Starting a business in South Dakota will mean potentially registering with a number of federal, state, and local agencies. Let’s take a look at common licenses and permits a business will register for in South Dakota.
Before applying for any licenses, the business entity will first need to be established. Learn more about the differences between the sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).
Related: Comparison of Business Entities
Learn more about forming an LLC in South Dakota
Also see: Steps to starting a business in South Dakota
General Business License
There is no general state of South Dakota business license, however, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and what the business does. Below are a few cities that have licensing requirements.
Sioux Falls – The Sioux Falls Licensing Office requires certain types of businesses to register, such as businesses serving alcohol, mobile food vendors, bowling centers, shooting galleries, and a few others.
Rapid City – Certain businesses in Rapid City require a business license, including contractors, taxis, security companies, etc.
Aberdeen – The Aberdeen City Hall issues business licenses to certain businesses such as kennels, garbage haulers, home day care providers, lumbers, etc.
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Building & Zoning Permits
Zoning – Depending on the location of the business, it’s important to verify whether the business needs an occupancy permit or has specific zoning ordinances to follow. Depending on city requirements, home-based businesses may need to apply for a home occupation permit.
Building Permit – A building permit may be needed from the city or county building and planning department if there is any construction or renovations to a facility.
Signage Permit – Some municipalities require a permit before adding signage.
Sales Tax License
Any retailer selling, renting, or leasing tangible personal property or products delivered electronically or providing certain services in South Dakota will need to register for a South Dakota Sales Tax License (also called a sales tax permit) from the South Dakota Department of Revenue.
There is no cost for this license.
Resale Certificate
Businesses purchasing merchandise to resell will usually want to obtain a South Dakota Resale Certificate to not pay sales tax for merchandise being resold to customers.
Contractor Excise License
Any person entering into a contract for construction services must have a South Dakota contractors’ excise tax license. Construction services include the construction, building, installation, and remodeling of real property.
More information about the Contractors Excise License is available from the Department of Revenue.
There is no fee for this license.
Professional License
A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in South Dakota include; architects, plumbers, barbers, and many more. Additional information, fees, and licensing requirements for professions are available from the South Dakota Department of Labor & Regulation.
In addition to professional licensing from the South Dakota Department of Labor & Regulation, a few other types of businesses also need licensing, such as food establishments and daycares.
Employer Identification Number (EIN)
Many businesses will register with the Internal Revenue Service (IRS) for an EIN (also referred to as a FEIN, Federal Employer Identification Number, or Federal Tax ID Number). The EIN is the business equivalent of a Social Security Number for an individual. Corporations, Limited Liability Companies, Partnerships, and Sole Proprietorships with employees will all need to register for one. Sole Proprietorships without employees can use the owner’s Social Security Number.
There is no cost for an EIN, and it only takes a few minutes to get.
Fictitious Name Registration
While not a business license, it’s common for Sole Proprietorships and Partnerships operating under a business name that is different from the full name of the owner(s) to register for a Fictitious Name (also known as a Doing Business As or DBA) with the Register of Deed’s Office in the county where the business is located.
These are just some of the most common business licenses a new business will need to register before starting. Before starting your business, be sure to check with City Hall, County Clerk, Chamber of Commerce, and/or Economic Developer in your area to get more information regarding business licensing.
6 Responses
Hi Greg,
I am interested in starting a small business selling handmade paper products at a couple local retail stores in Custer, SD. From reading, it looks like I don’t need an LLC. Do I need both an EIN and business license? I appreciate any guidance.
Hi Eve
You are right that you don’t have to get an LLC. Don’t take this as legal advice :), but for a business with low liability concerns, which it sounds like yours is, an sole proprietorship will be fine. The main benefit to the LLC is that if your business were to be sued, it would be the LLC that would be sued (unless you were negligent) and your personal assets would be safe. If you are going to operate your sole proprietorship under a fictitious business name (meaning not your full first and last name), you will want to register for a DBA with the Secretary of State – https://startingyourbusiness.com/how-to-register-a-dba-in-south-dakota/
As a sole proprietorship, an EIN will only be required if you hire employees. If it’s just you, your “business tax id” is your social security number.
As for business licenses, there is no state business license, and it doesn’t look like there is a business license requirement in Custer City, though you may want to verify by calling City Hall at 605-673-4824.
Since you are selling a physical product, you will want to get a Sales Tax License from the Department of Revenue – https://startingyourbusiness.com/how-to-register-for-a-sales-tax-license-in-south-dakota/. In addition, you will want to get your resale certificate as well, so you don’t pay sales tax on the paper products that you are selling (the retailer will be collecting the marked up sales tax)
I don’t know if you saw this page yet or not, but it may be a helpful resource too – https://startingyourbusiness.com/south-dakota/
Hope this helps. Let me know if you have any other questions!
Greg
Hi Greg.
I havnt been able to find straight answers. I just sell handmade stuffed animals from home by myself in aberdeen, SD. People typically pay me personally for them, rarely has anything been sold online where tax is collected. I just started selling and I want to do things right but I don’t know what I would need if anything.
Hi Makenna
There are a few exceptions, but sales of a product are taxable in South Dakota, regardless of whether the sale was made in the state or online (and sent to a resident in SD). It gets a bit more complicated when making online sales outside of South Dakota as each state has different requirements of when sales taxes need to be collected. The good news is that the threshold in most states is $100k in sales or 200 transactions annually.
At a minimum, you will need to register for a sales tax license with the South Dakota Department of Revenue https://dor.sd.gov/businesses/taxes/sales-use-tax/. At this point, it sounds like the only other registration you may need is to register for a Fictitious Business Name if you plan to operate under a business name rather than your first and last name.
I hope this helps. Let me know if you have any other questions.
Greg
Hi Greg,
I don’t really know where to start. So, I am looking to start a blog and a YouTube channel. On these platforms, I will be using a different name for myself. At some point I plan to use the website of my blog to have an online store selling digital and physical goods. Some of those physical goods would be things like opened/used products. (Trading cards, old electronics, etc.) I live in Huron. What things do I need to get to make sure that I am doing this right?
Thanks,
Nathan
Hi Nathan! From the little bit that I know about you and your business, I think your first order of business will be to figure out your business entity (See step 3 -https://startingyourbusiness.com/south-dakota/). Depending on which way you go, there are differences in registering a business name.
Unless you register as a corporation, you won’t have to register for an Employer Identification Number – https://startingyourbusiness.com/how-to-register-for-a-south-dakota-ein/ and would use your social security number for the business.
Next, you will want to look at getting the business registered. Fortunately, it’s pretty straightforward since you are operating online. There isn’t a state business license, so we would want to look at any city requirements. It’s not common, but some cities require licensing for all businesses, but from what I see from the City of Huron, there isn’t anything that you would need to do – https://www.huronsd.gov/224/Online-Forms-Documents.
The last thing I would look at is the Sales Tax License https://startingyourbusiness.com/how-to-register-for-a-sales-tax-license-in-south-dakota/, since you are selling physical goods.
I hope this gets you a pretty good start, but to get a second opinion, you may want to contact the Greater Huron Development Corporation to see if there is anything else that you may need.
Let me know if you have any other questions and looking forward to your success!
Greg