If you’re starting a new business in South Dakota, you will be happy to learn that there is no general corporate income tax. There is also no personal income tax. There are, however, still plenty of taxes that you as a business owner will need to be aware of. I’d like to talk a little bit today about the South Dakota small business tax laws and how they may apply to you and your business.

You as a business owner are required to have a sales and use tax license if you intend to sell, rent, or lease any kind of tangible personal property, or you intend to provide any kind of service, or you purchase equipment or services that may be subject to use tax. You will collect, report, and pay taxes to the state. The sales tax rate is currently 4 percent. All retailers licensed to engage in a sales or use taxable business in South Dakota are also registered to collect and remit municipal sales tax, use tax, and gross receipts tax. For 2007, Pierpoint, Saint Lawrence, and Watertown will all be putting a sales and use tax into effect of 2 percent.  Additionally, the municipalities are allowed to impose up to 1 percent gross receipts tax on alcoholic beverages, eating establishments, lodging accommodations, and ticket sales. So if you are involved in sales of goods for your business, you need to check with your municipality in order to determine whether you are covering all of the local taxes properly.
Also, If you provide a construction service within South Dakota, you are required to hold a contractors’ excise tax license.  You have to be licensed prior to starting work in South Dakota and must have a license for every business location (not each construction site) you own in the state. 
For more information, phone the Department of Revenue at 605-773-3311.

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This entry was posted on Tuesday, December 5th, 2006 at 3:54 pm and is filed under Small Business Tax Laws, Tax Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.