Last reviewed: July 2026
New South Dakota employers need a federal EIN from the IRS and an SUI account with the South Dakota Department of Labor and Regulation. Because South Dakota has no state income tax, there is no withholding account to open. Workers' compensation insurance is not legally required, though most employers carry it. Register for SUI before your first payroll, not after.
Table of Contents
Hiring your first employee in South Dakota starts a short but firm list of registration requirements. Skip a step and you risk back taxes, penalties, or a payroll run you can't legally process yet. Here is the order to work through them.
Registration Overview
Every new South Dakota employer needs:
- A federal Employer Identification Number (EIN)
- An SUI account with the South Dakota Department of Labor and Regulation
- Any additional South Dakota Department of Revenue registrations that apply to the business (sales tax, for example)
- Workers' compensation insurance (not legally mandatory, but recommended)
- New hire reporting set up for every future hire
Step 1: Get Your Federal EIN
Apply for a free EIN at irs.gov/ein. The online application takes about 15 minutes, and you receive the number immediately. You'll need it for every registration that follows.
Step 2: State Tax Registration
South Dakota has no state income tax, so there is no employer withholding account to set up. If your business sells taxable goods or services, you may still need to register with the South Dakota Department of Revenue for sales tax or other business taxes. This is separate from payroll and depends on what the business does, not on hiring employees.
Step 3: Register for SUI
Register with the South Dakota Department of Labor and Regulation for a Reemployment Assistance account as soon as you pay your first wages. You'll be assigned an employer account number and a new employer tax rate, currently 1.2% for non-construction industries plus a 0.55% investment fee, applied to the first $15,000 of each employee's wages for 2026. Quarterly wage reports come due the month after each quarter closes.
Step 4: Workers' Compensation
South Dakota is one of the few states that does not require private employers to carry workers' compensation insurance. That's a real choice, not a formality: an employer without coverage loses the usual legal defenses if an injured worker sues over a workplace injury, and a serious claim can cost far more than years of premiums. Most South Dakota businesses carry a policy for this reason, purchased through a private insurance carrier.
Step 5: New Hire Reporting
Report every new or rehired employee to the South Dakota New Hire Reporting Center within 20 days of their start date. You'll need the employee's name, address, Social Security number, start date, and your EIN. This feeds a national system used to enforce child support orders, and most payroll software files it automatically.
Once registrations are complete, use our paycheck calculator to check net pay, and send new hires to our W-4 helper for their federal withholding form. Our Form 941 guide covers the federal side of quarterly filing.
Frequently Asked Questions
Where do South Dakota employers register for unemployment insurance?
South Dakota employers register for a Reemployment Assistance account with the South Dakota Department of Labor and Regulation. Registration is completed online and should happen as soon as you hire your first employee, not after your first quarterly filing comes due.
Do South Dakota employers need to register for state income tax withholding?
No. South Dakota has no state income tax, so there is no withholding account to register for. Some employers still register with the South Dakota Department of Revenue for other business taxes, such as sales tax, depending on what the business sells.
How soon must a new South Dakota employer register?
Register for your SUI account with the Department of Labor and Regulation as soon as you pay your first wages. Waiting until a quarterly deadline forces you to file a backdated report and can trigger penalties on top of the tax owed.
Is workers' compensation insurance mandatory when registering as a South Dakota employer?
No state law forces South Dakota employers to carry workers' compensation insurance. Most carry it anyway, because an uninsured employer loses several legal defenses if an injured worker files a lawsuit.
Payroll Without the Extra Layer of Withholding
Because South Dakota has no state income tax, running payroll here comes down to federal filings plus SUI reporting to the Department of Labor and Regulation. Pacific Data Services, in business since 1969, handles that combination remotely for South Dakota employers so registration paperwork and quarterly filings never slip through the cracks.
See how Pacific Data Services supports South Dakota employers remotely →
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Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of July 2026 and may not reflect recent changes in federal or South Dakota state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with South Dakota law before making payroll or compliance decisions for your business.