How to Get South Dakota Sales Tax Permit | A Comprehensive Guide

by
South Dakota Sales Tax Permit

Have you ever wondered what a sales tax permit is in South Dakota? If you don’t, then we will guide you through it. In South Dakota, a sales tax permit, also known as a seller’s permit, is a legal document that allows businesses, specifically South Dakota LLC, to collect and remit sales tax to the South Dakota government. This permit ensures businesses operate legally and have the necessary permissions to conduct sales within a particular state. South Dakota has its own rules and regulations surrounding sales tax permits. Business owners must familiarize themselves with the requirements and processes to comply with the law.

In this comprehensive guide, Webinarcare Editorial Team will walk you through everything you need to know about obtaining and maintaining South Dakota Sales Tax Permit. From understanding the basics of sales tax to the intricacies of the application process, we have got you covered. You must be guided by all the factors gathered in this article.

How to Get Sales Tax Permit in South Dakota

What is a Sales Tax Permit?

A sales tax permit is South Dakota-issued license that allows businesses to collect and remit sales tax on the goods and services they sell. This permit ensures South Dakota businesses operate legally and have the necessary permissions to conduct sales within a particular state. In South Dakota, a sales tax permit is required for businesses that sell taxable goods or services and are required to collect sales tax from their customers.

Who Needs a Sales Tax Permit?

Not all businesses need a sales tax permit. Typically, businesses that sell tangible personal property or taxable services to customers within South Dakota require a sales tax permit. This includes brick-and-mortar stores, online retailers, and service providers. South Dakota may also require sales tax permits for businesses that sell certain types of products or services, such as alcohol or tobacco. If you plan to start a bakery business in South Dakota, you typically need a sales tax permit to collect and remit sales tax on the items you sell.

If your business operates in multiple states or forms a foreign LLC in South Dakota, you may need to obtain a sales tax permit for each state with a sales tax nexus. A sales tax nexus is a connection or presence a business has within a state that requires them to collect and remit sales tax. Factors that can create a nexus include the following:

  • Physical location
  • Employees
  • Inventory within a state

Obtaining a sales tax permit in South Dakota is not just about complying with regulations, but about seizing the opportunity to grow and thrive in the market. To start an LLC must be a gateway to establish a legitimate business presence and to build trust with customers. Embrace this essential step, for it paves the path towards success and prosperity.

– WEBINARCARE EDITORIAL TEAM

How to Get a Sales Tax Permit in South Dakota

The process for obtaining a sales tax permit varies from state to state. Generally, South Dakota businesses must apply through the South Dakota Department of Revenue. The following steps provide an overview of the application process:

Step 1: Determine If You Need a Sales Tax Permit 

Before applying, determine if your South Dakota business needs a sales tax permit based on the goods or services you sell and where you operate.

Most South Dakota businesses that sell tangible goods or services must have a sales tax permit. This includes:

  • Retailers – businesses that sell goods directly to consumers, such as clothing stores, grocery stores, and electronics stores.
  • Service Providers – businesses that provide services, such as hair salons, auto repair shops, and landscaping companies.
  • Wholesalers – businesses that sell goods to other businesses, such as distributors and manufacturers.
  • Online Sellers – businesses that sell goods or services online, including South Dakota E-commerce and online marketplaces.

Step 2: Register Your South Dakota Business

Register your business in South Dakota if you still need to. This may involve obtaining an Employer Identification Number (EIN) in South Dakota from the Internal Revenue Service and registering your business name with the South Dakota Secretary of State. 

Your South Dakota business name should be unique, memorable, and reflective of your products or services. There is a complete guide on South Dakota Business Name Search for a proper South Dakota business name. You can also check the availability of your desired business name by searching the South Carolina Secretary of State Business Filings Search‘s website.

In obtaining an EIN, it can be done through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Complete the registration for a legal South Dakota business if you plan to sell tangible goods. 

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom – ($0 + State Fee for LLC formation)

Step 3: Gather The Necessary Information

The next step is to collect the required information for the South Dakota sales tax permit application. To obtain a sales tax permit in South Dakota, you will need to gather the following necessary information:

  1. Business Details: Provide the legal name, mailing address, and contact information of your business, including your South Dakota DBA (Doing Business As) names.
  2. Entity Type: Indicate whether your business is a sole proprietorship, partnership, corporation, LLC, or legal entity.
  3. EIN/SSN: Have your Employer Identification Number (EIN) or Social Security Number (SSN) ready. This identification is required to associate the sales tax permit with your business.
  4. Purpose of Permit: Explain the nature of your business activities, such as retail sales, wholesale, manufacturing, or service, to determine the appropriate sales tax category.
  5. Product/Service Description: Provide a brief description of the goods or services your business offers, including any unique details that may impact the sales tax requirements.
  6. Nexus Information: Identify if your business has a physical presence or nexus in South Dakota, such as a brick-and-mortar location, employees, or inventory storage.
  7. Estimated Sales: Estimate your expected monthly or annual sales volume in South Dakota to determine the appropriate tax registration and reporting requirements.
  8. Previous Registration: If you are already registered for sales tax in another state, provide details to determine if any reciprocal agreements or exemptions apply.
  9. Supporting Documents: Some states may require additional documentation, such as a copy of your business license, federal tax returns, or a certificate of authority.
  10. Fee Payment: Be prepared to pay the required fee for obtaining a sales tax permit in South Dakota.

It’s important to note the exact requirements and processes in South Dakota. It is recommended to visit the official website of the South Dakota Department of Revenue or consult with a tax professional for accurate and up-to-date information.

Step 4: Complete The Application

Fill out the sales tax permit application form for South Dakota, either online or by paper. Be prepared to answer questions about your business operations, products, and services. You can register your South Dakota sales tax permit in South Dakota Department of Revenue.

Step 5: Pay Any Required Fees

In South Dakota, the state permit may charge a fee for obtaining a sales tax permit. Be prepared to pay this fee when submitting your application. Usually, it costs $0 (Free). 

Step 6: Submit The Application

Submit your completed application, along with the required fee of $0 (Free), to the South Dakota Department of Revenue.

Step 7: Receive Your Permit

Once your application is approved, you will receive your sales tax permit. This may be a physical document or an electronic certificate you can print. 

How to Maintain a Sales Tax Permit

After obtaining a sales tax permit, South Dakota businesses must maintain compliance with South Dakota sales tax laws. This typically involves the following steps:

  • Collect Sales Tax: Collect sales tax from customers on taxable goods and services. Be sure to charge the correct sales tax rate based on your and your customer’s locations. The sales tax rate in South Dakota is 4.50%. 
  • Keep Accurate Records: Maintained detailed records of all sales transactions, including the amount of sales tax collected. This information will be required when filing your sales tax returns. Hire a certified public accountant (CPA) to keep track of records. 
  • File Sales Tax Returns: File sales tax returns with South Dakota, typically monthly, quarterly, or annually, depending on your sales volume and South Dakota requirements. Be sure to remit the sales tax collected during the reporting period.
  • Renew your Permit: South Dakota requires businesses to renew their sales tax permits periodically. Know your state’s renewal requirements and complete the necessary steps to maintain your permit.

To easily maintain your sales tax permit, check out the Best LLC Services in South Dakota that provides obtaining a sales tax permit.

LLC Service

Rating & Pricing

Top Features

Learn More

#1 Recommendation

$0 + State fee

  • Free LLC Formation

  • Legal Support

  • Highly Reputed Company

Learn More

$299 + State fee

  • Single LLC formation package

  • Flat price for all services

  • Legal consultation

Learn More

Penalties for Non-Compliance

Failure to obtain or maintain a sales tax permit can seriously affect a business. Penalties for non-compliance can include fines, penalties, interest charges, and even the revocation of your business license. Additionally, South Dakota businesses that fail to collect and remit the South Dakota sales tax may be held personally liable for the unpaid taxes.

Do I Need a Sales Tax Permit If I Only Sell Online?

You likely need a sales tax permit if you sell taxable goods or services online and have a sales tax nexus in South Dakota. To have a Home-Based Business in South Dakota, you must still file and maintain a sales tax permit. 

How Long Does Obtaining a Sales Tax Permit Take?

The processing time for sales tax permit applications takes time. In South Dakota, they may issue permits within a few days, while others may take several weeks. Be sure to apply well in advance of when you plan to start selling taxable goods or services.

Can I Have Multiple Sales Tax Permits?

Businesses that operate in multiple states or sell different types of products may need multiple sales tax permits. Be sure to research the specific requirements for each state and product type. Having a foreign LLC is not quite easy since you still need to hire a Registered Agent, file for the Articles of Organization of the state you wish to operate your business, and also, you need to have multiple sales tax permits. 

How Much Does a Sales Tax Permit Cost?

The costs and requirements for obtaining a sales tax permit vary depending on the state. To find accurate information about the cost of a sales tax permit in South Dakota, you can visit the South Dakota Department of Revenue’s website or consult with a tax professional or accountant familiar with your state’s regulations. They can provide the most up-to-date information on the costs and requirements for obtaining a sales tax permit in South Dakota.

FAQs

How do I obtain a sales tax permit in South Dakota?
You can apply online through the South Dakota Department of Revenue website or fill out a paper form and mail it in.
Is there a fee to obtain a sales tax permit in South Dakota?
No, there is no fee to register for a sales tax permit in South Dakota.
Do I need a sales tax permit if I sell online from South Dakota?
Yes, if you sell taxable goods or services to customers within South Dakota, you are required to obtain a sales tax permit.
What is the sales tax rate in South Dakota?
The state sales tax rate in South Dakota is 4.5%, but local sales taxes can bring the total tax rate up to 6.5%.
Do I have to file a South Dakota sales tax return if I have no sales?
If you have a South Dakota sales tax permit, you are required to file a return even if you did not have any taxable sales.
When are South Dakota sales tax returns due?
South Dakota sales tax returns are due on the 20th of the month following the end of the reporting period.
What happens if a South Dakota sales tax return is filed late?
If a South Dakota sales tax return is filed late, penalties and interest may be assessed.
Can I pay my South Dakota sales tax liability online?
Yes, South Dakota accepts online payments of sales tax liabilities through their ePath system.
Can I use my South Dakota sales tax permit in other states?
No, a South Dakota sales tax permit is only valid for transactions within South Dakota.
Can I apply for a South Dakota sales tax permit as an out-of-state business?
Yes, if you engage in regular and systematic business activities within South Dakota, you may be required to obtain a South Dakota sales tax permit.
What information do I need to provide when applying for a South Dakota sales tax permit?
You will need to provide your legal business name, address, phone number, Federal Tax ID Number (EIN), and a description of the goods or services you will be selling in South Dakota.
How long does it take to receive a South Dakota sales tax permit after applying?
Generally, you will receive your South Dakota sales tax permit within 7-10 business days of the receipt of your application.
How often do I need to renew my South Dakota sales tax permit?
Your South Dakota sales tax permit is valid for two years and will need to be renewed before its expiration date.
Can my South Dakota sales tax permit be revoked?
Yes, if you fail to comply with any of the South Dakota sales tax laws, your permit may be revoked.
Is there a threshold for South Dakota sales tax liability?
Yes, you must both have a valid sales tax permit and have sales totaling at least $100,000 in the previous or current year before you are required to collect sales tax in South Dakota as an out-of-state seller.
Do I need a separate South Dakota sales tax permit for multiple locations?
Yes, if you have multiple business locations in South Dakota, you will need to apply for a separate sales tax permit for each location.
What is the definition of “nexus” for South Dakota sales tax purposes?
A nexus means a physical or economic presence in South Dakota, which triggers an obligation to collect and remit sales tax.
Do I need a South Dakota sales tax permit if I am a service provider and have no physical presence in the state?
Yes, you may still need to obtain a South Dakota sales tax permit if you provide taxable services to South Dakota customers.
Am I required to collect South Dakota sales tax on shipping charges?
If shipping is separately stated on the invoice and not part of the sales price of the goods, it is not subject to South Dakota sales tax.
Are sales of computer software and digital products subject to South Dakota sales tax?
Yes, sales of computer software and digital products are subject to South Dakota sales tax.
Are alcohol sales subject to South Dakota sales tax?
Yes, alcohol sales are subject to both state and local South Dakota sales taxes.
Are sales of prepared food subject to South Dakota sales tax?
Yes, sales of prepared food are subject to both state and local South Dakota sales taxes.
Do I need a separate permit for lodging taxes in South Dakota?
Yes, if you operate a hotel or other lodging establishment in South Dakota, you will need to obtain a separate license to collect and remit lodging taxes.
How do I report taxable sales of multiple South Dakota locations on one sales tax return?
You will need to break down the sales by location and report them separately on your South Dakota sales tax return.
How do I obtain a reseller permit in South Dakota?
Reseller permits are not recognized in South Dakota. All businesses providing taxable goods or services need to obtain a South Dakota sales tax permit.
What is the Streamlined Sales Tax Project in South Dakota?
The Streamlined Sales Tax Project is an effort between states to simplify and standardize sales tax requirements, including those for out-of-state sellers.
Does South Dakota offer a sales tax exemption for electricity generators or transmissions?
Yes, electricity generators and transmissions are exempt from both state and local South Dakota sales taxes.
Can I still obtain a South Dakota sales tax permit if I have outstanding tax liabilities?
No, any outstanding tax liabilities must be resolved before a South Dakota sales tax permit will be issued.
What is a sales tax permit in South Dakota?
A sales tax permit in South Dakota is a certificate that allows businesses to collect and remit sales tax on taxable goods and services.
Who needs a sales tax permit in South Dakota?
Any business that engages in taxable sales in South Dakota, including online businesses, needs a sales tax permit.
How do I know if my business needs a sales tax permit in South Dakota?
The South Dakota Department of Revenue can provide guidance on whether your business needs a sales tax permit based on its specific activities.
How do I apply for a sales tax permit in South Dakota?
You can apply for a sales tax permit in South Dakota online through the SD Dept. of Revenue website.
Is there a fee for obtaining a sales tax permit in South Dakota?
No, there is no fee for obtaining a sales tax permit in South Dakota.
How long does it take to obtain a sales tax permit in South Dakota?
It typically takes 1-2 business days to obtain a sales tax permit in South Dakota after submitting the application.
Can I apply for a sales tax permit in South Dakota in person?
No, the only way to apply for a sales tax permit in South Dakota is online.
Do I need a federal tax ID to obtain a sales tax permit in South Dakota?
Yes, you will need a federal tax ID (EIN) to obtain a sales tax permit in South Dakota.
How do I get a federal tax ID (EIN)?
You can obtain a free federal tax ID (EIN) from the IRS website.
Can I use my social security number as a federal tax ID (EIN) for a sales tax permit in South Dakota?
No, you cannot use your social security number as a federal tax ID (EIN) for a sales tax permit in South Dakota.
When do I need to renew my sales tax permit in South Dakota?
Your sales tax permit in South Dakota will need to be renewed annually.
Is a sales tax permit transferable in South Dakota?
No, a sales tax permit is not transferable to another business in South Dakota.
Why do I need to collect sales tax in South Dakota?
South Dakota law requires businesses to collect sales tax on taxable goods and services sold in the state.
How much sales tax do I need to collect in South Dakota?
The sales tax rate in South Dakota is currently 6.5%.
How often do I need to remit sales tax collected in South Dakota?
Sales tax collected in South Dakota should be remitted to the state on a monthly basis.
Where do I need to remit sales tax collected in South Dakota?
Sales tax collected in South Dakota should be remitted online through the SD Dept. of Revenue website.
Are there any exceptions to sales tax collection in South Dakota?
Yes, there are certain goods and services that are exempt from sales tax in South Dakota, such as prescription drugs and groceries.
Can I still collect sales tax if I don’t have a sales tax permit in South Dakota?
No, it is illegal to collect sales tax in South Dakota without a sales tax permit.
What are the penalties for not obtaining a sales tax permit in South Dakota?
Failure to obtain a sales tax permit in South Dakota can result in civil and criminal penalties, including fines and imprisonment.
Do I need to provide any documentation with my sales tax permit application in South Dakota?
Yes, you will need to provide your federal tax ID (EIN) and other basic business information when applying for a sales tax permit in South Dakota.
Can I use my sales tax permit in South Dakota for sales in other states?
No, a sales tax permit in South Dakota only applies to sales made in the state.
Do I need a sales tax permit if I’m not making any sales yet in South Dakota but plan to in the future?
Yes, you will need a sales tax permit in South Dakota before making any taxable sales in the state.
Can I cancel my sales tax permit in South Dakota?
Yes, you can cancel your sales tax permit in South Dakota by contacting the SD Dept. of Revenue.
Can I merge multiple sales tax permits into one in South Dakota?
No, each separate business location in South Dakota will require its own sales tax permit.
Can I sell goods or services before I receive my sales tax permit in South Dakota?
No, it is illegal to make taxable sales in South Dakota before obtaining a sales tax permit.
Do I need to display my sales tax permit in my business in South Dakota?
Yes, you should display your sales tax permit at your business location in South Dakota for customers to see.
Can I use my sales tax ID number in South Dakota as my business ID number?
No, your sales tax ID number in South Dakota is specific only to sales tax purposes.
Can I pay sales tax in South Dakota by check?
Yes, you can remit sales tax collected in South Dakota by check.

Also Read

Conclusion

Obtaining and maintaining a sales tax permit is crucial to running a compliant and successful business. By understanding the requirements and processes in South Dakota, you can ensure that your business collects and remits sales tax correctly and avoids any penalties for non-compliance. Consulting with a tax professional or South Dakota attorney is recommended to ensure that your South Dakota business meets all necessary sales tax requirements.

Leave a Comment