a statement of the rights and limitations of the shares, if you have more than one class or series of authorized shares.
• The address of your corporate office.

South Dakota requires that corporations file additional paperwork with their Articles of Incorporation. You must file an annual report during the corporation's anniversary month.

Nearly every state has standard processing times, but not all provide expedited processing for corporations. In South Dakota, there are a few fees that you may be charged when you register your business as a corporation. They include the following:

State fee: $160.

Rocket Lawyer filing fee: $0 $99.99.

• First filing FREE* for Rocket Legal+ members (excluding state fees).
• Get additional filings HALF OFF with Rocket Legal+.

Processing time: 2 business days.

Note: The above state fees and processing times (including expedited processing fees and times) are provided as a summary and may or may not encompass various fees mandated by your state or local authorities. Your state may also change these fees and processing times over time and without notice. If you have questions, speak to a Rocket Lawyer Business Pro to understand the costs and processing times that apply to your specific filing.

Businesses can save up to $2,500 per year with a Rocket Legal+^™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

Yes, you do have to pay taxes for your new corporation. Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees require an EIN. An EIN is similar to a Social Security number, but it's for businesses. You will also need an EIN to open a corporate bank account.

The tax structure for an S-Corp can be complicated, but these corporations are generally exempt from federal income taxes, so your business can elect to retain its profits as operating capital. A C-Corp provides more flexibility in tax structure, but you'll have additional tax implications, such as double taxation. However, there are ways to minimize your tax obligations.

South Dakota requires that corporations create certain records to maintain corporate status. The most common of these are Bylaws and Corporate Minutes. Bylaws set forth your company's internal operating rules and procedures. They define the responsibilities of your directors, the rights and powers of your shareholders, and they can address all other corporate matters. You don't have to file your corporation's Bylaws with the state, but you'll need them to demonstrate to banks, lending institutions, creditors, the IRS, and the courts that your corporation is valid and legitimate. Bylaws also help to establish rules so you can keep your corporate assets and debts separate from your personal ones.

Keeping Minutes of your director and shareholder meetings is also required in South Dakota. Your Minutes should be maintained at your corporate office along with your other company records. Other records include the names and addresses of the officers and directors, a copy of your Articles of Incorporation and its amendments, and a list of current shareholders. Minutes keep track of all votes on important business decisions and they help secure your corporate status.

We have more detailed information about South Dakota's requirements for Bylaws and Corporate Meeting Minutes.

We wish you success with your new South Dakota corporation! You can count on Rocket Lawyer for all the business, tax, and legal help you need at a price you can afford.

If you are planning to operate in another state, you may need to register a corporation in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign corporations that originate in South Dakota or domestic corporations that also operate in South Dakota. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.