South Dakota payroll setup for your first hire

South Dakota does not take state income tax from paychecks.

There is no South Dakota income-tax withholding account to open. A federal Employee’s Withholding Certificate (Form W-4) still sits with the IRS. A payroll login is not a state withholding number, because South Dakota does not assign one.

The Department of Revenue tax page says South Dakota is one of seven states that does not impose a state income tax. The same page sends federal wage questions to the IRS. This is like Texas, Florida, Washington, Tennessee, and Nevada on that one point. The unemployment portal and the workplace-injury rule are not the same as those states. The Department of Revenue business-tax page is for sales tax and other business taxes. It is not a paycheck-withholding door.

Register reemployment assistance first. All new shops file. Tax is due after $1,500 in a quarter, or one person in 20 weeks.

DLR collects state unemployment tax through RA, Reemployment Assistance. That tax is often called SUTA, state unemployment tax, or SUI, state unemployment insurance. Official pages use Reemployment Assistance. This DLR is South Dakota’s Department of Labor and Regulation. It is not South Carolina’s Department of Employment and Workforce.

The Reemployment Assistance Tax FAQ and the employer-registration page say all new and acquired businesses in South Dakota must register with the Reemployment Assistance Tax Unit. That file is Form 1, the Employer’s Registration Application, or the online Register Your Business path. This is not Nebraska’s $1,500-quarter pair as the only start. Nebraska also files UI Form 1 even if not yet liable. South Dakota’s register-all-new-shops line is its own clock. Do not wait for the first $1,500-quarter or 20-week test to open the file. Do not copy Idaho’s six-month IBR clock onto South Dakota. Do not copy Iowa’s 30-day myIowaUI clock after the first paycheck. Do not copy Kansas’s 15-day Form K-CNS 010 clock. Do not copy Louisiana’s 30-day apply-even-if-not-liable clock. Successors and shops that change ownership structure register within 30 days of the change.

SDCL 61-1-4 is the regular-shop tax test. You become an employer if you pay $1,500 or more in a calendar quarter in the current or preceding calendar year, or if you have at least one person in employment for some portion of a day in each of 20 different calendar weeks, whether or not consecutive, in the current or preceding calendar year. The FAQ restates that pair. One of those two tests is enough. This is not California’s $100-in-a-quarter test. There is no 15-day California clock on the DLR page. Do not copy that clock onto South Dakota. This is not New Mexico’s $450-quarter pair. This is not Nevada’s $225-quarter test. This is not Indiana’s $1 covered-wage test. This is not Oregon’s $1,000-quarter or 18-week test. This is not Utah’s one-person, some-portion-of-a-day clock. This is not Iowa’s any-wages test. South Dakota does not take state paycheck withholding. Do not treat South Dakota like a withholding state.

The same FAQ names other paths. A shop covered under the Federal Unemployment Tax Act, often called FUTA, and another state’s unemployment law is an employer here. A successor who takes all or part of a covered shop is an employer. Domestic work in a private home uses $1,000 cash wages in a quarter. Agricultural labor uses $20,000 cash wages in a quarter, or ten people in 20 weeks. A 501(c)(3) shop uses four people in 20 weeks. This scorecard is the regular-business path.

File Form 1 or the online registration. Later wage reports sit on Form 21.

The live start is the online Register Your Business path on the RA forms page, or paper Form 1. The same login later takes new-hire reports and quarterly wage reports. That door is apps.sd.gov/ld22newhire. The handbook also sends quarterly files to sdwagereport.com. 501(c)(3) shops use Form 1NP. Political subdivisions use Form 1PS. The FAQ says an online file that is subject to the tax receives the account number and rate at once. A mailed, faxed, e-mailed, or in-person Form 1 can take about two to three weeks. Confirm the live letter.

Hold the account number DLR assigns. Software pages also call that number a SEIN, a state employer identification number. Official pages say account number. Do not substitute a federal EIN for that number. There is no state withholding number to mix it up with.

After the account exists, file the Employer’s Reemployment Assistance Quarterly Report, Form 21. The RA tax page puts those files on the last day of the month after the quarter: April 30, July 31, October 31, and January 31. The handbook says file even if you do not receive a paper form. A quarterly Form 21 is not the new-hire report. The 2026 wage-base notice prints $15,000. Wages above that base must still be reported. They are not taxed. Nebraska’s 2026 wage base is $9,000. Idaho’s 2026 wage base is $58,300. Do not copy those wage bases onto South Dakota.

The same official page prints the new-employer RA tax as 1.20% for a regular shop and 6.00% for construction, plus a 0.55% investment fee. Years two and three print 1.00% or 3.00% when the account balance is positive, plus the same 0.55% fee. Use the rate on your Notice of Liability and later rate notice, not a number from a software page. That printed 1.20% is not Mississippi’s 1.00% first-year rate. It is not Nevada’s 2.95% new-shop rate. It is not New Mexico’s greater-of-industry-average-or-1% floor.

New hire is a 20-day New Hire Reporting Center file. A 30-day gap starts a rehire. Form 21 does not take it.

The new-hire report is a list of who you just hired. It is not a box on the quarterly Form 21 wage report. In South Dakota that report goes to the New Hire Reporting Center, called NHRC. The NHRC sits with the same Department of Labor and Regulation that collects reemployment assistance. The reporting-requirements page and the new-hire FAQ require a report of a newly hired or rehired employee within 20 days of the first day of work for wages. Report a rehire if the person has not worked or been paid for the past 30 days. That 30-day rehire clock is not Nebraska’s, New Mexico’s, Nevada’s, or Tennessee’s 60-day rehire line. Do not copy a 60-day rehire onto South Dakota. Use the most recent date of hire. The start date is the first day the person performed services for pay.

File on sdwagereport.com or the DLR new-hire login. The handbook also names phone, fax, and mail to the New Hire Reporting Center in Aberdeen. A copy of the federal W-4 can carry the report if it holds the required facts. The FAQ says independent contractors are not required. Family members, students, temporary workers, and day labor are required. A quarterly Form 21 does not satisfy that clock. SDCL 25-7A-3.3 and the laws page print the State Directory of New Hires. This is not Iowa’s 15-day Centralized Employee Registry report. This is not Alabama’s seven-day report. This is not Georgia’s 10-day report. This is not Massachusetts’s 14-day Department of Revenue report. Most peer states use a 20-day clock. South Dakota’s 20-day clock sits with the New Hire Reporting Center, not a different child-support website.

Workplace injury insurance is not required. An uninsured shop can still be sued.

This is Texas optional coverage. It is not Kentucky’s, Connecticut’s, Louisiana’s, Oklahoma’s, Nevada’s, Utah’s, Iowa’s, Idaho’s, or Nebraska’s first-employee path. It is not Georgia’s, North Carolina’s, Virginia’s, or Arkansas’s three-employee wait. It is not Mississippi’s, Alabama’s, or Tennessee’s five-employee wait. It is not Florida’s or South Carolina’s four-employee wait. It is not Wisconsin’s three-employee or $500-quarter path. It is not Kansas’s $20,000 payroll line. It is not Washington’s exclusive state fund. It is not Ohio’s Bureau of Workers’ Compensation monopoly. South Dakota calls this workers’ compensation.

The Department of Labor and Regulation workers’ compensation page says there is no law in South Dakota requiring any employer to carry workers’ compensation insurance. The same page says coverage is highly recommended. An uninsured employer may be sued in civil court by an injured worker. SDCL 62-5-7 is the election-out line for a shop that has not secured payment. The coverage page names who sits inside the Act if a shop elects in. Domestic work, farm or agricultural labor, and certified independent contractors sit outside that regular-shop line. This scorecard is the regular-business path.

DLR does not sell that policy. Ordinary shops that elect in buy a licensed private policy or qualify to self-insure. A payroll login is not a policy.

How Gusto and Patriot describe South Dakota

South Dakota has no state paycheck-withholding number to confirm. Confirm the reemployment-assistance account number and rate on the Notice of Liability and on sdwagereport.com. Confirm workplace injury insurance with a licensed carrier if you elect in. Confirm the 20-day new-hire file with the New Hire Reporting Center.

Gusto’s South Dakota help article says Middesk (Gusto’s business-verification company) may register state income-tax withholding and state unemployment insurance (SUI). South Dakota has no state paycheck withholding. Middesk’s standard order still names that withholding file. The same article names the Department of Labor and Regulation, Reemployment Assistance Division, for unemployment tax. That DLR door matches the registration page. It lists Form 21, also printed as SD DOL-UID-21, among South Dakota files. Form 21 matches the handbook. Official pages say Employer’s Reemployment Assistance Quarterly Report. Software pages also ask for a SEIN. Official pages say account number. Middesk’s standard order does not open workplace injury insurance. Read Gusto’s South Dakota help article. See Gusto on the directory.

Patriot’s registration article tells new shops to register unemployment with the Department of Labor and Regulation. That DLR door matches the registration page. The article prints a 1.2% new-employer SUTA rate for 2026 plus a 0.55% investment fee, and 6.0% plus the same fee for construction. Those printed rates match the RA tax page. Use the rate on your live DLR notice, not a number from a software page. The article puts the 20-day new-hire report with the Department of Labor and Regulation. That office matches the New Hire Reporting Center. The article also says workplace injury insurance is not required and is highly recommended. That voluntary line matches the DLR workers’ compensation page. It is not a Washington-style exclusive state fund. Read Patriot’s registration article. See Patriot on the directory.

What still sits on the employer

• Register every new South Dakota shop with the Reemployment Assistance Tax Unit on Form 1 or the online registration. Do not wait for the $1,500-quarter or 20-week test to open that file. Successors and ownership-structure changes register within 30 days.
• Decide that the $1,500-quarter or 20-week test in SDCL 61-1-4 has been met before you treat the shop as a tax-paying employer. Domestic, agricultural, successor, Federal Unemployment Tax, and 501(c)(3) paths use other tests.
• Hold the account number DLR assigns. Software pages may call that number a SEIN. Do not substitute a federal EIN for that number.
• Enter the reemployment-assistance rate from the live DLR notice, not a marketing figure. DLR prints 1.20% plus a 0.55% investment fee for a new regular shop, 6.00% plus the same fee for construction, and a $15,000 wage base for 2026. Confirm the live notice.
• File Form 21, the quarterly reemployment-assistance wage report, after the account exists. Those reports are due the last day of the month after the quarter.
• Do not open a state paycheck-withholding account. South Dakota does not take state income tax from paychecks.
• File the 20-day new-hire report with the New Hire Reporting Center. Report a rehire after a 30-day gap. A quarterly Form 21 does not satisfy that clock.
• Decide whether to buy workplace injury insurance. DLR does not require that policy. An uninsured shop may be sued in civil court. Payroll software does not issue that policy.
• Do not copy another state’s clock onto South Dakota. South Dakota does not use California’s $100-quarter test. South Dakota does not use New Mexico’s $450-quarter test. South Dakota does not use Nevada’s $225-quarter test. South Dakota does not use Iowa’s any-wages unemployment test. South Dakota does not use Iowa’s 30-day myIowaUI clock. South Dakota does not use Idaho’s six-month IBR clock. South Dakota does not use Kansas’s 15-day Form K-CNS 010 clock. South Dakota does not use Louisiana’s 30-day apply-even-if-not-liable clock. South Dakota does not use Indiana’s $1 unemployment test. South Dakota does not use Oregon’s $1,000-quarter or 18-week test. South Dakota does not use Utah’s one-person, some-portion-of-a-day unemployment clock. South Dakota does not use Arkansas’s ten-day unemployment test. South Dakota does not skip the register-all-new-shops file. South Dakota does not take state paycheck withholding the way New Mexico, Nebraska, or Idaho do. South Dakota does not use Iowa’s 15-day new-hire clock. South Dakota does not use Alabama’s seven-day new-hire clock. South Dakota does not use Georgia’s 10-day new-hire clock. South Dakota does not use a 60-day rehire clock. South Dakota does not use Nebraska’s, Kentucky’s, or Idaho’s first-employee workplace-injury path. South Dakota does not use Mississippi’s, Alabama’s, or Tennessee’s five-employee workplace-injury wait. South Dakota does not use Florida’s or South Carolina’s four-employee wait. South Dakota does not use Kansas’s $20,000 payroll workplace-injury line. South Dakota does not use Wisconsin’s three-employee or $500-quarter path. South Dakota does not use Washington’s exclusive state fund. South Dakota does not use Ohio’s Bureau of Workers’ Compensation monopoly.

Also forming a company in South Dakota? Process Score compares registered agents there.