The service industry, which includes finance, tourism, health care, and retail is the largest economic contributor in South Dakota. At the start of the 21st century, the state reported some of the lowest unemployment rates thanks to the many banks, health care centers, insurance agencies, and other service providers that sprouted in various locations thoughout the state. Federal government spending also contributes 10% of the gross state product. The Ellsworth Air Force Base is the second-largest employer in the state.
Small businesses also form the majority of private enterprises in the state and employ more than half of the state’s labor force. However, since the onset of the COVID-19 pandemic, many businesses suffered decreased incomes and the state instituted a $400 million Small Business COVID Interruption program to help eligible companies, and a Small Business Startup program with up to $10 million in grants to new businesses whose growth suffered due to the pandemic.
Here is a list of interesting statistics on small businesses (SMBs) in the Mount Rushmore State:
- There are 88,191 small businesses that account for 99% of all businesses in the state.
- Small firms employ a total of 209,403 employees—that’s 58.2% of the state’s workforce.
- Five industries have the largest number of small businesses:
- Other services (except public administration) — 11,771
- Retail trade — 11,033
- Construction — 10,757
- Real estate and rental and leasing — 9,838
- Professional, scientific, and technical services — 8,080
- To form a corporation in South Dakota, you need to file your Articles of Incorporation with the South Dakota Secretary of State’s office. The filing fee is $150.
- A total of 919 businesses exported goods in 2018, of which 76.5%, or 703, were small businesses.
- Self-employed individuals who run incorporated businesses have a median income of $51,000. Those with unincorporated businesses have a median income of $29,000.
- To form an LLC (limited liability company), you must file your Articles of Organization with the Secretary of State’s office. The filing fee is between $150 and $165.
- State law requires that every new South Dakota LLC designate a South Dakota registered agent that will be available during regular business hours at a physical address within the state.
- Out of over 88,000 small businesses, only a meager 3,096 are self-employed minorities.
- Private-sector employment decreased 7.8% during the 12-month period ending in April 2020.
- South Dakota is one of five states (including Nevada, Ohio, Texas and Wyoming) that have no corporate income tax. South Dakota also has no personal income tax.
- Three industries claim the largest share of small business employees in South Dakota:
- Health care and social assistance — 32,536
- Accommodation and food services — 31,522
- Retail trade — 26,368
- In 2018, South Dakota banks issued 13,805 loans under $100,000 to small businesses while reporting under the Community Reinvestment Act. The total value of the loans was $286.6 million.
- There are 114 small firms in the utilities industry that represent 0.13% of all small businesses in the state.
- The state has a bank franchise tax that applies to numerous financial institutions. The tax is based on the bank’s net income and is assessed at a series of progressively lower marginal rates ranging from 6% on income of $400 million or less down to 0.25% on income over $1.2 billion.