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The small population of the state’s Mount Rushmore means it’s overflowing with competitive opportunities. South Dakota has a business-friendly climate, low cost of living, and great tax incentives. Whether you choose to hang your shingle east or west of the Missouri River, here are eight steps to successfully starting a business in South Dakota.

 

  1. Choose a business idea 

First, you need a business idea for your business in South Dakota. This is one of the most important decisions you will make as an entrepreneur. You can create a new or innovative product or discover that the business of your country lacks. Here are two important points when considering ideas for your project:

 

  1. Name your business 

Once you have an idea for your business in South Dakota, choose a business name. A good name communicates what your business does, but it’s also attractive and memorable to customers. Here are some things to keep in mind when choosing a business name in South Dakota: 

 

  1. Create a business plan 

Just like a road map and travel itinerary, a solid business plan is essential to building a successful business. Your plan should reflect your overall business goals and give stakeholders (and potential investors) a clear idea of ​​how you plan to operate in the short and long term. Here are the essentials of a good business plan: 

You can write your plan using free templates tailored to your specific business needs, or write your own from scratch, looking at sample plans for inspiration.

 

  1. Choose a business plan and start 

Before starting your business in South Dakota, decide on a business plan. There are four main forms in South Dakota: sole proprietorships, general partnerships, limited liability companies, and corporations. Each offers certain advantages and disadvantages when it comes to tax treatment and debt protection. Note that the tax rate between the types of corporations is subject to federal income tax, while South Dakota does not levy a corporation tax or income tax). Here’s how the different methods differ: 

 

Get a Federal Employer Identification Number (EIN) 

Once you have determined the legal requirements of your South Dakota business, apply for a free Federal Employer Identification Number (EIN) through the Internal Revenue Service (IRS) website. The IRS assigns this nine-digit number to businesses for tax purposes. (Think of it as a Social Security number for businesses.) Having an EIN can also help secure credit and card accounts for business expenses.

 

 Incorporation in South Dakota 

To organize your business in South Dakota, you may need to file a form with the Secretary of State’s office, especially if you are forming an LLC or corporation. Here’s how to apply in South Dakota: 

You can also open a business bank account. Although not required, the IRS recommends that all small businesses maintain separate business bank accounts from their owners. 

 

  1. Obtain business licenses and permits 

All taxable businesses in South Dakota must have a tax license issued by the South Dakota Department of Revenue, even if you do not have a physical location in the state. That is, if you sell or facilitate transfers from South Dakota, even if your business is entirely online, you must obtain this tax license. You may also need to obtain a special license to sell certain products or services in the state, such as alcohol, tobacco products, wholesale, and gasoline. You can get these licenses from the Ministry of Revenue website.

 

  1. Explore Business Insurance Options in South Dakota 

Unexpected losses can affect small businesses. Although some business entities such as corporations and LLCs offer personal property protection, you can still purchase insurance to cover goods, vehicles, and other assets. Types of business insurance you may need or want to consider include: 

The federal Small Business Administration also maintains a list of what your new South Dakota business insurance policy may require.

 

  1. Understand financial matters 

In addition to purchasing insurance, you will need to make other investments to start your business in South Dakota. These costs may include renting a physical retail space, getting a well-designed business website, or paying for advertising, equipment, or accounting software. You may need lawyers, accountants or other professionals to support your efforts. You will also be responsible for special taxes such as unemployment insurance and state and federal taxes. Fortunately, there are business financing options to help cover startup costs, such as Shopify Capital, which allows you to be reimbursed by a percentage of your store’s daily sales. 

 

  1. Your market 

Marketing means developing customer interest and finding out what works to turn them into loyal customers. A solid business plan for your South Dakota small business may include the following: 

Customer loyalty. Build good relationships with customers so they keep coming back and spread the word to friends, family and colleagues.

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