How To Start a Nonprofit in South Dakota in Seven Steps

Like any startup business, you need to have a name for your nonprofit. The name should be unique so people will not confuse it with another business entity. Use the Business Name Availability Search tool with the South Dakota Secretary of State to see if it is available.

To see if you can use your name on the internet as your website, check the name in a search engine to make sure it is not already a registered domain name. If it is, choose another name.

You also want to verify that you are not infringing on a trademarked name. Enter the name on the United States Patent and Trademark Office (USPTO) website. If it is not a registered trademark, you can use the name.

A board of directors is a group that governs the activities of your nonprofit corporation. Under state law § 47-23-14, you have to have at least three directors on your board. Your board governs the activities of the nonprofit, oversees the financials, and helps with compliance. Board members are also helpful when it comes to networking and fundraising.

When looking for directors, choose people who believe in your cause and can add their skills or expertise to furthering your mission. They have a fiduciary duty to act in the best interests of your organization and avoid conflicts of interest.

You must draft Articles of Incorporation for a Domestic Nonprofit Corporation. You must include the following information:

• Name of the nonprofit

• Purpose of the nonprofit

• If the duration is perpetual or will end at a specific date

• The address of the principal place of business

• The name and address of the registered agent

• The name and address of the incorporator(s)

• The name and address of the directors (South Dakota requires three directors)

• If the corporation has classes of members and how they elect directors

• A provision for the distribution of assets upon corporate dissolution

If using a registered agent service, you must include their CRA# (Commercial Registered Agent Number).

You can file online with the South Dakota Secretary of State and complete their form. You can also complete the Articles of Incorporation and mail them to the Secretary of State Office, 500 E. Capitol Avenue, Pierre, SD 57501. The filing fee is $30. Make a check payable to the “Secretary of State.”

Or you can let our trusted partner LegalZoom handle your nonprofit creation starting at $99 plus filing fees.

Nonprofit organizations must have bylaws and a conflict-of-interest policy to get tax-exemption status from the IRS. Bylaws are a set of rules about how to run the organization, covering topics such as when to hold meetings, how many members constitute a quorum to make a decision, and how to vote and elect officers. A conflict-of-interest policy alerts directors and officers that they cannot engage in self-dealing.

The first board meeting establishes your nonprofit organization. The board approves the bylaws, elects the officers, and handles any administrative matters. It is essential to keep notes, or minutes, of these meetings as part of your corporate records.

EINs for business entities are similar to social security numbers for individuals. Nonprofits need an EIN to open bank accounts and file tax forms. To get an EIN, go to the IRS website (www.irs.gov) and fill out an online SS-4 form. You should receive your EIN instantly, and the application is free.

To get federal and state tax-exempt status, you must apply to the IRS. The Internal Revenue Code recognizes different types of nonprofits. The filing requirements are as follows:

• If your nonprofit is a charity, religious group, or educational organization, fill out Form 1023 or Form 1023-EZ. If you are eligible for the 1023-EX, use the Pay.gov site.

• If your nonprofit is a social welfare group, file Form 1024-A.

• For other types of nonprofit organizations, like those under 501(a), file Form 1024.

Once the IRS reviews your form, they will send a determination letter confirming your nonprofit’s tax-exempt status.

South Dakota nonprofits do not have to register if they fundraise or engage in charitable solicitations.

Some charitable organizations do not have to pay sales tax if they are an exempt entity. Contact the South Dakota Department of Revenue to see if your nonprofit qualifies for a sales tax exemption.