Is it cheaper to form an LLC in Maryland or South Dakota?

Formation fees are identical: $150 in both states. The year-over-year cost is where they differ. Maryland runs $400 per year after formation, South Dakota runs $155.

Can I form an LLC in Maryland if I live in South Dakota?

Yes, but your South Dakota business will almost certainly need to register as a foreign LLC in South Dakota too, which means paying South Dakota's foreign registration fee and any ongoing South Dakota obligations on top of the Maryland ones. The "form elsewhere to save" math usually doesn't work for operating businesses; it only works when you have no physical operations tied to any specific state.

How long does it take to form an LLC in Maryland vs South Dakota?

Maryland online: 10 business days; South Dakota online: 1 business day. Maryland offers paid expedite from $325. South Dakota offers paid expedite from $50.

Which state has lower taxes for an LLC, Maryland or South Dakota?

Maryland: state income tax applies to member-level pass-through income, no entity-level franchise or LLC tax. South Dakota: no state income tax, no entity-level franchise or LLC tax.

Do both states require a registered agent?

Yes. Every US state (and DC) requires every LLC to maintain a registered agent with a physical street address in the state. Maryland and South Dakota both have this requirement. You can serve as your own agent if you live in the state; most out-of-state filers use a commercial agent for $50 to $125 per year.

Which state should I pick if I run an online business from home?

Form in the state you actually live in. Your home state's Department of Revenue treats your residence as nexus regardless of where the LLC is filed, which means you owe state income tax there anyway. Forming in Maryland or South Dakota to escape your home state's tax doesn't work; it adds paperwork. The non-resident filings make sense when you genuinely operate nowhere in particular: international founders, purely passive holding entities, or real-estate LLCs owning property in other states.

Maryland vs South Dakota LLC comparison

Maryland charges $150 to form an LLC; South Dakota charges $150. Day-one sticker price is only part of the story, since most of the real cost comes from the annual obligations that stack up each year you keep the LLC open.

Over a rolling three-year window, South Dakota runs about $735 less in total state fees than Maryland. Whether that gap matters depends on whether you actually operate in one of these states or are weighing a non-resident filing.

On speed, South Dakota typically clears standard online filings faster than Maryland. Both states offer expedited tiers at an additional cost for filers on tight timelines.

For most small operators the choice is not really between these two states at all. It is between forming where the business actually operates and trying to route through a non-resident filing. The data below shows what each option actually costs.

Formation filing fee

Maryland $150

South Dakota $150

Tied

Year 1 total estimate

Maryland $550

South Dakota $305

South Dakota saves $245

Ongoing per year

Maryland $400

South Dakota $155

South Dakota saves $245

3-year total

Maryland $1,350

South Dakota $615

South Dakota saves $735

Key differences at a glance

South Dakota is $245 per year cheaper to maintain ($155 vs $400).
South Dakota has no state individual income tax; pass-through LLC income flows to members without a state layer. The other state does tax at the member level.

Where each state fits

For most filers, forming in the state you actually operate from is the right call. The side-by-side below shows where the two states meaningfully diverge.

What each state offers that the other does not

Only South Dakota

No state income tax

Both states

Online filing
Paid expedited tier
No entity-level franchise or LLC tax
No publication requirement
Operating agreement not statutorily required

Three-year cost, side by side

Rough estimate of the state-facing cost to form and keep an LLC through three years. Both totals include a $100 per year registered-agent estimate.

Maryland South Dakota

Year 1

$550

$305

Year 2

$950

$460

Year 3

$1,350

$615

Running total includes the one-time filing fee and annual ongoing costs (report fee or franchise tax plus a $100/year registered agent estimate).

What it costs under your specific situation

The table below runs the same LLC through four common scenarios. "Non-resident" rows assume a typical home-state foreign LLC registration adds about $200 per year of stacked cost; the real number depends on which state you live in and ranges from $50 to over $800 depending on jurisdiction.

Scenario	Year 1	Each year after	3-year total
You live in Maryland, business operates there No foreign LLC registration needed. You pay Maryland fees only.	$550	$400	$1,350
You live in South Dakota, business operates there No foreign LLC registration needed. You pay South Dakota fees only.	$305	$155	$615
Non-resident forming in Maryland with operations elsewhere You pay Maryland's fees plus a typical home-state foreign LLC registration of about $200 per year.	$750	$600	$1,950
Non-resident forming in South Dakota with operations elsewhere You pay South Dakota's fees plus a typical home-state foreign LLC registration of about $200 per year.	$505	$355	$1,215

Maryland vs South Dakota: full comparison

Dimension	Maryland	South Dakota
Online filing Can you file the formation document online?	Yes	Yes
Online approval time Standard, non-expedited	10 business days	1 business day
Expedited option Paid fast-track filing	$325	$50
Annual report Required in addition to tax	Required, $300	Required, $55
State-imposed annual tax Franchise, privilege, or LLC tax minimum	None	None
State income tax On pass-through LLC income at member level	Yes	No
Publication requirement Newspaper publication after formation	No	No
Operating agreement Required by state statute	Recommended, not required	Recommended, not required
Foreign LLC fee Cost to register as a foreign LLC in this state	$150	$750
State sales tax General statewide rate	6.0%	4.2%

Taxes in Maryland and South Dakota

How each state handles entity-level tax on LLCs. Pass-through classification means member-level income tax also applies at each member's residence state.

Maryland tax

No entity-level franchise tax on LLCs. State income tax applies to member-level pass-through income. Corporate rate 8.3%.

South Dakota tax

No entity-level franchise tax on LLCs. No state income tax.

Ongoing compliance

The recurring filings each state requires after formation.

Maryland

Annual report $300, due 04/15 each year. Registered agent required in Maryland.

South Dakota

Annual report $55, due on your anniversary month. Registered agent required in South Dakota.

Formation process, side by side

What actually happens from the moment you start filing to the moment you're in good standing. Use this as a checklist.

Maryland

Check business-name availability on the Maryland entity search.
Appoint a registered agent with a physical Maryland street address.
File Articles of Organization for a Limited Liability Company for $150.
Wait for approval. Online typically 10 business days. Paid expedite from $325.
Adopt an operating agreement (recommended, not required by Maryland statute).
Apply for a federal EIN (free from the IRS).
Open a business bank account to separate personal and business finances.
File your first annual report and pay $300 when it comes due.

South Dakota

Check business-name availability on the South Dakota entity search.
Appoint a registered agent with a physical South Dakota street address.
File Articles of Organization (Domestic Limited Liability Company) for $150.
Wait for approval. Online typically 1 business days. Paid expedite from $50.
Adopt an operating agreement (recommended, not required by South Dakota statute).
Apply for a federal EIN (free from the IRS).
Open a business bank account to separate personal and business finances.
File your first annual report and pay $55 when it comes due.

Before you pick either state

A few things that apply no matter which state you choose. These trip up enough first-time filers that they're worth stating explicitly.

Registered agent is non-negotiable. Both Maryland and South Dakota (and every other US state) require every LLC to designate a registered agent with a physical street address in the state of formation. You can serve as your own agent if you live in the state; otherwise a commercial agent runs $50 to $125 per year. Using your own home address makes it part of the public record.

Forming elsewhere does not escape your home state's tax. If you live and operate a business from your home state, forming the LLC in Maryland or South Dakota does not avoid your home state's income tax. The moment you transact business at home, your home state requires a foreign LLC registration, and state tax liability follows your residence regardless of where the entity sits on paper.

EIN applications are free. The IRS issues Employer Identification Numbers directly at no cost. Any service charging you to "get your EIN" is reselling a free form submission. Single-member LLCs with no employees technically don't need one for federal tax, but nearly every bank requires an EIN to open a business account.

Operating agreement matters more than the state you pick. A well-drafted operating agreement governs member ownership, management, profit splits, buy-sell terms, and dissolution. Without one, your LLC runs on the state's default rules, which are rarely what you want. California, Maine, Missouri, and New York require a written one by statute; every other state treats it as strongly recommended.

Agency contacts

Maryland State Department of Assessments and Taxation, Charter Division

Website: dat.maryland.gov
Phone: (410) 767-1184
Email: sdat.serviceofprocess@maryland.gov
Mail: Charter Division, Maryland Department of Assessments and Taxation, 8th Floor, 301 W. Preston St., Baltimore, MD 21201-2395
Office: 301 W. Preston Street, Baltimore, MD 21201
Hours: 8:30 AM to 4:30 PM Eastern, Monday to Friday

South Dakota Secretary of State - Business Services

Website: sdsos.gov
Phone: (605) 773-4845
Email: corpinfo@state.sd.us
Mail: Capitol Building, 500 East Capitol Avenue, Suite 204, Pierre, SD 57501-5070
Office: 215 E. Prospect Avenue, Pierre, SD 57501
Hours: 8:00 AM to 5:00 PM Central, Monday to Friday

Comptroller of Maryland

Website: www.marylandtaxes.gov
Phone: (410) 260-7980
Email: taxhelp@marylandtaxes.gov
Mail: Comptroller of Maryland, Revenue Administration Division, 110 Carroll Street, Annapolis, MD 21411-0001
Office: Goldstein Treasury Building, 80 Calvert Street, Annapolis, MD 21401
Hours: 8:30 AM to 4:30 PM Eastern, Monday to Friday

South Dakota Department of Revenue

Website: dor.sd.gov
Phone: (605) 773-3311
Mail: 445 E Capitol Avenue, Pierre, SD 57501
Hours: 8:00 AM to 5:00 PM Central, Monday to Friday

Frequently Asked Questions

Is it cheaper to form an LLC in Maryland or South Dakota?

Formation fees are identical: $150 in both states. The year-over-year cost is where they differ. Maryland runs $400 per year after formation, South Dakota runs $155.
Can I form an LLC in Maryland if I live in South Dakota?

Yes, but your South Dakota business will almost certainly need to register as a foreign LLC in South Dakota too, which means paying South Dakota's foreign registration fee and any ongoing South Dakota obligations on top of the Maryland ones. The "form elsewhere to save" math usually doesn't work for operating businesses; it only works when you have no physical operations tied to any specific state.
How long does it take to form an LLC in Maryland vs South Dakota?

Maryland online: 10 business days; South Dakota online: 1 business day. Maryland offers paid expedite from $325. South Dakota offers paid expedite from $50.
Which state has lower taxes for an LLC, Maryland or South Dakota?

Maryland: state income tax applies to member-level pass-through income, no entity-level franchise or LLC tax. South Dakota: no state income tax, no entity-level franchise or LLC tax.
Do both states require a registered agent?

Yes. Every US state (and DC) requires every LLC to maintain a registered agent with a physical street address in the state. Maryland and South Dakota both have this requirement. You can serve as your own agent if you live in the state; most out-of-state filers use a commercial agent for $50 to $125 per year.
Which state should I pick if I run an online business from home?

Form in the state you actually live in. Your home state's Department of Revenue treats your residence as nexus regardless of where the LLC is filed, which means you owe state income tax there anyway. Forming in Maryland or South Dakota to escape your home state's tax doesn't work; it adds paperwork. The non-resident filings make sense when you genuinely operate nowhere in particular: international founders, purely passive holding entities, or real-estate LLCs owning property in other states.

Full state guides

MarylandOpen Maryland LLC guide →
South DakotaOpen South Dakota LLC guide →

More Maryland and South Dakota comparisons

More Maryland vs ...

More South Dakota vs ...

Sources

Filing fee: dat.maryland.gov/businesses/Documents/FEES.pdf · verified April 21, 2026
SDAT Fee Schedule for Documents Relating to Corporate Charters (revised May 2024). Articles of Organization (domestic LLC) base fee is $100 with a $50 expedited service fee. All online filings through Maryland Business Express are automatically expedited, making the effective online day-one cost $150 (100 base plus 50 expedite). Mail filings may pay the $100 base with 4 to 6 week review, or add the $50 expedite fee for 7 to 10 business day review.
Expedited filing: egov.maryland.gov/BusinessExpress/home/ProcessingTimes · verified April 21, 2026
Rush service via online Maryland Business Express: $325 same-day fee when submitted before 2:30 PM (reviewed within approximately 3 hours). Rush service via paper dropbox at 123 Market Place, Baltimore: $425 same-day fee (submit by 10 AM, pickup by 3:45 PM). Fee amounts per SDAT fee schedule revised May 2024. We report the online rush at $325 and approximately 3 hour turnaround as the default expedited tier.
Annual report fee: dat.maryland.gov/SDAT%20Forms/PPR_Forms/2025_Form1.pdf · verified April 21, 2026
Form 1 Annual Report and Business Personal Property Return, Maryland SDAT. Filing fee for a Domestic or Foreign Limited Liability Company is $300 per entity, due April 15 each year. The same Form 1 captures both the Annual Report (Sections I through III all LLCs must complete) and the Business Personal Property Return (Sections IV through VIII, required only if the LLC owns, leases, or uses personal property in Maryland with total original cost of $20,000 or more).
Corporate income tax rate: www.marylandtaxes.gov/business/income/tax-information.php · verified April 21, 2026
Maryland corporate income tax is a flat 8.25% of Maryland modified income. Applies to C-corporations and to LLCs electing C-corp treatment. LLCs default to pass-through taxation.
Sales tax rate: www.marylandcomptroller.gov/taxes/business/sales-and-use/ · verified April 21, 2026
Maryland statewide sales and use tax is 6% with no local add-on (special 9% rate applies to alcoholic beverages). Short-term vehicle rentals and a handful of services have different rates.
Foreign LLC registration fee: dat.maryland.gov/businesses/Documents/FEES.pdf · verified April 21, 2026
SDAT Fee Schedule: Foreign LLC Registration base fee $100 plus $50 expedited. Online filings through Maryland Business Express are automatically expedited at $150 total. Same foreign LLC must also file Form 1 Annual Report and pay the $300 annual fee.
Business name search: egov.maryland.gov/BusinessExpress/EntitySearch · verified April 21, 2026
Maryland Business Express Entity Search. Confirm LLC name availability before filing Articles of Organization.
Operating agreement requirement: mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gca&section=4A… · verified April 21, 2026
Md. Code Corp. and Assns. 4A-402 permits (but does not require) members to enter into an operating agreement. Unless the articles of organization specifically require otherwise, the operating agreement need not be in writing. Maryland does not mandate a written LLC operating agreement.
Filing fee: sdsos.gov/general-information/filing-fees.aspx · verified April 21, 2026
SD SoS filing fee schedule: Domestic LLC Articles of Organization filed electronically online is $150; filed via paper is $165 (includes the $15 paper filing fee). Online is the default; filingFee captures the online amount.
Expedited filing: sdsos.gov/general-information/filing-fees.aspx · verified April 21, 2026
SD SoS offers expedited processing for any filing at an additional $50 flat fee, defined as completion sooner than the normal course of business on request. Typical expedited turnaround is 24 hours.
Foreign LLC registration fee: sdsos.gov/general-information/filing-fees.aspx · verified April 21, 2026
Foreign LLC Certificate of Authority online filing fee is $750; paper is $765 (includes $15 paper filing fee). This is materially higher than the $150 domestic fee; South Dakota is one of the most expensive states for foreign LLC registration.
Operating agreement requirement: sdlegislature.gov/Statutes/47-34A · verified April 21, 2026
SDCL 47-34A (Uniform Limited Liability Company Act) defines an operating agreement under 47-34A-103 as any valid agreement, written or oral, governing relations among members, managers, and the LLC. The statute does not require the operating agreement to be in writing.
Publication requirement: sdlegislature.gov/Statutes/47-34A · verified April 21, 2026
SDCL 47-34A contains no newspaper publication requirement for LLC formation. Only NY, AZ, and NE require publication.
Annual report fee: sdsos.gov/general-information/filing-fees.aspx · verified April 21, 2026
SD SoS filing fee schedule: LLC Annual Report filed electronically online is $55; filed via paper is $70 (includes the $15 paper filing surcharge). Due first day of the anniversary month each year.
Franchise tax: dor.sd.gov/businesses/taxes/ · verified April 21, 2026
SD Department of Revenue confirms South Dakota does not impose a general corporate income tax or franchise tax. A narrow bank franchise tax applies only to financial institutions under SDCL 10-43.
Corporate income tax rate: dor.sd.gov/businesses/taxes/ · verified April 21, 2026
South Dakota has no corporate income tax. Field set to null.
Sales tax rate: dor.sd.gov/businesses/taxes/sales-use-tax/ · verified April 21, 2026
SD Department of Revenue: the state sales and use tax rate is 4.2%. Municipalities may impose up to 2% additional general sales tax.
Business name search: sosenterprise.sd.gov/BusinessServices/Business/FilingSearch.aspx · verified April 21, 2026
SD SoS Enterprise business information search. Use before filing Articles of Organization to confirm name availability.
Online filing portal: sosenterprise.sd.gov/BusinessServices/Business/RegistrationInstr.aspx · verified April 21, 2026
SD SoS Enterprise online business registration portal. Online LLC filings are typically approved immediately or within one business day; paper filings take about 3-5 business days plus mail transit.
Certificate of Formation form: sdsos.gov/docs/business/llc-domestic-articlesoforganization.pdf · verified April 21, 2026
Official Domestic LLC Articles of Organization fillable PDF published by the SD SoS, used for paper filings.

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