South Dakota LLC Operating Agreement: Free Template & Guide

The South Dakota LLC operating agreement is the internal contract that governs ownership, management, and money inside a company formed under SDCL Title 47, Chapter 34A. The state doesn't require one, and the Secretary of State won't accept it. Skip it anyway, and statutory defaults take over.

Free South Dakota Templates

Download Boost Suite’s free South Dakota LLC Operating Agreement template

Choose the version that matches your South Dakota LLC structure and download it in PDF or Word format. Each template is designed to help you document ownership, management, and internal rules more clearly from day one.

Preview of the South Dakota single-member operating agreement template

Single-Member Operating Agreement

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Multi-Member Operating Agreement

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Manager-Managed Operating Agreement

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How South Dakota's LLC Act treats operating agreements

The South Dakota Uniform Limited Liability Company Act lives in SDCL Title 47, Chapter 34A, and § 47-34A-103(a) is the operative statute for any operating agreement. The section says the agreement “need not be in writing.” Oral and even implied operating agreements are legally recognized, though they create evidentiary problems no founder wants to test in court.

From the filing side, the Secretary of State confirms the same point. Corporate bylaws and LLC operating agreements are internal company documents kept in the company's records, never filed with the state and never part of the public record. That holds for every South Dakota LLC, whether a single member LLC or a multi member LLC, member-managed or manager-managed.

One feature sets South Dakota apart from most jurisdictions. The statutory definition expressly states that a single-member LLC operating agreement isn't unenforceable by reason of having only one party signing it. That's been settled state law for years, and it removes the legal hesitation some other states create around solo agreements.

Forming the LLC itself is a separate workflow. The Articles of Organization are filed with the South Dakota Secretary of State for $150 online or $165 by mail, payable at the time of filing. Both the registered office and the registered agent must be named in those Articles under § 47-34A-203. Boost Suite walks through the filing in How to Start a South Dakota LLC in 5 Simple Steps, and a South Dakota LLC formation cost breakdown lays out every fee. Picking the agent is its own decision, and Boost Suite reviewed the 12 best South Dakota registered agent services for that step.

What South Dakota law fills in when your operating agreement is silent

When the operating agreement is silent, SDCL 47-34A-404.1 drops in default rules that don't always match how members actually run the business. Each member gets equal rights in the management of the company, regardless of capital contribution. Routine business decisions go by majority vote of the members in a member-managed LLC, or by majority of the managers in a manager-managed LLC.

Some matters require unanimous member consent under the same statutory provisions. The list includes amending the operating agreement, admitting a new member, certain distributions, sale of substantially all of the company's assets, and dissolution.

Distributions default to pro rata treatment under SDCL 47-34A-405 and 47-34A-406, with strict liability for managers or members who approve an improper distribution of cash or property. Dissolution events live in § 47-34A-801, including expiration of any term stated in the agreement, unanimous consent to wind up, and judicial dissolution on specified grounds.

Here's where it gets practical. The table below contrasts what South Dakota law does on its own with what the operating agreement can re-engineer.

What a South Dakota operating agreement can't override

SDCL 47-34A-103(b) lists the contractual freedoms an operating agreement loses no matter how it's drafted. The list isn't long, but each item carries weight:

• Duty of loyalty: the agreement can't eliminate it, though it can identify activities that don't violate the duty if the standards aren't manifestly unreasonable.
• Obligation of good faith and fair dealing: the agreement can prescribe performance standards, but can't strip the duty.
• Right to expel a member: § 47-34A-601(6) preserves this right in defined circumstances.
• Winding up the company: the agreement can't override the duty to wind up under § 47-34A-801(a)(3) and (4).
• Third-party rights: the agreement can't restrict rights non-members are granted by the chapter.

These guardrails apply to every South Dakota LLC, including single-member companies. The fiduciary baseline lives in SDCL 47-34A-409, which codifies the duty of loyalty, the duty of care, and the obligation of good faith and fair dealing. These three statutory duties bind members in a member-managed company and managers in a manager-managed company alike.

The “manifestly unreasonable” standard is where most of the actual drafting fights happen. The agreement can change how a duty is measured, but the change has to survive a court's reasonableness review. South Dakota courts haven't issued a bright-line precedent on what crosses the line. The catch: any aggressive carve-out gets decided after the fact, often years later.

Member-managed, manager-managed, and South Dakota's “excluded manager” option

The first management decision happens when the Articles of Organization are filed. Under SDCL 47-34A-203(a)(6), the Articles must state whether the company is manager-managed and, if so, name the initial managers. Silence on the question makes the LLC member-managed by default.

Member-managed (the default if Articles are silent)

Every member shares equal rights in management of a member-managed South Dakota LLC. Day-to-day decisions need a majority of the members, while certain reserved actions still require unanimity under § 47-34A-404.1. This is the structure most single-member LLCs and small partnerships use, because it tracks how owners typically expect the company to run.

Manager-managed (designated in Articles)

Designating the LLC as manager-managed shifts authority to one or more named managers who hold equal rights among themselves. Members keep certain unanimous-consent rights (amending the operating agreement, admitting members, dissolution), but day-to-day calls move to managers. The company can also create officer roles (CEO, CFO, treasurer) inside the operating agreement, with managers appointing and removing each officer. A manager-managed structure lets passive investors hold a membership interest without taking on management responsibility, and it's the model most outside-capital LLCs adopt.

Picking a name that's distinct from existing entities matters for both the Articles and the operating agreement. Boost Suite walks through how to run a South Dakota business entity search on the Secretary of State's records to confirm the LLC name is available before filing.

The “excluded manager” option (SDCL 47-34A-304, added 2023)

South Dakota's excluded manager provision is one of the most underused features in the state's LLC statute. New section 47-34A-304, added by HB 1106 (Chapter 233, 2023 session), lets the operating agreement divide manager duties so a designated manager is relieved of specified obligations. The State Bar of South Dakota's commentary on the change describes it as a flexible governance tool. It works best for LLCs that want to separate strategic, operational, and advisory functions inside one management layer.

The catch: the excluded manager carve-out can't eliminate the non-waivable provisions in § 47-34A-103(b) or the fiduciary baseline in § 47-34A-409. Drafted properly, it gives South Dakota LLCs a precision instrument that most state statutes don't offer.

Clauses to draft into a South Dakota operating agreement

A workable South Dakota LLC operating agreement isn't a copy of a generic multi-state template. The clauses below are the ones where SD law most actively shapes drafting choices, and they're the sections that go wrong most often when founders use a generic form.

Capital contributions, distributions, and tax allocation

Spell out who contributed what, when, and in what form. SDCL 47-34A-405 and 47-34A-406 govern distributions and impose strict liability on members or managers who approve a distribution that leaves the company unable to pay its debts. The operating agreement should:

• Specify each member's initial capital contribution (cash, services, property, with valuation method):
• Define how additional contributions are called and approved by the members:
• Tie profits and losses to capital accounts or to membership interest, then set a clear distribution schedule:

South Dakota has no state personal income tax and no state corporate income tax. That means the federal classification of the LLC and the sales/use tax registration with the South Dakota Department of Revenue do most of the tax work each year. The agreement should match the chosen federal classification: default partnership treatment for multi-member LLCs, disregarded entity for single-member, or the S-corporation election filed with the Internal Revenue Service on Form 2553. It should also authorize officers or managers to register for sales tax licenses where applicable.

For founders who'd rather not draft these clauses solo, 10 of the best LLC services in South Dakota pair operating agreement preparation with formation filings and registered agent services.

Membership transfers, charging order, and transferee rights

SDCL 47-34A-504 makes the charging order the exclusive remedy a creditor of a member has against that member's distributional interest. The creditor steps into the shoes of a transferee under § 47-34A-503, which means they receive distributions when declared but don't get management rights or member status. Reinforce that protection in the operating agreement:

• State that no transferee automatically becomes a member without the consent of the existing members:
• Add a right of first refusal for the company and remaining members on any voluntary transfer:
• Define permitted transfers (estate planning trusts, family transfers) and require a buy-out at a stated valuation method on triggering events:

Without these clauses the default rules still protect against creditor takeover, but they don't address voluntary transfers among members in the way most founders actually want.

What's different about single-member operating agreements

A single-member South Dakota LLC operating agreement looks different from a multi-member one, even though the underlying statute treats both:

• Single-member: confirm sole ownership, document the initial capital contribution, name a successor manager for incapacity or death, and reinforce separation of personal and company finances:
• Multi-member: add deadlock-resolution mechanics, buy-sell triggers (death, disability, voluntary exit), and dispute resolution language (mediation before litigation, choice of law, venue):

South Dakota LLC operating agreement FAQ

These are the operating-agreement questions South Dakota LLC owners ask most often, answered with the relevant SDCL citations and current 2026 fees.