Here’s an overview of the key steps you’ll need to take to start your own business in South Dakota.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check Choose Your Business Structure on Nolo’s website for more information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the South Dakota Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 120 days by filing anApplication for Reservation of Name form with the South Dakota SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations).See How to Form an LLC in South Dakota and How to Form a Corporation in South Dakota for more information.
Is your business is a sole proprietorship or partnership that uses a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership)? If so, you must register a fictitious business name with the South Dakota Secretary of State.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in South Dakota, you must register with the Department of Revenue (DOR) to collect sales tax. You can register online at the DOR’s South Dakota Tax Application website.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits.These cover areas such as:
The Governor’s Office of Economic Development (GOED) has a downloadable document that lists licenses issued by many state agencies, such as the Departments of Agriculture, Environment and Natural Resources, Health, and Labor & Regulation. You can apply for some important state business licenses relating to taxes by completing a South Dakota Tax Application. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Occupational Licensing Agencies section of the South Dakota Department of Labor and Regulation website lists many of state agencies and boards that regulate various professions and occupations. Similarly, the South Dakota Boards and Commissions Portal provides a searchable list of licensing agencies and boards.
You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.
South Dakota is one of just four states that have no corporate tax and no personal income tax. See South Dakota State Business Income Tax for more information on state business taxes in South Dakota.
South Dakota LLCs and corporations must file annual reports with the South Dakota SOS. Also, apart from South Dakota taxes, there are federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.
Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check Obtaining Business Insurance for more information.