Starting Your Business in South Dakota | A Step-by-Step Guide

Start a Business in South Dakota

If you want to start an LLC in South Dakota, there are numerous factors to consider. Starting your own business is one of the most exciting and profitable things you can do in South Dakota. But where do you start? Follow our comprehensive guide on How to Start a Business in South Dakota. We will assist you in removing doubt from the process and investigate your success chances. It will begin with defining your business idea and progress to establishing, launching, and expanding your business. Webinarcare Editorial Team will help you every step of the way!

What Business to Start in South Dakota?

If you’re looking to start a business in South Dakota, consider starting a limited liability company (LLC). LLCs offer personal liability protection for their owners while also providing the flexibility of a partnership or sole proprietorship. Beyond that, here is the list of businesses to consider in South Dakota.

  1. Tour Guide
  2. Canoe and Kayak Rental Business
  3. Catering Business
  4. Campground business
  5. Woodworking business

Whatever business you choose to start, it’s important to conduct thorough market research and create a solid business plan before diving in. We reviewed some of the Best LLC Services and provided features as an add-on with their packages for you to check out.

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Starting a business can be a challenging but highly rewarding endeavor. By taking the time to research and plan, you can increase your chances of success. Whether you choose to form a corporation or start an LLC in South Dakota, it’s important to surround yourself with a strong team that will guide you. Don’t let fear hold you back, take that first step towards turning your business dreams into a reality.

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How to Start a Business in South Dakota?

To form a business in South Dakota, you must follow a few steps that include creating a business plan, choosing a business entity type, determining your business costs, naming your business, registering a business, and lastly, marketing your business.

Please continue reading to learn more about the overall procedure and what new small business owners should keep in mind as they complete each step.

Step 1: Creating a Business Plan

When developing a business plan, many factors should be considered during the decision-making process. Your business plan in South Dakota serves as a road map for your company’s success.

A business plan should take into account the specific goals of your company. You should know the product or service you will provide in South Dakota. A well-thought-out business plan is essential for determining how your company will make a profit. If the purpose of the business plan is ambiguous and unrelated to the service you provide, it will impact the business you are forming. Make sure your business goals are SMART (specific, measurable, achievable, realistic, and time-bound). Also, researching your competitors’ services will help you determine your strategy for your state business. Finally, you should consider your company’s funding.

With this article’s assistance, you can better comprehend your business’s essential components and success strategy. You can apply for South Dakota Small Business Loans from banks and investor funding to help support your company in South Dakota.

Once you have the entire plan in your hands, you can work on the legal framework of your company. Legally, you can form an LLC for your ideal business.

Step 2: Choose a Business Entity in South Dakota

Selecting a business entity for your South Dakota company. When starting your own business, you must choose a business structure. How well your personal assets are secured, how much tax you pay, and how much paperwork you have to deal with will all be significantly impacted by the type of corporate entity you choose. Consider setting up a corporation, LLC, LLP, or sole proprietorship as your business entity in South Dakota.

Sole Proprietorships

Consider a sole proprietorship if you want to start a business in South Dakota by yourself. A sole proprietorship is the simplest business structure in which a single individual owns and operates the entire business. The owner and the business are considered the same legal entity in a sole proprietorship. There is no legal distinction between the owner and the business, meaning that the owner has complete control over the business operations, profits, and losses.

Sole proprietorships are best suited for South Dakota small businesses with low risks and for individuals who want to maintain complete control over their business without the complexities of establishing a separate legal entity.

Limited Liability Company

A Limited Liability Company (LLC) is a business structure that combines features of both partnerships and corporations, offering limited liability protection to its owners (called members) while allowing flexibility in management and taxation. An LLC is a separate legal entity from its owners, meaning the members are not personally liable for the business’s debts, obligations, or liabilities.

It is a popular choice for small to medium-sized businesses that want the liability protection of a corporation while maintaining management flexibility and simpler tax treatment. It’s essential to consult with a legal or financial professional to determine if an LLC is the best choice for your specific business situation.

Limited Liability Partnership

A limited liability partnership (LLP) is comparable to an LLC. However, it is usually used by licensed business professionals like attorneys or accountants. A partnership agreement is necessary for this kind of business entity. You can form an LLP in South Dakota if you are planning to.

Corporation

Forming a Corporation in South Dakota reduces your personal liability for business debts as an LLC does. A corporation is a legal entity that is separate and distinct from its owners, known as shareholders. It is created under the laws of the state it is incorporated in and is considered a separate “person” under the law. The corporation can enter into contracts, own property, sue and be sued, and pay taxes separately from its owners.

A corporation can be taxed as an S-corporation (S-Corp) or a C-corporation (C-Corp). If a small corporation satisfies certain Internal Revenue Service (IRS) standards, then S-corporation status is available, providing pass-through taxation. However, most larger businesses and startups seeking venture financing are taxed as C-corps.

To choose the right business structure in South Dakota, consider personal liability protection, taxation, management flexibility, administrative requirements, and setup costs. Consult a legal or financial professional to help you make the best decision.

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Step 3: Determine your South Dakota Business Cost

In South Dakota, you should determine the cost of your business. You should consider paying the Articles of Organization fee, business licenses fee, office supplies and equipment, payroll, rent, utilities, transportation, and taxes.

Usually, filing an initial South Dakota Articles of Organization fee costs $150, while the LLC annual fee costs $50 in South Dakota. In terms of filing South Dakota Articles of Incorporation, the costs usually range up to $150 for online filing, and $165 for filing by mail..

If forming an LLC is your ideal business, consider knowing the LLC Cost in South Dakota.

Step 4: Name your Business in South Dakota

Naming your business doesn’t take a lot of time. With the help of South Dakota Business Name Search, you can acquire a name for your business. If you form an LLC in South Dakota, you must follow the below rules while naming your business-

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In South Dakota, if you do not wish to file your business right away but want to hold the name that you have decided on, then you can reserve your business name. You must file a name reservation application in the South Dakota Secretary of State to keep the name.

If the business name is available, you may choose to reserve it for a specific period of 120 days. The online name reservation fee is disclosed and the mail name reservation fee is $25. If your business plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done in two methods, by mail and in person, which you can file in South Dakota Secretary of State. You can check out how to file a DBA in South Dakota for clearer understanding.

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Step 5: Register South Dakota Business

To register a business in South Dakota, you need to file it with the South Dakota Secretary of State. Before that, you must have a South Dakota Registered Agent for your business. The Registered Agent is a person who is responsible for receiving important legal documents on your behalf.

You can serve as your own Registered Agent, or you can appoint a friend or family member, or you can check the Best Registered Agent Services in South Dakota.

Apply For Articles of Organization

After you have a Registered Agent, you need to file the South Dakota Articles of Organization, if you want to have an LLC structure, or you need to file the South Dakota Articles of Incorporation if you want to have a Corporation.

Request For an EIN

In addition to the paperwork, your Registered Agent should apply for an Employer Identification Number (EIN) in South Dakota. An EIN will serve as the tax ID for your professional corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. You can obtain the EIN for free from the IRS.

The application of an EIN in South Dakota can be 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 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 (for 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.

After you have your EIN number, you can benefit in several ways. It will give your LLC the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

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LegalZoom($0 + State Fee for LLC formation)

Step 6: Apply for Business License and Permit

Business licenses and operating permits are necessary to run any business in South Dakota. Before launching your new business, request any required business license or permission. Most South Dakota businesses need licenses or permits to operate. Federal, state, and local governments may all require businesses to have licenses and permits. The business license fee depends on the type of license you are applying for. It can start from $25 till going up to $100+. However, in South Dakota, the business license fee ranges from $50 – $300.

Step 7: Obtain a Bank Account

Your business dealings in South Dakota might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Opening a separate bank account for your South Dakota business is essential for maintaining a clear separation between your personal and business finances.

You can check out the Best Banks in South Dakota, which offers the best fees, services, and convenience for your business needs.

Step 8: Market your Business in South Dakota

Now that your South Dakota business is registered, you can market it with an ideal marketing plan. An ideal marketing plan can help a start-up business to become known. Making a comprehensive social media network like META, Facebook, Instagram, Twitter, and YouTube falls within this category. While creating an SEO campaign for your company website, you may also look at specialized communities on Facebook and LinkedIn.

FAQs

What kind of business should I start in South Dakota?
That depends on your skills and interests, as well as market opportunities in South Dakota.
What are some good industries to start a business in in South Dakota?
Agriculture, healthcare, and tourism are all prominent industries in South Dakota.
Do I need a business license to start a business in South Dakota?
Yes, you will need to obtain a business license from the South Dakota Secretary of State’s office.
Can I file my business license application online in South Dakota?
Yes, you can apply for a business license online through the South Dakota Secretary of State’s website.
What are the state taxes for businesses in South Dakota?
South Dakota does not have a corporate income tax, personal income tax, or franchise tax.
What type of legal structure should I choose for my South Dakota business?
Your legal structure options in South Dakota include sole proprietorship, partnership, LLC, corporation, and non-profit.
How long does it take to register a business in South Dakota?
Business registration time varies depending on the type of business structure you choose and can take anywhere from several days to several weeks.
Do I need to register my business’s trademark in South Dakota?
The South Dakota Secretary of State’s office doesn’t handle trademarks, so you will need to register your trademark separately through the United States Patent and Trademark Office.
What kind of insurance should I get for my South Dakota business?
Common types of insurance for businesses in South Dakota include general liability insurance, cyber liability insurance, and worker’s compensation insurance.
How do I get a sales tax permit for my South Dakota business?
You can apply for a sales tax permit online through the South Dakota Department of Revenue’s website.
Do I need to collect sales tax for online sales made in South Dakota?
Yes, since June 2018, businesses making sales to South Dakota customers through an online marketplace or with more than 200 transactions a year are required to collect sales tax.
What are the requirements to hire employees in South Dakota?
You will need to obtain workers’ compensation insurance and obtain an Employer Identification Number (EIN) from the Internal Revenue Service to legally hire employees.
What resources are available for South Dakota entrepreneurs?
The South Dakota Governor’s Office of Economic Development offers resources and assistance for entrepreneurs and small businesses in the state.
Is South Dakota a good state to start a business in?
According to the 2021 Forbes Small Business Index, South Dakota is ranked as the 23rd best state for business.
Where can I find funding for my South Dakota startup?
Resources for finding business funding in South Dakota include banks, investors, and business accelerators.
How do I register my LLC in South Dakota?
You can register your LLC online through the South Dakota Secretary of State’s website and will need to obtain a state business license as well.
Does South Dakota have any special programs for veteran-owned businesses?
The South Dakota Governor’s Office of Economic Development offers resources and support for veteran-owned businesses in the state.
Can I get a loan to start my business in South Dakota?
Business loans are available through banks and other lenders in South Dakota.
How can I find out if the name I want for my business is available in South Dakota?
You can perform a business name search through the South Dakota Secretary of State’s website to determine if your desired name is available.
What should I include in my South Dakota business plan?
A South Dakota business plan should include a detailed description of your products or services, market analysis, marketing strategies, and financial projections.
Are there any special state laws or regulations I need to be aware of to start a business in South Dakota?
Any industry-specific regulations or legal requirements will depend on your industry and business structure; however, South Dakota is generally considered to be a business-friendly state.
How do I pay taxes for my South Dakota business?
You can file and pay state taxes online through the South Dakota Department of Revenue’s website.
What taxes does South Dakota require for businesses operating within the state?
South Dakota charges a sales tax on tangible property and products of contracts for improving real property; there is no personal or corporate income tax.
Can I apply for grants with the state of South Dakota for my business?
The Governor’s Office of Economic Development may provide funding source for some small business researched by the office.
What are some resources for obtaining state contracts in South Dakota for my business?
The state procurement office contains a database of current contracts available for procurement for supplier use.
How do I set up an agricultural business in South Dakota?
The South Dakota Department of Agriculture provides information about state resources on starting specific types of agricultural businesses
Are there any regulations on employment I need to know if I start a business in South Dakota that employs minors?
South Dakota has several child labor laws, including restrictions on hours worked, permitted jobs, and age limits.
Are there any subsidies for businesses located within certain areas of South Dakota?
Yes, Governor’s Office offers distance-related subsidies for such businesses.
How do I start an online business in South Dakota?
The procedures for starting an online business in South Dakota are pretty much the same as for starting a traditional brick and mortar business.
What are the most popular industries to start a business in South Dakota?
The most popular industries in South Dakota are agriculture, manufacturing, healthcare, and tourism.
Is there a sales tax in South Dakota?
Yes, South Dakota has a sales tax rate of 4.5%.
What are the requirements for registering a business in South Dakota?
In South Dakota, you need to register your business with the Secretary of State by filing articles of incorporation, articles of organization, or a certificate of limited partnership, depending on your business structure.
What is the process for obtaining a business license in South Dakota?
The process for obtaining a business license in South Dakota varies depending on the type of business you have, but you may need to obtain licenses from multiple state agencies.
Are there any incentives for businesses to start in South Dakota?
Yes, South Dakota offers a variety of tax incentives and job creation programs for businesses that start or expand in the state.
Are there any specific regulations for starting a restaurant business in South Dakota?
Yes, restaurant businesses in South Dakota are subject to health code regulations and food service laws.
What are the labor laws in South Dakota?
South Dakota labor laws cover minimum wage, overtime, workers’ compensation, and other employment issues.
What is the state income tax rate in South Dakota?
South Dakota does not have a state income tax.
Are there any grants available for small business owners in South Dakota?
Yes, there are several grant programs available to small business owners in South Dakota, including the South Dakota Development Corporation (SDDC) funding program.
Are there any high-growth industries in South Dakota?
Renewable energy, advanced manufacturing, and value-added agriculture are among the many high-growth industries in South Dakota.
Can I get funding from the state government to start my business in South Dakota?
Yes, the South Dakota Governor’s Office of Economic Development (GOED) provides financial assistance to start-ups.
What is the cost of living like in South Dakota?
South Dakota has a lower cost of living compared to many other states in the US.
What universities in South Dakota offer entrepreneurship programs?
The University of South Dakota, South Dakota State University, and Black Hills State University are notable universities having a dedicated program for entrepreneurship in South Dakota.
How can I obtain a vendor’s license in South Dakota?
Vendor licenses are not required statewide in South Dakota.
What are the tax incentives for small businesses in South Dakota?
South Dakota’s incentive program includes tax rebates, productivity enhancement and stimulus programs, low-interest financing, workforce development grants, and equipment grants.
Is unemployment insurance mandatory in South Dakota?
Employers are required to provide unemployment insurance in South Dakota.
Can I register my business online in South Dakota?
Yes, you can register your business online using the South Dakota Secretary of State’s website.
Do I need to file taxes for my business in South Dakota?
Yes, all businesses operating in South Dakota are required to file state and federal taxes.
What is the process for obtaining a building permit in South Dakota?
The process for obtaining a building permit varies depending on the city or county where you plan to construct your business facility.
What are the workers’ compensation laws in South Dakota?
South Dakota’s workers’ compensation laws provide benefits to employees who get hurt or sick on the job.
Can I register a sole proprietorship business in South Dakota?
Yes, registering your sole proprietorship with the Secretary of State in South Dakota is simple and easy.
What are the zoning laws in South Dakota?
Zoning and land use laws vary by city and county in South Dakota.
How long does it take to register a new business in South Dakota?
It can take anywhere from several days, for online filing, to several weeks, with complete document verification, to fully register your new business in South Dakota.
Does South Dakota have any mediation programs for business disputes?
Yes, the South Dakota Department of Revenue offers taxpayer mediation services for certain types of disputes.
What is the South Dakota sales tax on gasoline?
South Dakota charges a state excise tax of 30 cents per gallon on gasoline.
Do I need a business plan to start my business in South Dakota?
Yes, writing a business plan is an important step in starting a business in South Dakota.
What are the regulations for selling alcohol in South Dakota?
The South Dakota Department of Revenue regulates alcohol sales in the state.
What are the insurance requirements for businesses in South Dakota?
South Dakota law requires businesses operating in the state to have general liability insurance.
Are there any incubators for start-ups in South Dakota?
Yes, there are several incubators for start-ups in South Dakota, including Enterprise Institute, USD Discovery District and Dakota Business Innovation Center.

Also Read

Why You Should Start Business in South Dakota

South Dakota may not typically be the first state that comes to mind when thinking about business opportunities, but there are many reasons why it should be on your radar. The state offers a myriad of advantages that can benefit small businesses and startups in various industries.

One of the key factors that make South Dakota an attractive place to start a business is its low operational costs. From overhead expenses to employee wages, the cost of doing business in South Dakota is significantly lower compared to many other states. This can translate to greater profit margins and more room for growth and expansion.

Additionally, South Dakota boasts a business-friendly environment that is conducive to entrepreneurship. The state has relatively low business taxes and straightforward regulatory requirements, making it easier for new businesses to navigate the legal landscape. Furthermore, the government has shown a commitment to supporting small businesses through various incentive programs and resources, helping to pave the way for success.

Another important consideration for entrepreneurs is access to a skilled workforce. South Dakota is home to a diverse and talented labor pool, with workers across a range of industries and skill levels. Whether you are looking for specialized professionals or entry-level employees, you can find the talent you need to help your business thrive.

Beyond its financial and logistical advantages, South Dakota offers a high quality of life that can benefit both business owners and employees. The state is known for its welcoming communities, low crime rates, and abundance of outdoor recreational activities. This creates a desirable living environment that can help attract and retain top talent, ultimately contributing to the success of your business.

In addition to its practical advantages, starting a business in South Dakota also allows entrepreneurs to be part of a vibrant and growing economy. The state’s economy is diverse and resilient, with thriving industries such as agriculture, manufacturing, healthcare, and tourism. By establishing your business in South Dakota, you can tap into these existing industries and contribute to the overall economic growth of the state.

Overall, South Dakota presents a compelling opportunity for entrepreneurs looking to start or expand their businesses. With its low operational costs, business-friendly environment, skilled workforce, high quality of life, and growing economy, the state offers the perfect conditions for businesses to succeed. If you are considering starting a new venture, South Dakota should be at the top of your list as a destination worth exploring.

Conclusion

Starting a business in South Dakota has unique advantages and challenges since it offers a large and diverse market, access to skilled talent, and numerous networking opportunities, making it an attractive location for entrepreneurs. However, business owners must also contend with a high cost of living, intense competition, and potentially complex regulations.

Ultimately, whether starting a business in South Dakota is the right decision depends on the entrepreneur’s specific needs, goals, and industry. It is crucial to conduct thorough research and consider factors such as taxes, regulations, workforce availability, and target market when choosing a location for a new business. By carefully weighing the pros and cons, entrepreneurs can make informed decisions and set themselves up for success in the competitive South Dakota business landscape.

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