Why Incorporate in South Dakota: Everything You Need to Know

Incorporating in South Dakota offers a number of benefits like limited liability, perpetual existence, and easy accessibility to investment.4 min read

Why incorporate in South Dakota? Incorporating in South Dakota offers a number of benefits like limited liability, perpetual existence, ease of ownership transfer, and easy accessibility to investment.

Corporation Overview

A corporation is a distinct business entity with limited liability. In the event of a corporation being sued or not being able to meet its financial obligations, the shareholders of the company cannot be forced to pay from their personal funds or assets. Forming a corporation gives credibility to your business. It also offers several other benefits like tax savings, perpetuity, and easy reach to investors.

Since a corporation is a legal entity, it continues to exist until terminated according to the applicable law. Retirement or death of members does not affect the existence of the company. Corporations make it easier to set up retirement funds, stock option plans, and profit sharing compared to other business structures.

It's also easier to transfer ownership in a South Dakota corporation. Often, the transfer can be done by mere sale of shares.

Steps to Incorporating in South Dakota

The process of forming a corporation is commonly known as incorporation. You must file a corporate charter to form a corporation. Here are the steps required:

1. Corporate Structure

Choose the most appropriate corporate structure for your business.

2. Name Availability

  • The name of your corporation must be clearly distinguishable from registered or proposed names of other businesses.
  • You can call up the secretary of state's office to find out whether your proposed name is available.
  • The name of your corporation must include a term like limited, corporation, company, incorporated, or the abbreviation of these terms, namely, ltd., corp., co., or inc.
  • You can reserve your proposed name for a period of 120 days. For this, you must file a name reservation application with South Dakota's secretary of state.

3. Registered Agent

  • Before filing your formation documents, you must designate a registered agent to receive service of process and handle other legal communication on behalf of the corporation.
  • You can either designate a commercial registered agent or an individual with a business address in South Dakota.