South Dakota vs Texas LLC: fees, taxes, and which to pick
Data last updated: Apr 21, 2026South Dakota charges $150 to form an LLC; Texas charges $300. 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, Texas runs about $15 less in total state fees than South Dakota. 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 Texas. 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.
Key differences at a glance
- South Dakota costs $150 less to form ($150 vs $300).
- Texas is $55 per year cheaper to maintain ($100 vs $155).
- Texas imposes an entity-level franchise or LLC tax that applies to pass-through LLCs. South Dakota does not.
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 entity-level franchise or LLC tax
Both states
- Online filing
- Paid expedited tier
- No state income 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.
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 South Dakota, business operates there No foreign LLC registration needed. You pay South Dakota fees only. | $305 | $155 | $615 |
| You live in Texas, business operates there No foreign LLC registration needed. You pay Texas fees only. | $400 | $100 | $600 |
| 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 |
| Non-resident forming in Texas with operations elsewhere You pay Texas's fees plus a typical home-state foreign LLC registration of about $200 per year. | $600 | $300 | $1,200 |
South Dakota vs Texas: full comparison
| Dimension | South Dakota | Texas |
|---|---|---|
| Online filing Can you file the formation document online? | Yes | Yes |
| Online approval time Standard, non-expedited | 1 business day | 13 business days |
| Expedited option Paid fast-track filing | $50 | $25 |
| Annual report Required in addition to tax | Required, $55 | Required, $0 |
| State-imposed annual tax Franchise, privilege, or LLC tax minimum | None | None |
| State income tax On pass-through LLC income at member level | No | 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 | $750 | $750 |
| State sales tax General statewide rate | 4.2% | 6.3% |
Taxes in South Dakota and Texas
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.
South Dakota tax
No entity-level franchise tax on LLCs. No state income tax.
Texas tax
No entity-level franchise tax on LLCs. No state income tax.
Ongoing compliance
The recurring filings each state requires after formation.
South Dakota
Annual report $55, due on your anniversary month. Registered agent required in South Dakota.
Texas
Annual report $0, due 05/15 each year. Registered agent required in Texas.
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.
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.
Texas
- Check business-name availability on the Texas entity search.
- Appoint a registered agent with a physical Texas street address.
- File Certificate of Formation: Limited Liability Company (Form 205) for $300.
- Wait for approval. Online typically 13 business days. Paid expedite from $25.
- Adopt an operating agreement (recommended, not required by Texas 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 $0 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 South Dakota and Texas (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 South Dakota or Texas 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
South Dakota Secretary of State - Business Services
- Website
- sdsos.gov
- Phone
- (605) 773-4845
- corpinfo@state.sd.us
- 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
Texas Secretary of State, Business & Commercial Section
- Website
- www.sos.state.tx.us/corp/index.shtml
- Phone
- (512) 463-5555
- corpinfo@sos.texas.gov
- P.O. Box 13697, Austin, TX 78711-3697
- Office
- James Earl Rudder Office Building, 1019 Brazos Street, Austin, TX 78701
- Hours
- 8:00 AM to 5:00 PM Central, Monday to Friday
South Dakota Department of Revenue
- Website
- dor.sd.gov
- Phone
- (605) 773-3311
- 445 E Capitol Avenue, Pierre, SD 57501
- Hours
- 8:00 AM to 5:00 PM Central, Monday to Friday
Texas Comptroller of Public Accounts
- Website
- comptroller.texas.gov
- Phone
- (800) 252-1381
- P.O. Box 13528, Capitol Station, Austin, TX 78711-3528
- Office
- Lyndon B. Johnson State Office Building, 111 East 17th Street, Austin, TX 78774
- Hours
- 8:00 AM to 5:00 PM Central, Monday to Friday
Frequently Asked Questions
-
Is it cheaper to form an LLC in South Dakota or Texas?
South Dakota is cheaper at formation ($150) than Texas ($300). Ongoing costs are also different: $155 vs $100 per year. Total over three years: $615 vs $600.
-
Can I form an LLC in South Dakota if I live in Texas?
Yes, but your Texas business will almost certainly need to register as a foreign LLC in Texas too, which means paying Texas's foreign registration fee and any ongoing Texas obligations on top of the South Dakota 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 South Dakota vs Texas?
South Dakota online: 1 business day; Texas online: 13 business days. South Dakota offers paid expedite from $50. Texas offers paid expedite from $25.
-
Which state has lower taxes for an LLC, South Dakota or Texas?
South Dakota: no state income tax, no entity-level franchise or LLC tax. Texas: 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. South Dakota and Texas 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 South Dakota or Texas 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
More South Dakota and Texas comparisons
More South Dakota vs ...
Sources
- 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. - Filing fee: www.sos.state.tx.us/corp/forms/205_boc.pdf · verified April 21, 2026
Texas Secretary of State Form 205 Certificate of Formation for an LLC. $300 filing fee stated on form instructions. Authority: Texas Business Organizations Code §4.152 (formation fees). - Filing fee: www.sos.state.tx.us/corp/sosda/index.shtml · verified April 21, 2026
SOSDirect service charges a 2.7% convenience fee on credit-card transactions on top of the $300 state fee. The stated filingFee of $300 is the statutory fee exclusive of the payment-processing surcharge. - Expedited filing: www.sos.state.tx.us/corp/options.shtml · verified April 21, 2026
Texas Secretary of State expedite service: $25 per document for expedited processing (typically 2 business days). Applies to paper filings mailed or delivered to the SoS. SOSDirect online filings are normally processed within a few business days without a separate expedite fee. - Annual report fee: comptroller.texas.gov/taxes/franchise/ · verified April 21, 2026
Texas LLCs file an annual Franchise Tax Report and Public Information Report with the Comptroller by May 15. No separate filing fee for the PIR. Under SB 3 (88th Leg., 2nd C.S., effective for reports due in 2024 and later), entities with total revenue at or below the no-tax-due threshold no longer file a No Tax Due Report but still file the PIR. - Franchise tax: comptroller.texas.gov/taxes/franchise/ · verified April 21, 2026
Texas Tax Code Chapter 171 (Franchise Tax). No-tax-due threshold raised to $2.47 million for reports due 2024 forward (SB 3, 2023). Rates: 0.375% retail/wholesale margin; 0.75% other. EZ computation 0.331% on revenue up to $20M (no deductions). Confirm current threshold on Comptroller site each year. - Operating agreement requirement: statutes.capitol.texas.gov/Docs/BO/htm/BO.101.htm · verified April 21, 2026
Texas Business Organizations Code §101.052 authorizes a company agreement (Texas's term for an operating agreement). Not required to be in writing or filed; LLC may operate under default statutory rules. - Foreign LLC registration fee: www.sos.state.tx.us/corp/forms/304_boc.pdf · verified April 21, 2026
Texas Secretary of State Form 304 Application for Registration of a Foreign LLC. Filing fee $750. Authority: TBOC §9.001. - Publication requirement: statutes.capitol.texas.gov/Docs/BO/htm/BO.3.htm · verified April 21, 2026
Texas does not require newspaper publication for LLC formation. TBOC Chapter 3 governs formation filings without any publication requirement. - Business name search: mycpa.cpa.state.tx.us/coa/ · verified April 21, 2026
Texas Comptroller Taxable Entity Search (the broadly-used search for Texas business entities). SOSDirect also offers a paid name search for $1 per request. - Sales tax rate: comptroller.texas.gov/taxes/sales/ · verified April 21, 2026
Texas statewide sales and use tax rate is 6.25%. Local jurisdictions may add up to 2% for a maximum combined rate of 8.25%.