It takes strong motivation to form and run a business in South Dakota, but the result can be extremely rewarding. To ensure your new business runs smoothly, it’s important to keep track of the many required compliance tasks that will help your new venture grow while conforming with state law. Those requirements may include obtaining a South Dakota business license, either for your specific business activities or for your profession itself.
So, do you need a business license for your South Dakota company? Find out what’s required for certain businesses and occupations in this guide, which covers types of licenses (federal, state, and local), application processes, costs, and more.
Does South Dakota require a general business license?
No, there is no recognized South Dakota general business license. While some other states require this type of general license, South Dakota instead only mandates certain state tax and occupational licenses, as well as local licenses and permits based on business activity, location, and industry. Additionally, there may be applicable federal licenses and permits that your business might need to obtain.
What does "no general business license" actually mean?
A general business license typically refers to one that’s simply for the privilege of doing business in the state. And just because the state of South Dakota doesn’t require a general business license doesn’t mean that your company can necessarily operate without any licenses whatsoever. Your company may require specific ones based on your business activity, industry, and location. It’s up to you to determine which licenses or permits you need to be able to operate legally in the state.
What types of licenses might my South Dakota business need?
There are several types licenses at the federal, local, and state level that may be applicable to your South Dakota business:
- Federal licenses for federally regulated industries and business activities, including agriculture, firearms sales, or wildlife-related activities
- State business tax license from the South Dakota Department of Revenue, such as sales or use tax licenses
- State industry-specific licenses, such as alcohol, food service, or lodging licenses
- State professional and occupational licenses from the South Dakota Department of Labor and Regulation, Department of Health, or Department of Social Services
- City and county business licenses or permits
How do I get a South Dakota tax license?
Getting a South Dakota business tax license is a fairly simple process with the Department of Revenue. Here’s all the information you need to determine if you need one for your business, and if so, how to apply for a license.
Who needs a South Dakota sales and use tax license?
The South Dakota sales and use tax licenses are two different licenses that many businesses might need. Here’s an overview of each and if you might need one.
- Sales tax license: Required for all businesses that sell, lease, or rent taxable services, products, or personal property and that either have a physical presence in the state or have at least $100,000 revenue in gross sales (such as online retail businesses)
- Use tax license: Required for businesses that have purchased items where sales tax wasn’t applied, such as out-of-state purchases. Also applicable when untaxed retail inventory is removed for personal or store use
Some business entities are exempt from the sales tax license requirement, including state and federal government agencies, Indian tribes, public schools, and more.
What is the application process for a South Dakota tax license?
Take the following steps to complete your South Dakota tax license application:
- Navigate to the Department of Revenue’s Tax License Applications page.
- Select either “Complete Without an Account” or “Sign Up.” Setting up an account means that you’ll be able to view all of your applications and renewals in one place.
- Whatever account option you choose, once you get to the Taxpayer Information page, select the ownership type (e.g., corporation, sole proprietor, LLC, or other business entities) and the type of license you need, such as both sales and use tax or just one.
- Complete your taxpayer information, clicking “Next” to move through each page.
- Fill out filing information, ownership information, and business information.
- Review the details you’ve provided, and submit your application.
Sales and use tax licenses are free to obtain.
What other business taxes require licensing in South Dakota?
You may need to apply for other types of business tax licenses at the state level, such as:
- Contractor’s excise tax license for construction services
- Motor fuel license for fuel distributors and retailers
- Alcohol license for microbreweries, wholesale liquor producers, and more
- Tobacco license for tobacco distributors and wholesalers
- Lottery and gaming licenses
- Coin-operated washer and dryer license
What occupational licenses does South Dakota require?
Some business entities and individual professionals need occupational licenses to be able to perform certain services. South Dakota occupational licensing is based on industry and issued by a variety of state boards and agencies, such as the South Dakota Department of Health, South Dakota Board of Accountancy, and many others.
Which professions require state licenses in South Dakota?
If you or your business offers certain professional services, chances are you’ll need an occupational license at the state level. Some occupations include:
- Healthcare, such as doctors, nurses, and dentists
- Financial services, such as accounting professionals, insurance sales agents, and real estate agents
- Construction trades, including electricians, plumbers, and HVAC technicians
- Cosmetology and barbering
- Social services, such as counselors and therapists
- Technical professions, including engineers and architects
Find a complete list of state boards on the Department of Labor and Regulation’s Occupational Licensing Agencies page.
How do I apply for a professional license in South Dakota?
Here’s how to apply for a professional license in South Dakota:
- Identify the relevant licensing board or agency. You can refer to the Department of Labor and Regulation’s Occupational Licensing Agencies page or do an internet search for your specific profession.
- Determine the requirements. Review the age, education, experience, exam, and documentation requirements to be able to apply for a license.
- Complete and submit your application. Some agencies and boards allow both paper and online applications, while others require an online-only application. Ensure that you fill out the application completely and accurately, that you provide all the necessary documentation, and your payment for the application and license is included.
- Wait for approval. Application processing timelines vary. Check with the issuing board or agency to plan for approval and licensure time frames.
It’s also important to research the renewal requirements and timelines, as well as any continuing education required, to maintain your professional license.
Do I need a city or county business license in South Dakota?
Many cities and counties in South Dakota require business licenses or permits for specific business activities, so be sure to check with your municipality before launching operations. Here’s a look at city and county licenses and permits you might need.
Which South Dakota cities require business licenses?
Most cities in South Dakota require business licenses for certain activities. For instance, in Sioux Falls, you’ll need to obtain a license from the Department of Health to be able to run a daycare, but you’ll need one from the city to operate as an electrician. Another example is in Rapid City, which requires licenses for alcohol retailers, taxi cabs, and even mobile ice cream vendors.
For city business license requirements in South Dakota, check your city’s website or contact the city clerk’s office.
What county-level permits might I need in South Dakota?
Even if you have a city-issued business license, your business may also need a county-level permit, depending on its activities. Types of permits include zoning and land use, building, environmental, and even sign usage. For instance, in Pennington County, your construction company might need a storm water permit if it’s disturbing more than 10,000 square feet of land.
Contact the county in which you’re operating to understand what permits or licenses your business might need.
When do I need a federal business license?
Certain industries and activities are regulated by federal agencies, so if your South Dakota business falls under these categories, you’ll likely need to obtain a federal license or permit.
Which businesses need federal licenses or permits?
Here are some examples of business activities that might require a federal license or permit:
- Importing or exporting wildlife (U.S. Fish & Wildlife Service)
- Transporting animals or plants across state lines (U.S. Department of Agriculture)
- Drilling for oil or natural gas on federal lands (Bureau of Safety and Environmental Enforcement)
- Operating a commercial vehicle for interstate commerce (U.S. Department of Transportation)
For more information, check the Small Business Administration’s listing of federal licenses and permits and follow up with each agency to learn more about licensing requirements.
How much does a business license cost in South Dakota?
South Dakota business license costs vary widely depending on the type of license, but they can range anywhere from $0 to hundreds or thousands of dollars.
What are the fees for South Dakota state licenses?
To get a better idea of costs, take a look at the following license types and their fees.
- State sales and use tax license: $0
- State alcohol tax license: $100
- State professional licenses: $50–$500 (depending on profession)
Take into account that some licenses may need to be renewed, which will likely incur additional fees.
How much do local business licenses cost in South Dakota?
As with state licenses, local business license costs can range from free to hundreds of thousands of dollars—again, it all depends on the type of license or permit.
For instance, to operate a Sioux Falls or Rapid City restaurant that sells alcohol, you’ll need to apply for a city alcohol retail license, which can cost between $100,000–$200,000. Other types of licenses or permits, such as building permits, signage permits, or home occupation licenses, may range from $0 to a few thousand dollars.
Licensing costs may also depend on how many business locations you have, as each site will likely need a separate location-specific license.
What happens if I operate without required licenses in South Dakota?
You risk having penalties imposed when you operate without the required licenses or permits. It’s very important to research what licenses you might need before conducting regulated business activities or providing certain professional services.
What are the penalties for operating without a South Dakota business license?
The penalties for operating without a business license in South Dakota might include the following:
- Monetary fines
- Potential criminal charges, such as a class 1 misdemeanor
- Cease and desist orders requiring business closure
- Lawsuits against you (if your profession must be licensed) or your business
- Inability to legally enforce contracts
- Loss of business funding
Can I operate while my license application is pending?
To avoid penalties or legal action, you shouldn’t start operating your business or providing professional services while a license application is pending. Wait until you receive your license—which may take anywhere from days to months, depending on the license and issuing agency—before launching operations.
How do I maintain my South Dakota business licenses?
Maintain your South Dakota business license by renewing by its deadline and updating individual or business information as needed. If you have a professional license, you’ll also need to keep up with any continuing education requirements.
What are the renewal requirements for South Dakota licenses?
Renewal requirements for South Dakota licenses vary by the type of license. Many licenses, such as those for massage therapists, are renewed annually, but some are renewed biennially, like those for engineers and architects. City- and county-issued license renewals vary by the type of license and municipality.
You should receive a license renewal notice from the issuing agency before the deadline, so make sure that your email and mailing addresses are up to date.
When do I need to update my South Dakota business licenses?
To maintain compliance, it’s important to update any federal, state, or local business licenses with new individual or business information. This might include:
- Change of business address
- Change of ownership or business structure
- Business or personal name changes
- Updates to business offerings or activities
If you’ve created an online profile with the issuing agency, you can typically log in to the portal and update your information through your account. For paper license submissions, it’s best to contact the issuing agency for steps on how to change some of the information on your license.
LegalZoom also offers resources for business owners who need assistance with compliance tasks. Our business license report and management service helps you effortlessly manage your licenses and permits, providing ongoing notifications when updates or renewals are due.
FAQs about South Dakota business licenses
Do online businesses need licenses in South Dakota?
Yes, many online businesses need licenses in South Dakota. For example, if you sell taxable products or services, you’ll still need a state sales tax license, and if you provide a professional service that’s regulated by the state, you’ll need a license from the relevant state board or agency. Additionally, many home-based businesses will need to apply for a home occupation license with the city in which their home is located.
What kind of business does not require a license in South Dakota?
Your business might not need a license in South Dakota if it operates in an unregulated industry or profession and doesn’t sell taxable goods or services. This might include freelance business consultants, copywriters, book editors, dog walkers, and so on.
How long does it take to get a business license in South Dakota?
The time it takes to get a South Dakota business license varies wildly depending on the type of license and the issuing agency. While some low-risk local licenses could take days to approve, many professional licenses from state boards and agencies can take up to a few months.
Do I need a business license if I'm a sole proprietor in South Dakota?
Sole proprietors in South Dakota may or may not need a business license, as obtaining one depends on your business activities, industry, and location. For instance, if you’re a sole proprietor who provides clothing alteration services, you’ll likely need a South Dakota sales tax license, because you’re selling a taxable service in the state.
However, sole proprietors who work in unregulated industries or professions might not need a state or local business license.
Can I get a South Dakota business license before forming my LLC?
No, to get a South Dakota business license, you must first complete South Dakota business registration with the Secretary of State. Once your LLC is officially formed in the state, you can then apply for any necessary business licenses or permits.
LegalZoom’s business formation services can help you register your LLC in South Dakota. Just answer a few questions about your business and kickstart your new venture in minutes.
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