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How to Set Up a New Business in South Dakota

Published By Janet Gershen-Siegel at July 10th, 2019

Starting a Business in South Dakota

So have you been wondering: how do I start a business in South Dakota? And more importantly, can I do so no matter what the economic conditions are? Can I start a new business in South Dakota during a recession?

New Business in South Dakota: Pros and Cons

Business Insider puts South Dakota in its middle ten states when it comes to starting a new business, according to a 2016 article. And this is for the whole country.

South Dakota has a decent rate of new business owners. South Dakota also has the second best business tax climate. But the pool of potential workers to hire is small in the state. South Dakota has the lowest percentage of available employees at 0.52%.

Still, Max Filings names South Dakota #2 for states with the business best tax climate to form an LLC or a corporation. Nearby Wyoming was #1.

Recent Upsurge

In 2018, Fit Small Business ranked South Dakota as number five for starting a new business. But keep in mind, the methodologies used by Fit Small Business, Business Insider, and Max Filings all differ.

Why the dramatic upswing? Even Fit Small Business saw a change (South Dakota was number twenty on their list in 2017), and some was due to the good tax climate and high marks for the cost of starting a business. Business survivability is also very good.

New Business in South Dakota: Top Industries

Per the South Dakota Governor’s Office of Economic Development, the biggest industries in South Dakota are value-added agriculture, financial services, and also bioscience. As in many states, the health care and social assistance sectors are also large employers.

Smart business owners can take find new opportunities with bigger industries in the state. They can offer goods or services. These can include developing safety equipment, and also trucking for any industry. Other ideas are ground transportation, and computer support such as in data and programming.

Here is how to start business in South Dakota.

Start a New Business in South Dakota – South Dakota New Business Secretary of State Requirements

Register a Business Name

DBAs (also known as fictitious business names) must be registered, according to the South Dakota Secretary of State’s website.


A business owner must choose a unique name for their corporation. Do an extensive search of online records and other archives and catalogs to make sure the name is not in use. There is a database of South Dakota corporations that anyone can search online at the South Dakota Secretary of State website.

Corporate Name Reservations

Name reservations are not required in South Dakota. However, if a business owner wants to reserve a corporate name, they can submit a name reservation application to the office of the South Dakota Secretary of State.

Download the name reservation application form at Reserve a South Dakota Corporation Name on the South Dakota Secretary of State website. The corporate name will then be reserved for a period of 120 days. They will need to pay a filing fee of $25.00.

When choosing a corporate name, it must include the word “corporation,” “incorporated,” “limited,” “company”. Or it can be an abbreviation of one of these words.

Registered Agents

A corporation will need a registered agent. They will act as an agent for service of process and also receive all legal and tax documents for it.  An adult resident of South Dakota or a corporation can act as a registered agent.

There are companies that provide registered agent services. You can find a directory of some of these companies online at Register a South Dakota Corporation on the South Dakota Secretary of State website.

Start a New Business in South Dakota – Business Permits and Licenses

The Department of Labor and Regulation keeps a list of occupational and professional licensing boards. The Governor’s Office of Economic Development also has a PDF with pertinent data.

Local Permits and Licenses

A rather useful interactive map can make finding South Dakota County websites easy.

Start a New Business in South Dakota – Business Registration

Go to the “Start a New Business” page via South Dakota Secretary of State business services. Business forms are also there.

Tax Registration

You can apply at the South Dakota Department of Revenue.

Start a New Business in South Dakota – Virtual Offices

Alliance offers South Dakota virtual business office space in Sioux Falls only. For Rapid City, try Regus for South Dakota virtual office space or to connect with local business owners. Also try computer user groups to see if they can help.  Other options may be to look for virtual business office space in nearby states. They are Iowa, Minnesota, Montana, Nebraska, North Dakota, and also Wyoming.

Start a New Business in South Dakota – Establish Business Credit

Business credit is credit in a company’s name. It doesn’t link to a business owner’s personal credit, not even when the owner is a sole proprietor and the sole employee of the business.

Therefore, an entrepreneur’s business and individual credit scores can be very different.

The Benefits

Considering that business credit is independent from individual, it helps to protect a business owner’s personal assets, in the event of court action or business bankruptcy.

Also, with two separate credit scores, a small business owner can get two separate cards from the same vendor. This effectively doubles buying power.

Another benefit is that even startup ventures can do this. Visiting a bank for a business loan can be a recipe for frustration. But building small business credit, when done the right way, is a plan for success.

Individual credit scores depend upon payments but also additional elements like credit use percentages.

But for company credit, the scores actually merely hinge on if a company pays its bills promptly.

new business in South Dakota Credit Suite3 - How to Set Up a New Business in South Dakota

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

The Process

Establishing company credit is a process, and it does not happen without effort. A small business will need to actively work to establish company credit.

That being said, it can be done readily and quickly, and it is much quicker than building individual credit scores.

Vendors are a big aspect of this process.

Doing the steps out of order will lead to repetitive denials. No one can start at the top with business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Start a New Business in South Dakota – Business Fundability

A small business has to be fundable to lenders and vendors.

Due to this fact, a business will need a professional-looking web site and email address. And it needs to have site hosting from a company such as GoDaddy.

And, company telephone and fax numbers should have a listing on

Likewise, the business telephone number should be toll-free (800 exchange or the like).

A company will also need a bank account devoted solely to it, and it needs to have all of the licenses necessary for operation.

new business in South Dakota Credit Suite3 - How to Set Up a New Business in South Dakota

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Working with the Internal Revenue Service

Visit the IRS website and get an EIN for the company. They’re free of charge. Select a business entity like corporation, LLC, etc.

A company can start off as a sole proprietor. But they will probably wish to switch to a form of corporation or an LLC.

This is in order to decrease risk. And it will maximize tax benefits.

A business entity will matter when it involves tax obligations and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. No one else is responsible.

Sole Proprietors Take Note

If you run a business as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the small business name. As a result, you can find yourself being personally responsible for all small business debts.

Additionally, according to the IRS, using this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 possibility for corporations! Avoid confusion and significantly decrease the odds of an Internal Revenue Service audit at the same time.

Start a New Business in South Dakota – Instigating the Business Credit Reporting Process

Begin at the D&B web site and obtain a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a business into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the company. You can do this at If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

This way, Experian and Equifax will have activity to report on.

Vendor Credit

First you need to build trade lines that report. This is also known as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.

new business in South Dakota Credit Suite2 - How to Set Up a New Business in South Dakota

And with an established business credit profile and score you can start to oget retail and cash credit.

These sorts of accounts tend to be for the things bought all the time. Like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first of all, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are typically Net 30, instead of revolving.

Hence, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, such as within 30 days on a Net 30 account.


Net 30 accounts must be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. In comparison with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you used.

To launch your business credit profile the right way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then make use of the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Helps

Not every vendor can help like true starter credit can. These are vendors that will grant an approval with very little effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 3 of these to move onto the next step, which is retail credit.

Retail Credit

Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, then progress to the retail credit. These are businesses like Office Depot and Staples.

Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.

Fleet Credit

Are there more accounts reporting? Then move to fleet credit. These are service providers like BP and Conoco. Use this credit to buy fuel, and to fix and take care of vehicles. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the company’s EIN.

new business in South Dakota Credit Suite3 - How to Set Up a New Business in South Dakota

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Cash Credit

Have you been responsibly handling the credit you’ve up to this point? Then move to more universal cash credit. These are service providers such as Visa and MasterCard. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

These are usually MasterCard credit cards. If you have more trade accounts reporting, then these are doable.

Start a New Business in South Dakota – Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and take care of any inaccuracies ASAP. Get in the practice of taking a look at credit reports. Dig into the specifics, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less.

Update Your Record

Update the details if there are inaccuracies or the information is incomplete.

Start a New Business in South Dakota – Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any inaccuracies in your records. Mistakes in your credit report(s) can be fixed. But the CRAs normally want you to dispute in a particular way.


Disputing credit report mistakes normally means you send a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and keep the original copies.

Fixing credit report errors also means you specifically itemize any charges you dispute. Make your dispute letter as crystal clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you mailed in your dispute.

A Word about Business Credit Building

Always use credit smartly! Don’t borrow beyond what you can pay off. Keep an eye on balances and deadlines for payments. Paying off on time and in full will do more to increase business credit scores than virtually anything else.

Building small business credit pays off. Great business credit scores help a small business get loans. Your credit issuer knows the company can pay its debts. They know the company is bona fide.

The business’s EIN connects to high scores and credit issuers won’t feel the need to require a personal guarantee.

Business credit is an asset which can help your business for years to come.

Learn more here and get started toward opening a new business in South Dakota.

Want to start a new business someplace else in America? Then check out our handy guide to starting a business in any state in the country. 

South Dakota’s Response to COVID-19

Here’s what South Dakota is doing about COVID-19. On March 13, Governor Kristi Noem declared a state of emergency. The Governor is working with the SBA to obtain Economic Injury Disaster Loans for South Dakota businesses.

South Dakota is seeking eligibility for emergency disaster loans for small businesses from the SBA. Small businesses will need to fill out an economic injury worksheet which will help the state qualify.

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