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South Dakota S Corporation Formation Services

How to register an S corporation in SD

South Dakota S corporations are for those who want the limited liability and the more formal structure of a corporation but with pass-through taxation of the business profits. A South Dakota S corporation is simply a standard corporation that becomes an S corporation when its shareholders elect special tax status with the Internal Revenue Service (IRS) by filing an IRS Form 2553 (after filing its official documents with State).

Like South Dakota C corporations, an S corporation is recognized by the law as an individual entity, separate from its shareholders (owners), many times treated as a human being. South Dakota S corporation shareholders enjoy limited liability for the debts, obligations and liabilities incurred by the business as well as liability stemming from possible legal action.

Protection of shareholders’ personal assets is one of the major reasons South Dakota business owners choose to incorporate.

Normally, shareholders cannot lose more than the amount they invested in the corporation. If the corporation goes bankrupt, the shareholders will not be liable for its debts. Should someone sue the corporation and the corporation is found liable, they can take the corporation’s property to satisfy the judgment. But if that property still does not satisfy the judgment, incorporating as an S corp will ensure that they will not be able to take a shareholder’s personal assets (i.e. home, car, or bank account).

There are exceptions to shareholders’ limited liability to keep in mind. For example, one exception to a shareholder's limited liability occurs when the corporation has recklessly harmed people or has been used to perpetuate fraud.

At MaxFilings, our competitive pricing is simple and straightforward. It includes all state fees and other charges. There are absolutely no “hidden charges” to surprise you later.

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South Dakota S Corporation Taxation

Unlike C corporations, a South Dakota S corporation does not itself pay any income taxes. While an S corporation with more than one shareholder does file tax returns, the individual shareholders (owners) must include their share of the corporation’s income or loss on their personal tax returns, just as is done in sole proprietorships, partnerships and Limited Liability Companies (LLCs).

To qualify as an S corporation in South Dakota, an IRS Form 2553 must be filed with the Internal Revenue Service. In very few states, you will also be required to file a separate state election, as specified by that state, in order to qualify as a Sub S Corporation. Only Arkansas, New Jersey, New York, Ohio and Wisconsin require state level filing in addition to IRS filing.

MaxFilings can help you with filing the IRS Form 2553 by preparing the form and sending it to you with instructions for completion and filing with the IRS.

Important Points to Consider When Forming a South Dakota S Corporation

Overview

  • Official documents must be filed with the state in order to form a South Dakota corporation, and state filing fees must be paid.
  • Form 2553 electing special tax status must be filed with the IRS.
  • A South Dakota S corporation is considered, by law, to be an individual entity separate from its owners (shareholders).
  • There can be some limitations as to the kind of business South Dakota S corporations are allowed to conduct.
  • You must hold and keep minutes that document meetings of the stockholders and board of directors.
  • South Dakota S corporations cannot have more than 100 shareholders; shareholders cannot be other corporations, Limited Liability Companies (LLCs), partnerships, certain trusts or non-resident aliens.

Limited Liability

  • South Dakota S Corporation shareholders normally enjoy limited liability and can lose no more than the amount they invested in the corporation.
  • South Dakota S Corporation shareholders cannot normally be held liable for legal judgments against the corporation, or for any of the corporation’s debts or obligations.
  • Protection of South Dakota S Corporation shareholders’ personal assets is one of the major reasons State business owners choose to incorporate.
  • There are exceptions to shareholders’ limited liability where shareholders can be held liable.

Raising Capital

  • South Dakota S corporations can get additional capital easier than some of the other types of business since you can issue and sell stock, or a variety of other financial instruments, as evidence of interest in the corporation.
  • The sale of stock is sometimes subject to state and federal securities laws.
  • Ownership can be transferred by selling stock in the corporation.
  • While voting rights can differ, South Dakota S corporations can have only one class of stock.

Taxation

  • South Dakota S corporations are normally audited less frequently than sole proprietorships and partnerships.
  • South Dakota S corporations enjoy pass-through taxation so shareholders avoid so-called “double taxation.”
  • South Dakota S corporations file informational tax returns, but pays no income tax itself.
  • South Dakota S corporation shareholders report their share of both income and losses on their personal tax returns so they are able to use losses to offset other income.
  • Income and losses must be allocated based upon ownership percentages.
  • Owners’ self employment taxes do not apply to salaries they are paid by the corporation.

Owners & Employees

  • There can be limitations on certain fringe benefits for major shareholders.
  • Owners working in the business are employees and are therefore eligible for certain fringe benefits such as group insurance plans, retirement and profit sharing plans, and tax-favored stock option and bonus plans.
  • Employees frequently prefer to work for a corporation that can offer them stock options and stock bonuses.
  • In a sense, a corporation is immortal and perpetual since it does not end with the death of a shareholder owner as do some of the other business types.

Public Perception

  • The general public normally thinks of corporations as being more substantial than sole proprietorships and partnerships.


*Note: The information provide above is not an attempt to present all you should know when forming an S corporation in South Dakota, but rather to educate you on some of the basic information about South Dakota S corporations. While we make every effort to ensure its accuracy, MaxFilings cannot and does not guarantee that all of the information is accurate, complete and/or current. It should therefore be independently verified. As always, seek the advice of qualified professionals who are familiar with your circumstances as well as applicable federal and South Dakota laws.

How to Form a Corporation in South Dakota

Here’s an overview of the 10 steps to forming a corporation with MaxFilings:

  1. Choose a corporate name
  2. File your Articles of Incorporation
  3. Appoint a registered agent
  4. Start a corporate records book
  5. Prepare corporate bylaws
  6. Appoint initial directors
  7. Hold first Board of Directors meeting
  8. Issue stock to shareholders
  9. Comply with your state’s annual reporting requirements
  10. Comply with tax and regulatory requirements

MaxFilings Helps Business Owners Like You Form S Corporations in South Dakota

MaxFilings helps you get organized and you set the pace – you can save all your incorporation information in one handy spot online and make changes anytime until you’re ready…or you can order online right now to take advantage of the following benefits:

  • Competitive & Transparent Pricing. There’s never any obligation to order and there’s no charge for saving your information – you only pay your incorporation fees when you’re ready to order. Our competitive pricing includes all state fees and other charges so you’ll have no surprises later.

  • Convenience & Ease of Use. MaxFilings helps you get organized in an orderly way and you set the pace – you can save all your incorporation information in one handy spot online and make changes anytime until you’re ready to incorporate…or you can order your incorporation online right now!

  • Secure & Confidential. As a MaxFilings user, you can rest easy knowing that all your information is completely safe. We use industry-recognized security safeguards for storing and processing your orders, ensuring stringent data security for as long as you want to keep it with us.

  • Partner Perks. As you incorporate in State, you need to think about growing and promoting your new corporation. MaxFilings’ online promotions partner SEO Advantage offers you expert services in PR, web development, search engine marketing, website optimization and graphic design.

Best of all, your satisfaction is 100% guaranteed!

Ready to Form Your S Corp in South Dakota?

If you’re ready to form a South Dakota corporation, start entering your information now. You’re under no obligation, and there is no charge until you actually place your order.

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