Starting a Business in South Dakota
South Dakota is not just known for its iconic Mount Rushmore, it is also a great place to conduct business. Companies there, year after year, have one of the best business and tax climates in the nation. With no corporate or individual income tax and one of the lowest sales and property tax requirements, it is no wonder companies can operate here with a distinct advantage. It has a cutting edge manufacturing sector, as well as expanding biotechnology, tourism, and banking services. There are various tax credits, business tax incentives, business grants and loans available. Some important things that can be done before starting business operations are performing a business name search and verifying a business registration with the South Dakota Secretary of State.
STEPS TO STARTING A BUSINESS IN SOUTH DAKOTAAfter you have selected a business name and filed to establish a company, you can start to address other administrative tasks. You would need to apply for a FEIN if you are structured in any way other than a sole proprietor. With this number you will be able to do things like opening a business bank account. The next procedure you would handle is to register online for a South Dakota Sales Tax License. This special license will allow you to collect sales tax and file your sales tax returns on time to avoid any penalties. It is administered by the South Dakota Department of Revenue which oversees its regulations. Another major compliance tasking that must be dealt with to remain within the bounds of the law is to research the correct Business Licenses needed to operate. South Dakota is one of the states that have come under the umbrella of recent changes in law pertaining to the collection of out of state sales tax. These laws were actually enacted by a court decision within South Dakota that has had an effect on almost every other state. If you are a vendor who has clients in other states, you may need to register for a SST streamlined sales tax permit if you meet specific thresholds. If you are done with your compliance tasks, you can look into the various incentives offered. Below are some of the more favorable programs available to help you expand your South Dakota business:
- South Dakota offers small businesses low interest financing to purchase real estate, machinery or equipment, and to expand operations. The maximum project cost is $750,000 and the maximum loan amount is $100,000. Loans are given for up to 10 years.
- The South Dakota Jobs Program gives cash grants to new businesses, as well as those trying to expand. The grant is meant to help a company with equipment upgrades or expansion of operations. Requirements are necessity based and will depend on the chances of success of the company. The amount of the grant cannot exceed the Sales & Use tax burden of the individual project. Projects must cost less than $20 million and equipment upgrades cannot exceed $2 million.
- A continuation of the Jobs Program is the Reinvestment Payment Program. Projects must cost more than $20 million and equipment upgrades must exceed $2 million. As with the jobs program, the amount of the grant cannot exceed the Sales & Use tax burden of the individual project.
- The Revolving Economic Development Fund is a program that tries to promote growth by offering cost effective loans of almost half of a project cost. The fund provides capital to a company to purchase land and structures as well as equipment financing. These balloon loans offers company extremely low interest rates amortized over 10-20 years.