South Dakota Contractor License

Written by: Will Bond

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South Dakota Contractor License

Looking to get licensed as a contractor in South Dakota? Whether you’re preparing to work in this industry or have already qualified in another state, it’s crucial to understand the requirements of the South Dakota contractor license process.

This article has been designed to simplify the various types of contractor licenses available in this state and break down the process of obtaining the one you need. This allows you to focus more on what counts: making sure your business is operating smoothly and legally.

Tip: If you’re planning to work as a general contractor in South Carolina, we recommend forming an LLC. This is an affordable business structure that protects your personal assets against debt and/or lawsuits.

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Do You Need a Contractor License

While not all South Dakota contractors are required to obtain a statewide license, this can vary depending on your specific trade and the location you’re based in. We’ve explored these considerations in greater detail below.

General Contractors

While there’s no statewide license for general contractors in South Dakota, your business may still need to obtain a local level license depending on its location, as the majority of contractor licensing is handled directly by local jurisdictions.

This means that general contractors in one area may require a license (such as in Sioux Falls, Brookings, and Watertown) while those in neighboring towns may not. Some cities and counties call this a residential building contractor license, and they’re generally similar regardless of the location.

One statewide requirement that applies to all residential contractors is the need to register for a South Dakota Contractor’s Tax License with the Department of Revenue if they’re entering into contracts for construction work.

Electricians and Plumbers

While there’s no statewide license for general contractors based in South Dakota, your contracting business will need a specific statewide license if it plans to engage in any electrical or plumbing work.

Some examples of services that you would need license to offer in South Dakota include:

  • Boiler inspections
  • Electrical installation work and code enforcement
  • Elevator designing, installations, and maintenance
  • Sprinkler system designing, installations, and maintenance

In order to obtain these plumber and electrical contractor licenses, you’ll need to meet the strict experience and examination requirements of these licenses.

Many of our readers have found using reputable study resources to be one of the biggest keys to succeeding in their contractor exams.

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How to Get a Contractor License in South Dakota

Becoming a general contractor in South Dakota is relatively straightforward since the state doesn’t mandate a license. This means there are no specific age, experience, or education qualifications that you must meet at a state level to be able to offer these services.

However, if you intend to perform any work in a specialist trade (i.e., as an electrical or plumbing contractor company), there are certain steps your business will need to follow in order to get licensed in South Dakota. While the specifics of these steps vary between each trade, you will generally need to do the following:

Step 1: Choose Your Business Structure

Before starting the application process for a contractor license, you’ll first need to decide on the structure of your business. Since this decision will impact your liability, tax obligations, and how you run your business, it’s vital you’re informed about the details of each structure so that you can effectively determine which one is best suited to your needs.

Many contracting businesses in South Dakota, particularly smaller ones, decide to structure themselves as an LLC because it grants them tax flexibility, limited liability protection, and credibility in the eyes of their clients.

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Step 2: Meet the Basic Requirements

After forming your business, you’ll need to confirm that you meet the minimum basic requirements. While the specifics of these requirements will vary depending on the license you are trying to obtain, you’ll generally need to:

  • Be at least 18 years of age
  • Be a US citizen or legally reside in the country
  • Have no convictions of a disqualifying offense
  • Demonstrate a certain number of hours of on-the-job training and experience. For example, you must be able to demonstrate at least 4,000 hours of experience (2,000 of which in commercial work) to obtain a journeyman electrician’s license

Step 3: Submit an Application

Once you’ve confirmed that you meet the basic requirements of the license your business needs, the next step is to complete and submit the appropriate application form to the South Dakota Department of Labor and Regulation along with any associated fees.

We’ve explored this process for the two specialist trades in South Dakota that require licensing below:

  • Electrical Contractors: Any contractors looking to engage in electrical work in South Dakota must notarize and submit the relevant application to the Department of Labor and Regulation. This costs between $20 and $60 and must be submitted alongside a Verification Request Form to demonstrate your hours of work experience
  • Plumbing Contractors: In order to get licensed, plumbers will need to fill out and submit the plumbing contractor application (which is used for all plumbing licenses) and pay the appropriate filing fee, which can vary between $10 and $375

You can find more detailed information on the application process for these two professions using the South Dakota Department of Labor and Regulation website.

Step 4: Pass a Licensing Exam

While not a universal requirement, many contractor licenses in South Dakota require applicants to pass a licensing exam in order to qualify. For example, plumbing contractors, journeymen, and apprentices must all pass a state exam administered by the South Dakota Plumbing Commission.

Many candidates struggle with these exams as they will often test both their knowledge of the trade and their understanding of South Dakota’s specific regulations and laws. To avoid this, many applicants take advantage of online study guides and preparatory courses in order to get ready for these exams.

Step 5: Satisfy Insurance Requirements

In order to protect both your business and the client in case of accidents and damages, most contractors in South Dakota will need to provide proof of insurance coverage in order to get licensed. For example, all electrical contractors based within the state must hold a $10,000 surety bond.

Many local governments in South Dakota also impose their own specific insurance requirements on contractors that you’ll need to be aware of. In the cities of Brookings and Watertown, for example, residential building contractors must provide proof of general liability insurance.

Be sure to check the specific insurance prerequisites for the license you’re seeking as well as the surety bond requirements of your local municipality, as these requirements will be unique to each trade and city in South Dakota.

Step 6: Keep Your Contractor License Valid

Once you obtain your license, it’s essential to keep it active. This often involves renewing it every few years, paying associated renewal fees, and meeting continuing education requirements.

For example, electrical contractors in South Dakota are required to submit a renewal form and attain 16 hours of continuing education by June 30 every two years in order to keep their license valid.

Congratulations! You’ve now successfully obtained the professional license needed to work as a contractor in South Dakota. However, your licensing journey doesn’t end here, as there are additional licensing requirements your business will need to satisfy in order to operate legally.

Other Licenses You May Need

Despite the lack of a statewide general contractor license in South Dakota, there are a number of additional licenses and permits that you may still need, which we’ve broken down in more detail below.

Business Licenses

While general contractor licenses aren’t required at a state level in South Dakota, there are certain state business licenses you may need to obtain before you can get up and running.

For example, since the building materials and services a general contractor provides to clients as part of a construction project are generally taxable, you’ll likely require a sales tax license. You can obtain this from the South Dakota Department of Revenue by completing a Tax License Application.

Additionally, your general contractor business may require a specific permit from the South Dakota Department of Agriculture and Natural Resources if it takes on certain types of projects with the potential to put public safety or the environment at risk. This includes activities like renovating or demolishing structures with asbestos-containing materials (ACMs).

Note: To better understand your general contractor business’s licensing requirements, we recommend checking out our South Dakota Business License guide for a more in-depth breakdown.

City and Municipal Licenses

While there’s no statewide rule demanding general contractors in South Dakota to have a license, you may still be required to satisfy some licensing requirements as many local municipalities often impose their own additional requirements.

For example, the city of Sioux Falls requires any contractor performing work on single-family homes, duplexes, or townhouses to obtain a Residential Building Contractors License by passing the Construction Supervisor Examination and satisfying the relevant insurance requirements.

Similarly, some specialist contractors may need to obtain some local licenses in addition to any statewide requirements. For example, plumbers and electricians in Sioux Falls must meet certain city-specific Contractor Licensing requirements, including filling out an application and submitting proof of a $20,000 Compliance Bond, and $300,000 in general liability insurance.

Note: This is just an overview of the contractor licensing requirements in some of the most common areas in South Dakota. It’s important to inform yourself on your city’s specific regulations as unlicensed contractors can face hefty penalties.

South Dakota Contractor License FAQ

How do I get a contractor’s license in South Dakota?

The process of obtaining a contractor’s license in South Dakota will vary depending on the specific license in question. After ensuring you meet the basic requirements, it generally involves submitting an application, passing a licensing exam, and satisfying any insurance requirements. We break down the process of getting licensed in these professions in our article on How to Get a General Contractor License.

Do you need a license to be a handyman in South Dakota?

Unless you’re planning to work as an electrician or plumber, there’s no statewide license that handymen and other general contractors must obtain in order to work in South Dakota. However, there are a number of local level licenses for contractors in place, such as residential building licenses. For more information, see our South Dakota Contractor License article.

What is the contractors tax in South Dakota?

In South Dakota, a 2.00% Contractor’s Excise Tax is imposed on the gross receipts of businesses engaged in construction services or any work related to the construction, building, installation, or repair of a fixture to real property. In order to pay this tax, you will need to apply for a Contractor’s Excise Tax License from the Department of Revenue.

How much does it cost to get a contractor license in South Dakota?

In South Dakota, the cost of becoming a licensed contractor completely depends on the specific type of license you need. For example, applying for a plumbing contractor license will cost $375, while an apprentice plumber license will only cost $10. Be sure to check with the relevant licensing authority for the cost of the specific license your business needs.