South Dakota Business License

Written by: Nik Ventouris

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South Dakota Business License

To legally operate your business in South Dakota, you must secure the right business licenses, which may vary depending on local, state, or federal regulations.

Identifying and obtaining the permits for your business can be challenging, particularly for new entrepreneurs, as there isn’t a universal South Dakota business license applicable to all enterprises.

Therefore, we’ve designed this guide to help simplify this complex process, offering clarity on what you need to lawfully get your business up and running. Read on to find out how to get your business started with confidence today.

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Do I Need a Business License in South Dakota

In South Dakota, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

  • Sales Tax Licenses: In South Dakota, all retailers involved in selling, renting, or leasing goods, are required to hold a specific license in order to be able to collect sales tax. This license can be obtained from the South Dakota Department of Revenue by completing a Tax License Application
  • Professional Licenses: Depending on the nature of the goods or services that your business offers, it may be subject to professional licensing requirements. In South Dakota, the Department of Labor and Regulation (DLR) handles the regulation of these professions
  • Environmental Permits: There are also a large number of licenses and permits covering business activities involving the health of the general public, natural resources, and the environment. For example, all businesses in the food service industry must obtain a relevant license from the South Dakota Department of Health

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within South Dakota plays an important role as well.


In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to federal, state, and local licensing requirements:

  • Local: Not all business licenses in South Dakota are issued by statewide regulatory bodies — many are actually issued on a city and county level. For example, if you’re planning on setting up a daycare facility in the City of Sioux Falls, you’ll need a specific license from the Sioux Falls Health Department
  • State: There are also a number of statewide licenses to look out for in South Dakota. One of the most common types is the sales tax license, which all businesses that lease, rent, or sell taxable goods or services must obtain from the South Dakota Department of Revenue
  • Federal: If your business operates within certain industries or does specific types of work, you might need a license from the federal government. These include the alcohol, aviation, firearms and explosives, radio and television broadcasting, and transportation industries, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

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How to Get a Business License in South Dakota

In order to get your business license(s) in South Dakota, you will need to complete the following steps:

  • Form Your Business
  • Obtain an Employer Identification Number (EIN)
  • Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in South Dakota, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in South Dakota to register as a Limited Liability Company (LLC). Here are a few reasons for why:

  • Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
  • Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
  • Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
  • Ease of Formation: With the South Dakota Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

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Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

  • Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
  • By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
  • By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

  • Local Licenses: Depending on the city and county in which your business is based, you may be required to obtain different licenses. For example, all food establishments in the City of Sioux Falls are required to obtain a Food Service Establishment Permit from the Sioux Falls Health Department
  • Statewide Licenses: A number of different industries are also licensed at a state level. For example, in order to offer licensed beauty treatments (such as skin care, hair care, and makeup services), businesses must obtain a license from the South Dakota Cosmetology Commission
  • Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For more detailed information on the various state agencies as well as more resources for starting a new business, check out the South Dakota Governor’s Office of Economic Development’s website.

Step 4: Renewal of Licenses and Permits

Many business licenses must be renewed periodically every few years in order to keep them valid. There are no general rules regarding the renewal process in South Dakota, so if you’re uncertain how to renew any of your business licenses, be sure to reach out to the relevant agency for clarification.

Alternatively, due to how complicated each step of applying for and renewing business licenses is, third-party services that handle this entire process are becoming an increasingly popular option.

If you’re interested in finding out more about this process, see our article on How to Get a Business License.

How Much is a Business License in South Dakota

Registering for a business privilege license is free at the state level, but there are fees at the local level. The cost of South Dakota business licenses at the local level may range from $15 to $1,000, depending on your county and how your business operates.

Some businesses, such as restaurants or healthcare providers, may additionally need specialized licenses or permits. These often incur extra fees.

Keep in mind that you’ll need to renew most licenses — usually annually — and renewal often comes with a fee. In addition, South Dakota can sometimes charge a small processing fee for online transactions.

Generally speaking, you will need to check with the Secretary of State websites — as well as with your local county and city government websites — in order to get up-to-date information on the current South Dakota business license costs.

South Dakota Business License FAQ

Does South Dakota require a business license?

South Dakota does not have a generalized business license requirement for all businesses. However, it’s best to check with local and state agencies as some specialized fields like restaurants, liquor stores, or construction companies may need specific permits or licenses. For more information on the licenses you may need, see our South Dakota Business License article.

How much does it cost to start a business in South Dakota?

The cost of starting a business in South Dakota can vary widely depending on the type of business and where exactly it’s based. While the basic registration fees for forming an LLC or corporation are around $150, additional costs like leasing office space, obtaining specialized licenses, and operational expenses will vary based on your location.

What do you need to start a business in South Dakota?

To start a business in South Dakota, you’ll need to decide on a business structure like a sole proprietorship, partnership, LLC, or corporation. Then, you’ll need to obtain an Employer Identification Number (EIN) from the IRS for tax purposes before checking to see if you require any state or local permits. See our How to Get a Business License article for more information.

Do I need to register a sole proprietorship in South Dakota?

Although a sole proprietorship doesn’t require formal state registration in South Dakota, you might need to file a “Doing Business As” (DBA) name if you operate under a business name different from your own. Local permits or licenses may also be necessary depending on the specific nature of your business.

For all related articles, have a look at our How to Get a Business License page.