What should businesses do before hiring their first employee?

Preparing to Hire Your First Employee in South Dakota

Before hiring your first employee in South Dakota, it is essential to complete several operational steps to ensure compliance and smooth onboarding.

Key Steps to Take Before Hiring

• Register Your Business: Confirm your business is properly registered with the South Dakota Secretary of State, including any assumed business names or trade names.
• Obtain an Employer Identification Number (EIN): Apply for an EIN from the IRS. This number is required for payroll tax reporting and employee tax withholding.
• Register for State Taxes: Register with the South Dakota Department of Revenue for withholding taxes and unemployment insurance tax accounts.
• Understand Employee Classification: Determine whether the worker is an employee or an independent contractor to comply with tax and labor regulations.
• Set Up Payroll Systems: Establish payroll processes to handle wage payments, tax withholdings, and reporting requirements efficiently.
• Obtain Workers’ Compensation Insurance: South Dakota requires most employers to carry workers’ compensation insurance to cover workplace injuries.
• Prepare Required Posters and Notices: Display all mandatory labor law posters in the workplace as required by federal and state law.
• Develop Employee Policies: Create clear policies on attendance, workplace safety, and employee conduct to support compliance and operational consistency.

Ongoing Compliance and Recordkeeping

As of 2026, maintain accurate employee records including payroll, tax documents, and employment agreements. Regularly review South Dakota labor laws to stay compliant with any updates affecting hiring and employment practices.