Whether you live in South Dakota or thinking about moving to the state for a new opportunity, South Dakota can be a great place to start a business. However, if you have never started a business before, the prospect of setting one up in South Dakota can be overwhelming.

But with this guide, you will be well on your way to starting your business successfully in South Dakota. You will learn everything from choosing a business idea, getting funding, writing a business plan, and registering and marketing your business.

Step 1: Choose Your Idea

The first step in starting your own business in South Dakota is to come up with an idea. This idea will form the foundations of your business, and your idea will be fleshed out as you build your business from the ground up. At this point of starting a business, your vision does not need to be overly thought-out.

To help you formulate a good business idea and to see if your idea will work, answer the following questions:

  • Do you have any valuable passions, skills, or hobbies?
  • Can these activities be turned into a profitable business?
  • Can you see yourself working or running a business every day?
  • Do you have the skills to run this business?
  • Are there any businesses like yours already?
  • Is there a need for your business?
  • How is your business different or solving a consumer’s problem?

Your answers to these questions should point you in the right direction, and if not, you can always tweak or re-think your idea. If you’re stuck, consider asking your friends and family – their valuable insights as fellow consumers can help you further.

Step 2: Pick a Name

Once you have decided on your business idea, you will need to pick a name for the business in South Dakota. The name you choose is vital as this is what you will use on all your paperwork, branding, and advertising. Make sure you are happy with the chosen name, as changing it partway through the process is not generally a good idea – especially regarding marketing.

The name you choose should be unique but not so difficult that people don’t know how to pronounce it. In South Dakota, you cannot register your business with a name already registered with the state. To check if the name you want to use is still available, visit the South Dakota Secretary of State website to run a business name search.

Coming up with a name can be challenging. Try out these different methods to help pick a name:

  • Create a word dump. This is a list of words that pop into your mind when you think about your business.
  • Create a poll on Facebook.
  • Use an online name generator. These are free and generate randomized names.
  • Brainstorm with friends and family.

Step 3: Write Your Business Plan

Now that you have decided on an idea and a name, you will need to flesh out the business’s goals. In this step, you will need to write out your business plan. The business plan will act as a guide to your company and include things like your planning, research, product information, and all the essential financial details.

You should ensure that your business plan is as thorough as possible, as this can be used to apply for funding and to attract investors in the next step.

In South Dakota, there are no rules about what needs to be included in your business plan, but you should make sure your plan answers the following:

  • Why have you started the business?
  • What products or services does your business offer?
  • Who are your direct competitors?
  • Who is your target audience?
  • How do you plan on turning your target audience into paying customers?
  • How much will you need to start the business?
  • Do you have the money, or will you need to get funding?
  • How will you get funding?
  • How much will you need to make to break even?
  • What equipment is needed?
  • What type of employees will you need?
  • What are your financial goals and predictions?

Writing a business plan can be daunting, especially if you have never drafted one before. However, there are plenty of ready-to-download business plan templates available on the internet that you can use if needed.

Step 4: Get Funding

Starting a business in South Dakota is more than just filling in paperwork. There are several costs involved, and unless you have the money upfront, you will need to get funding elsewhere. You can do this through a grant, loan, or an investor.

While the state of South Dakota does not offer grants or loans on its official government websites, you can always apply for funding from places like banks or other financial institutions. Alternatively, if you do not qualify for a loan or grant, you could have an investor cover the startup costs in exchange for shares or profits in the business.

Step 5: Choose a Business Structure

Choosing the proper business structure to use is an important step. Here are the structures that you can choose from.

Sole Proprietorship

This is an informal business structure with only one owner and no separation between the owner and the business assets. This type of business structure is commonly used for low-risk businesses.


A partnership is very similar to a sole proprietorship, as there is no separation between the owner’s assets and the business’s. The only difference between the two structures is that a partnership has more than one owner, all with equal shares in the business.

Limited Liability Company

A limited liability company, also known as an LLC, is a business structure often used by small to medium-sized businesses. This is a popular business structure as it combines two types of structures, pulling advantages from both types. For example, it has the ease and flexibility of a sole proprietorship or partnership and the liability protection of a corporation. 

C or S Corporation

A corporation is a formal business structure used mainly by large companies with multiple shareholders. A corporation is an entirely separate entity from the owners, and this business structure also comes with some tax benefits.

Step 6: Register the Business

Depending on what business structure you choose to use, you may be required to register the business with the state before you can legally begin trading.

Sole Proprietorship

As this is not a formal business structure, you have no legal requirement to register the business. Simply set up and start trading! However, if you want to run your business under a different name other than your personal one, you can file a Doing Business As (DBA) with the Secretary of State.


This business structure does not need to be registered either, but you can file a DBA if needed. There is also the option for all business owners to sign a partnership agreement to protect against future conflicts. But this agreement does not have to be submitted to the state; it would just be for the business’s records.

Limited Liability Company

To register an LLC in South Dakota, you must complete the Articles of Organization and submit them to the Secretary of State. The fee to register your LLC online is $150.


To register a corporation with the South Dakota Secretary of State, you must fill out and submit the Articles of Incorporation. The fee to register your corporation is $150.

Step 7: Set Up Your Finances & Accounting

You should set up your business finances before you open the business. Set up your finances by opening a bank account for the business, applying for a company credit card, and setting up a payment method for customers to use. If applicable, you should install a payroll system for employee salaries and taxes.

It is recommended to hire an accountant to assist you with taxes and look after the books, so there are no expensive mistakes.

Step 8: Get Business Insurance

Running a business without business insurance is risky, as you never know when disaster might strike. When it does, you want to be covered. Therefore, you should invest in a good general liability insurance policy. This is a broad insurance policy that will cover your business on a day-to-day basis.

There are plenty of other types of business insurance policies you can choose from, and the choices can be overwhelming. So, consider consulting a business attorney or a broker to understand your options and choose the best one for your business and your needs.

Step 9: Obtain Any Permits or Licenses Needed

All businesses in South Dakota are required by law to have a business license. These licenses are known as sales tax licenses. These licenses can be applied for on the South Dakota Department of Revenue website.

On this website, you should also see what other licenses or permits you may need. These requirements differ according to your business, so look at the various licenses and permits to see what you’ll need to remain compliant. You should also consult your local clerk to ensure you are meeting all local requirements as well.

Step 10: Build a Website

In this day and age, you must have a website for your business, as it is an excellent way of creating content, advertising, and interacting with consumers. You can even use your website to sell your products using platforms like Shopify.

Whether you’re building the website yourself or you are paying someone to make it, there are a couple of things you’ll need to keep in mind:

  • The font should be a good size and easy to read.
  • All content should be relevant and up-to-date content.
  • Ensure the images and content you use are your own.
  • Do not clutter your webpage with loads of images, videos, and GIFs, as this can drastically slow down your loading times.
  • Make sure the website is mobile-compatible.
  • Include a catchy call to action.
  • Provide links to your other social media.

Step 11: Hire Employees (If Any)

If you find that you need to hire employees, you’ll need to draft up a job post and post it on local and online job boards. Once that’s done, wait for candidates to apply and narrow them down to your top choices. Interview your top candidates, and finally, offer the job to the candidate most qualified and best suited for the role!

You should also be aware that in South Dakota, all new hires must be reported to the South Dakota New Hire Reporting Center. This needs to be done within 20 days of the hire date. There is no fee to report new hires.

Step 12: Market Your Business

Congratulations! You are now at the final step in starting your own South Dakota business. Marketing your business can be a creative exercise and can be done on any budget.

Here are some different ways to market your business:

  • Advertise on the business website.
  • Use social media like Facebook and Instagram to advertise for free.
  • Make use of pay-per-click advertising.
  • Create a Google Business profile and advertise on Google.
  • Advertise in your local newspaper and radio station.
  • Attend markets and expos.
  • Run competitions.
  • Hand out free samples.
  • Attend local networking events.

If you prefer to focus on other aspects of the business, you can always hire a marketing expert to take care of all of this for you!

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