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STARTING AND OPERATING A BUSINESS IN SOUTH DAKOTA Copyright © 2004, Michael D. Jenkins
CONTENTS OF THIS SECTION:
I. INTRODUCTION I. INTRODUCTION South Dakota has a somewhat unusual tax and legal structure under which businesses must operate, considerably different from most other states. In particular, it is a highly attractive place to live or do business, as it is one only a handful of states that has neither a personal income tax nor a corporate income tax, except on banks and other such financial institutions. It is one of only two states that has:
The state was ranked first nationally for economic environment for entrepreneurship according to the 1998 Small Business Survival Index. Like most states, South Dakota imposes sales and use taxes and various excise taxes, with property taxes imposed at the local level. The state has also adopted a limited liability company (LLC) law, and a limited liability partnership (LLP) law, so that businesses operating in South Dakota in LLC or LLP form may obtain the advantages of limited liability, without incorporating or becoming subject to federal or state corporate taxation, generally. At present, the state's economy is very robust, in terms of the level of unemployment and other economic measures. For example, in September, 2004, the state's unemployment rate was only 3.4%, down from 3.7% a year earlier. This compares very favorably to a national unemployment rate of 5.4% for the same month. To view the latest federal Bureau of Labor Statistics unemployment rate data for South Dakota or any other state, visit the BLS website. II. LEGAL ENTITIES -- FILING FEES AND REPORTING REQUIREMENTS. (a) In General. A business that operates in South Dakota can do so as a sole proprietorship, a general or limited partnership, a corporation, or a limited liability company. If, under the federal tax law, a business operates as an S corporation, its income will generally be taxed only to the shareholders, not at the corporation level, for federal tax purposes, and will not be taxed at either level by the state of South Dakota, which has no state income taxes on individuals or corporations. South Dakota also provides for limited liability partnerships, in which no partner is liable for certain debts of the partnership, somewhat like a corporation or LLC, but with fewer legal formalities than are required for either a corporation or an LLC. Each of the above entities is discussed below, along with the basic requirements for forming such an entity and any general ongoing (non-tax) reporting requirements that are applicable to it. The tax treatment of each form of legal entity is discussed in Section IV below. (b) Sole Proprietorships. In general, sole proprietorships in South Dakota can be formed with no formalities. However, as discussed in Section IV(b), it will generally be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, as well. No separate tax form filing is required, generally, for a sole proprietorship under South Dakota law, since there is no South Dakota state income tax of any kind on individuals. (c) Partnerships. As a rule, general partnerships in South Dakota can be formed with no formalities, although it is highly advisable to have a written partnership agreement. However, as discussed in Section IV(b), it will typically be necessary to obtain one or more local business licenses from cities or counties in which you operate and, in some cases, state licenses, for any type of partnership, including general or limited partnerships, or limited liability partnerships. A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts), may also be formed under South Dakota law. Unlike a general partnership, a limited partnership must usually have a written partnership agreement, and must file a certificate of limited partnership with the secretary of state, together with a filing fee of $100. Foreign limited partnerships must also register before being allowed to do business in South Dakota, and must also pay a registration fee of $100. For information on limited partnership filing requirements, see the contact information for the offices of the South Dakota Secretary of State, listed in Section VI(a). Limited liability partnerships (LLPs) are a new form of partnership permitted under the laws of South Dakota. Like an LLC, an LLP provides limited liability for its owners, while retaining the tax advantages of a partnership for federal income tax purposes. However, unlike an LLC, an LLP typically operates like a regular partnership, and is not required to file articles of organization. Prior LLP provisions were repealed in the state laws on July 1, 2001, and were replaced by the new Uniform Partnership Act, which now governs partnerships and LLPs in South Dakota. To form an LLP in South Dakota, you must register as an LLP and pay a filing fee of $100 to the secretary of state. Foreign LLPs, those created under the laws of another state, must also register with the secretary of state and pay an initial fee of $100. Note that the South Dakota LLP law appears to give somewhat less protection to partners in an LLP than state law grants to stockholders of a corporation, so you should not ordinarily consider an LLP as the complete equivalent of a corporation, with regard to limitation of your liability as an owner. However, an LLP will provide greater liability protection than a regular general partnership in many instances. Every LLP doing business in South Dakota, including both domestic and foreign LLPs, must renew its registration annually and pay a $30 annual fee. For more information on LLP registration and reporting requirements, see the contact information for the offices of the secretary of state, listed in Section VI(a). Note that one potential drawback of LLPs, if you will do business in other states besides South Dakota, is that you may not enjoy limited liability with regard to creditors of the LLP if you do business in some such states. Some states, like California and New York, only recognize certain types of professional partnerships as LLPs. Such other states may simply treat your LLP like an ordinary general partnership, with no limitation of liability. Effective since July 1, 2002, South Dakota allows a limited partnership to become a limited liability limited partnership, by a vote of its partners, plus filing a statement of qualification, and by adding the words "Registered Limited Liability Limited Partnership" or the letters "L.L.L.P." or "LLLP" to the end of its name. A partnership agreement, for any type of partnership, should spell out in considerable detail such matters as the following:
There is no personal state income tax in South Dakota, so the income of a partnership is not taxed to the individual partners for state tax purposes. (d) Corporations. To form a corporation in South Dakota, you must file articles of incorporation with the South Dakota Secretary of State and pay a fee of $125. In the past, corporations paid an incorporation fee based on the amount of its authorized capital stock, which could be as much as $16,000. As of July 1, 2004, a flat fee of $125 now applies for all incorporations. A foreign corporation (one formed under the laws of another state or a foreign country), must obtain a certificate of authority before it may legally conduct business in South Dakota, by filing an application for a certificate of authority and paying a filing fee of $550. For more information on filing articles of incorporation or applying for a certificate of authority to do business in South Dakota, see the contact information for the offices of the secretary of state, listed in Section VI(a). In addition, once your corporation is formed, it will be required to file an annual report and pay a filing fee of $30, with the secretary of state each year. Failure to file this report on a timely basis could result in suspension or revocation of your corporation's charter. While corporations, other than S corporations, must pay federal income taxes on their taxable income, there is no state corporation income tax in South Dakota, except for banks and certain financial corporations. (e) S Corporations. An S corporation is simply a regular corporation that has elected, for federal or state income tax purposes, or for both, to be taxed somewhat like a partnership, with its income, losses and tax credits flowing through to its owners, who report such income, losses, or credits on their individual tax returns. Since there is no individual or corporate income tax in South Dakota, the existence of a federal S corporation election is not relevant for state income tax purposes in South Dakota. (f) Limited Liability Companies. South Dakota, like every other state in the U.S., has adopted a limited liability company (LLC) law. Thus, in addition to the traditional choices of a sole proprietorship, partnership, or corporation, a business that operates in South Dakota may also choose to operate in the form of an LLC. In most states, LLCs are very attractive entities for many small businesses, in that they offer the same protection as a corporation from creditors for debts of the business, while offering much of the flexibility plus the flow-through tax treatment of a partnership for federal tax purposes. LLCs are not subject to state income tax under South Dakota tax laws, since there is no general state income tax in South Dakota. Effective as of July 1, 2004, the state's LLC laws were changed, reducing the potentially large tax or fee based on capital, which applied to a newly formed domestic LLC or to a foreign LLC that applied for a certificate of authority to do business. Under prior law, the tax or fee could be as high as $16,000. Under the new laws, a flat fee of $125 applies in the case of a newly formed domestic LLC, or $550 in the case of a foreign LLC that applies for a certificate of authority. To form an LLC under the laws of South Dakota, one or more persons must file articles of organization with the secretary of state, which must be accompanied by the filing fee of $125 with the first annual report of the LLC. Note that South Dakota state law allows formation of one-owner LLCs, which now qualify for treatment as sole proprietorships for federal tax purposes. Foreign LLCs, those formed under the laws of another state, must obtain a certificate of authority to do business in South Dakota, by filing an application for a certificate of authority with the secretary of state and paying a filing fee of $550 with the initial annual report. In addition to initial filing fees, an LLC formed in South Dakota must subsequently file annual reports and pay an annual report filing fee of $50 with each such annual report, after the initial annual report. A foreign LLC is also required to file an annual report and pay the applicable filing fee of $50 each year after filing the initial annual report. For more information on filing articles of organization for an LLC, see the contact information for the offices of the secretary of state, listed in Section VI(a). III. BUSINESS ACQUISITIONS (a) In General. When acquiring an existing business, there are a number of state legal and tax issues you or, preferably, your business attorney, should attend to before closing the purchase. These include matters such as doing a title search for any real property that is being acquired, checking for any recorded security interests on personal property items, and thoroughly researching county, state, and federal records for any judgment liens, tax liens, or other liens, before property is acquired. You will also benefit from consulting a tax advisor before the agreement of sale is negotiated, in order to seek a structuring of the agreement so that the purchase price is allocated among the assets in a way that favors you. You may be able to obtain considerable tax savings if the purchase price is allocated in a way that gives you the best possible tax results under federal income tax laws, and state tax laws, such as sales/use tax or property tax laws. Depending upon the state (or states) in which the seller's assets are located, you may also have to comply with state bulk sale or bulk transfer laws. You should also obtain tax releases from various state taxing agencies, as discussed below. (b) Bulk Sale Laws. Typical bulk sale laws require either publication of legal notices to all creditors in advance of the sale and recording of such notices in some cases, or maintenance of detailed lists of the property to be transferred, for inspection by the public. South Dakota is one of the states that has repealed its bulk sale laws, so you no longer have to be concerned with this requirement when buying a business in South Dakota. (c) Tax Releases. When you acquire an existing business, you will want to make sure that you do not unwittingly become liable for any unpaid taxes owed by the seller. Typically, to protect yourself, you will need to receive a tax release or releases from various state taxing agencies, for such taxes as sales and use tax, income tax withholding, and state unemployment taxes, in each state in which the seller does business. If you fail to obtain such a release or written statement from the tax agency that the seller is not delinquent on any tax payments, you will be held responsible for such tax if it is not withheld from the purchase price proceeds and paid to the state at the time the sale of the business transpires. In South Dakota, you should require the seller to give you a letter that authorizes the South Dakota Department of Labor, Unemployment Insurance Division, to release information to you regarding the seller's unemployment tax experience and record of tax payments, to ensure that you do not become liable for unpaid unemployment taxes owed by the seller. As the buyer of a business in South Dakota, you will generally not be held liable for state taxes, such as sales or use taxes, owed by the seller. However, the state Department of Revenue can, if requested, provide you a statement to the effect that the seller is not delinquent with respect to any state taxes. (d) Unemployment Tax Rating of Seller. In
addition to obtaining tax releases, you may find it advantageous
to succeed to the seller's unemployment tax experience rating,
if the seller has a tax rate lower than you would otherwise
obtain as a new business. To obtain the seller's favorable
experience rating as a successor employer, you will need
to apply on a timely basis to the Division of Unemployment
Insurance, requesting that you be treated as a successor
employer. Otherwise, you will be assigned the standard
initial rate for new employers.
IV. SOUTH DAKOTA TAXES AND OTHER GENERAL REQUIREMENTS. (a) In General. South Dakota offers an exceptionally favorable tax and regulatory climate for both large and small businesses. Particularly attractive to businesses is the absence of any state income tax on either individuals or corporations, except for banks and certain other financial institutions. In addition, nearly all personal property, including inventories and intangible personal property, is exempted from property taxation in South Dakota, and employers will find the state's strong right-to-work law, as discussed in Section V, an attractive feature. Compared to other states, the lack of bureaucratic red tape for businesses in South Dakota is refreshingly different. For example, while all other states require employers to obtain and display various types of labor law posters on job safety, unemployment insurance, workers' compensation, discrimination, and other matters, South Dakota is the only state with no general posting requirements for employers. As noted by the website of the Division of Unemployment Insurance, the only required state posting is of a small postcard-size notice sent to employers after they have registered for state unemployment insurance. (b) State and Local Licensing. Nearly any business, operated anywhere in the United States, will have to have at least one government license of some kind. In most cases, this will be a local license, issued by your city or county. Before you open your business, contact your local city or county hall and find out if your particular business needs one or more local licenses. Most kinds of local business licenses are granted upon payment of a fee, with no further requirements, except possibly for annual or other periodic renewal fees. However, if you are engaging in any kind of food business, you will usually need to also obtain a health department permit and show that you are in compliance with health department food-handling requirements. In addition, be sure to check with an attorney or local government zoning or planning department officials to determine if your business will be in compliance with all local zoning and planning restrictions. If you own or rent any type of facility, you will generally need fire department permits, showing that you meet fire safety codes and any construction or improvements to an existing structure will usually require a building permit. If you intend to simply operate your business from your home, you may be in violation of local zoning requirements, but this is less likely to be a concern if you don't have clients, customers, suppliers, or employees coming to your house on business, on a regular basis. State governments have also traditionally required special licenses for many kinds of professionals, such as physicians, dentists, lawyers, and accountants. To further protect consumers, South Dakota has expanded the list of occupations that must be licensed by the state to include many other occupations. Most state licenses not only require payment of fees, but are only issued for a given profession or occupation upon showing that you have completed certain educational or experience requirements, or passed certain tests, or some combination of the foregoing. Some of the specific businesses, professions, and occupations that are licensed by the state in South Dakota include the following partial list:
For information on state licensing and business registration requirements in South Dakota, see the contact information for the offices of the Department of Regulation and Revenue, or the Governor's Office of Economic Development, both of which are listed in Section VI(a) (c) Income and Franchise Taxes. South Dakota is one of the few states that does not have either a corporate or individual income tax, and it also does not impose a corporate franchise tax. The only state income tax that is imposed in South Dakota is on banks and other financial institutions, such as savings and loan associations and finance companies. Accordingly, neither you nor your business entity will be required to file state income tax returns with the state of South Dakota. Because there is no state corporate or individual income tax in South Dakota, the income of a regular ("C") corporation, S corporation, limited liability company (LLC), or a partnership is also not subject to state income taxes in South Dakota. (d) Sales and Use Tax. South Dakota imposes a general sales tax on retail sales of tangible personal property and certain types of services at the statewide rate of 4%. Municipalities are also allowed to impose local sales and use taxes. The South Dakota sales tax is quite broad, as it applies to gross receipts from most kinds of service businesses, except certain exempted services, such as health and educational services. Wages paid to an employee are also exempt. Sales tax also applies to sectional homes, which are pre-built homes for placement on foundations, not mobile homes. The sales tax also applies to Internet services, and has continued to be enforced, even after passage of the federal Internet Tax Freedom Act in 1998, since the South Dakota sales tax had always taxed Internet service fees in the past. While the general state sales tax rate is 4%, a 3% rate formerly applied to farm machinery and irrigation equipment, oil and gas field services, and gross receipts from amusement devices. However, since South Dakota adopted the Streamlined Sales and Use Tax Project, effective January 1, 2006, sales tax rates have been simplified, and the above items are now also subject to the general 4% statewide tax rate. As a concession to farmers, this tax increase was offset somewhat by exempting sales of farm machinery parts and repairs to farm machinery. In addition to the state sales tax, cities and towns can impose local sales taxes of up to 2%, and a number of cities also impose lodging taxes at rates of 2% to 3%. Several Indian reservations impose a 4% tribal tax, in place of the statewide sales tax, which generally does not apply on reservations. Reservations that impose a tribal sales tax are the Cheyenne River Sioux Tribe, Oglala Sioux Tribe, Rosebud Sioux Tribe, and the Standing Rock Sioux Tribe. Under the Streamlined Sales Tax Project law revisions, a city may now have only one local tax rate within its jurisdiction. A seller is required to obtain a sales tax permit from the Department of Revenue for each place of business. No fee is charged for the permit. Apply on the Department of Revenue Sales and Contractors' Excise Tax License Application form, which can be obtained from the Department of Revenue. In 1997, the previously existing Tourism Promotion tax was repealed and replaced with a 1% tax on gross receipts from:
The tax on visitor-intensive businesses only applies during the months of June through September each year. There are numerous exemptions from the sales tax, the most important of which is the resale exemption. If you are a wholesaler or retailer who purchases goods that you will resell, your purchase of such goods may qualify as an exempt sale for resale. Similarly, if you sell goods to wholesalers or retailers for resale by them, your sale may also qualify as an exempt sale for resale. In any such transaction, the exemption is ordinarily available only if the purchaser gives the seller a valid resale certificate, certifying that the items are being purchased for resale, and not for use or consumption by the buyer. A shadow tax, the use tax, is also imposed at the same rate as the sales tax. It is primarily intended to tax property that is acquired from sources outside of the state, in transactions not subject to sales tax, when such property is used or consumed within South Dakota. Use tax may also apply to items purchased on an exempt basis, such as for resale, if such items end up being used or consumed, instead of being resold. Some of the major categories of goods and services that are subject to sales or use tax in South Dakota include:
Major categories of goods or services that are exempt from sales tax in South Dakota include:
For more information on South Dakota sales and use tax registration and compliance, see contact information for the offices of the Department of Revenue in Section VI(a). (e) Real and Personal Property Taxes. In South Dakota, as in every other state, any business real estate you own will be subject to real property taxes. In general, there is little that you must do, unless you wish to challenge your assessed valuation, since the assessor will bill you for each year's property taxes as they come due. South Dakota, unlike most other states, does not impose any property taxes on personal property of any kind, either tangible or intangible, except on certain centrally assessed property, such as bank property. Thus, businesses are usually not subject to property tax in South Dakota on their machinery and equipment, inventory, or intangible assets. (f) Other Business Taxes. South Dakota imposes a number of other taxes on businesses, some of which may affect you. These include:
(g) Trade Names. A trade name, also known as a fictitious or assumed name, is any name used in the course of business that does not include the actual legal names of all the owners of the business. Thus, if your business goes by any name other than your own real name, it is operating under a trade name. The same is true of a corporation, if it operates under a name other than its legal name. A trade name might also be one that suggests the existence of additional owners, by using such words as "company," "associates," or "group." In most states where you do business, it will be necessary to register a trade, fictitious, or assumed name, so that people who do business with you can find out who the actual owners of your business are. You may also want to register any such trade name, as a means of protecting against other companies usurping that particular trade name. In South Dakota, a sole proprietor or general partnership
using a fictitious business name must register the name
with the Register of Deeds in the county where the business
is conducted. A small $10 initial registration fee must be
paid, plus a renewal fee every fifth year after the initial
registration.
V. EMPLOYER REQUIREMENTS IF YOU HAVE EMPLOYEES (a) Employer Registration and Withholding. Once you hire the first employee in your business, you must comply with many more Federal and state laws. One of the first things you will need to be concerned about as a new employer is withholding personal income taxes from the wages of your employees. As an employer, you are responsible for withholding the taxes and paying them over to the government on behalf of the employee. If you have any employees, you will have to withhold federal income tax and FICA taxes from their wages. Because South Dakota has no state income tax on wages, you will not need to be concerned with any obligation to withhold state income tax. However, if you pay more than a minimal amount of wages, you will most likely be required to pay state unemployment tax, and will have to register with the state as an employer for unemployment tax purposes, as described in Section V(b). (b) Unemployment and Other State Payroll Taxes. If your business employs one or more individuals in each of 20 weeks during any calendar year or if your payroll amounts to $1,500 in any calendar quarter, you, as an employer, will be required to pay state unemployment tax based on the amount of such wages paid. Employers subject to the South Dakota unemployment tax are required to register with the South Dakota Department of Labor, Division of Unemployment Insurance. New employers are required to pay tax at a rate of 1.2%, plus an investment fee of 0.7%, or a total rate of 1.9% in 2004, on the first $7,000 of wages paid to each employee. An initial rate of 6.7% applies to employers in the construction industry. After you have had employees for a while, you will develop an unemployment tax experience rating. This rating is based on the number of employees you terminate who then claim unemployment benefits and the amount of such benefits paid to those former employees, under complex formulas. The state will inform you when they have assigned you an individual tax rate based on your firm's experience rating. That rate may be higher or, if you have had relatively few benefit claims charged to your account, lower than the standard new employer tax rate you initially were paying. All state unemployment taxes are imposed upon you as the employer, and, under South Dakota law, cannot be charged to your employees or withheld from their wages. For more information on your South Dakota unemployment tax obligations as an employer, see the contact information for the offices of the Division of Unemployment Insurance, listed in Section VI(a). (c) Workers' Compensation. In South Dakota, virtually all businesses with one or more employees are required by law to have workers' compensation insurance, except those able to self-insure. Note, however, that a sole proprietor or a partner in a partnership is generally not considered an employee. However, the officers of a for-profit corporation are considered to be employees, for workers' compensation purposes, unless they file with the corporation a written rejection of coverage. Independent contractors, such as real estate agents, are not required to be covered by workers' compensation. Workers' compensation provides wage loss and medical benefits to employees injured on the job and it protects you, as an employer, from legal action for damages for injuries or job-related illnesses suffered by your employees. In effect, it is a "no-fault" insurance system for work-related injuries or illnesses. Thus, if you fail to obtain required workers' compensation insurance, and an employee is injured on the job, you will have opened yourself to unlimited liability and severe legal consequences, so it is very important to obtain workers' compensation insurance for your employees. Be aware that neither general liability nor health and accident insurance can properly substitute for workers' compensation insurance. As an employer, you must keep records of on-the-job injuries and report injuries to the Department of Labor, while providing a copy to the employee. For more detailed information regarding your obligations as an employer under the South Dakota workers' compensation laws, contact your insurance carrier or see the contact information for the offices of the South Dakota Department of Labor, Division of Labor and Management, listed in Section VI(a). (d) State Wage and Hour Laws. Some employees of certain small firms not engaged in interstate commerce are not covered by the federal minimum wage and overtime laws. However, even if few or none of your employees are covered by the federal wage-hour laws, if, for example, because your firm does less than $500,000 a year in gross sales and the employees in question are not deemed to "...engage in (interstate) commerce...," they will still generally be subject to the South Dakota wage-hour laws, which provide for a state minimum hourly wage that is the same as the federal minimum, $5.15 an hour at present. Note that outside salespersons and baby sitters are exempt from the South Dakota wage-hour rules. In addition to wage-hour laws, most businesses are subject to federal child labor laws, which put numerous restrictions on the working hours and kinds of work in which minors under the age of 18 may engage. Your business must also comply with similar state child labor laws, in South Dakota. (e) State Occupational Safety and Health Laws. Employers in South Dakota must comply with state and federal job safety laws and regulations designed to prevent injuries or illnesses resulting from unsafe or unhealthy conditions in the workplace. The state of South Dakota does not have its own job safety enforcement agency, so the federal Occupational Safety and Health Administration (OSHA) is responsible for enforcing workplace health and safety standards in South Dakota, as is the case in more than half of the states. Note that while you may obtain a free safety consultation from federal OSHA experts, they must and will cite you for any violations they discover at your workplace. This is not the case with state safety inspections. If you request a safety consultation from the Engineering Extension Onsite Technical Division of South Dakota State University and they detect violations, they will not cite you if you promptly correct the unsafe conditions. For information on your job safety and health obligations as an employer and possible on-site safety consultations, see the contact information for the Engineering Extension Onsite Technical Division of South Dakota State University, listed in Section VI(a). (f) Other Miscellaneous State Labor Laws. Other South Dakota labor laws you need to be aware of, as an employer, include the following: (1) Wage payments to terminated employees. South Dakota law requires that wages be paid at least once a month by employers. If an employer terminates an employee, or if an employee quits employment, the employee must receive his or her final wages no later than the next regular payday or, if later, the date on which the employee returns all property of the employer that is in the employee's possession. (2) Right-to-work laws. About half the states have enacted "right-to-work" laws, which guarantee that no person may be denied employment for refusing to join a union or for not paying union dues, thus banning either "union shop" or "agency shop" agreements, or both. In a union shop, an employee not belonging to a union may be hired but then must join the union, usually within 30 days. In an agency shop, an employee need not join the union but, to remain employed, must pay union dues. South Dakota has a right-to-work law, which makes it an attractive place to do business, for many employers. State law makes it a misdemeanor to deny a person employment on account of membership or nonmembership in a labor union. (3) State anti-discrimination laws. In addition to complying with federal anti-discrimination laws, employers must also be aware of and comply with state civil rights laws in South Dakota. State law makes it illegal for an employer to discriminate on the basis of race, color, creed, religion, sex, ancestry, disability or national origin. For more information, contact the South Dakota Department of Labor, Division of Human Rights, at the address listed in Section VI(a). (4) Reporting new hires. Under new federal welfare
reform laws, employers in all states now have to report all
newly-hired (or rehired) employees to the state New Hire
Reporting System (administered jointly in South Dakota by the
South Dakota Department of Labor, Division of Unemployment
Insurance, and by the Department of Social Services) within
20 days after the date of hire. Filing of new hires reports
on the World Wide Web is now possible. See the URL listing
for the South Dakota New Hire Reporting System and the
Department of Labor website in Section VI(c),
plus the mailing address and other contact information
for new hire reporting in Section VI(a).
VI. STATE SOURCES OF HELP AND INFORMATION (a) Key State Agencies Contact Information. Unlike some other states, South Dakota does not have a single agency to whom you can go to handle all your licensing and permitting requirements for your business under the laws of South Dakota. Accordingly, you will need to contact the various South Dakota government agencies that are mentioned in this book or listed below on an individual basis, to obtain needed forms, information, and other assistance from each such agency. A list of addresses and other contact information for such key agencies is set forth below for your convenience. BUSINESS STARTUP INFORMATION. A key agency that can provide helpful information on getting your business up and running in South Dakota, including a helpful Business Start-Up Package, is:
STATE SALES TAX. Obtain your sales and use tax license or permit and information on the South Dakota sales and use tax law, from the Department of Regulation and Revenue, at the address listed above for that agency. EMPLOYER WITHHOLDING. No state income tax withholding is required in South Dakota, as there is no state income tax. STATE UNEMPLOYMENT TAX. Contact the following state agency to determine whether you are an employer subject to payment of state unemployment taxes, and for registration as an employer if you are subject.
NEW HIRES REPORTING. Report newly hired employees within 20 days after the date of hire to the New Hire Reporting Center, by mail or fax (or file reports on-line at the web site listed in Section VI(c)).
STATE OSHA PROGRAM. There is no state OSHA program in South Dakota. The federal government provides federal OSHA enforcement instead. For required posters and information on federal occupational safety and health laws that affect you as an employer in South Dakota, contact the OSHA Denver, Colorado regional office (there is no OSHA Area Office in South Dakota) at:
STATE ANTI-DISCRIMINATION LAWS. Contact the following state agency for more detailed information on South Dakota civil rights laws that may apply to your business.
(b) Small Business Development Centers. A number of Small Business Development Centers (SBDCs) are located throughout South Dakota to assist you. These centers, usually located on college campuses, provide a wealth of start-up information and sponsor frequent business-oriented seminars. Contact the lead office below for information, or for the locations of other SBDCs nearer to you.
(c) Internet Sites. If you have access to the Internet, there is a wealth of state and even local business information provided by state and local governments. All states now have a state government Web page, and most major state agencies also have sites on the Internet where you can obtain useful small business information on matters such as state taxes, financing sources, or the addresses and phone numbers (or e-mail addresses) of various state and federal agencies' offices in South Dakota. Since new sites are appearing constantly, you might also want to search for other South Dakota government Web sites by using one of the popular Internet search engines, such as Excite! or Yahoo. To start your Internet search for South Dakota government information, you may want to begin with the following Internet sites: State of South Dakota home page: List of South Dakota state agencies: South Dakota Secretary of State (forms for LLC and corporation filing, fee schedules): South Dakota Department of Regulation and Revenue (sales and use tax forms and registration, other tax information): South Dakota Department of Labor (minimum wage, workers' compensation, unemployment insurance, new hires reporting): Governor's Office of Economic Development (Business Start-Up Package and other information on doing business in South Dakota): South Dakota New Hire Reporting Center (for information or to report newly hired employees on-line):(d) Financing Sources. For information and help on locating financing for your small business, contact the nearest U.S. Small Business Administration (SBA) office in South Dakota, or contact the Governor's Office of Economic Development at the address listed in Section VI(a) for that state office. The address of the main SBA Office in South Dakota is:
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Copyright © 2004 Michael D. Jenkins
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