How to Do Payroll in South Dakota: What Every Employer Needs to Know

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South Dakota law requires that employers post specific information about their employee compensation packages. This requirement can be fulfilled by an employer posting this content on the company website, or distributing it in other ways as well. South Dakotan employers should be aware of these requirements and ensure compliance with them to avoid fines from state regulators.

The “south dakota employee rights” are the rights that employees have in South Dakota. Employers should be aware of these rights before they hire someone to work for them.

South Dakota is one of the most straightforward states to manage payroll in. Because the state does not collect income tax or need a state income deduction form, calculating South Dakota payroll taxes is simple—one less thing for you and your workers to worry about. There are no state or municipal taxes in South Dakota, so understanding how to process payroll there should be simple.

Using an all-in-one payroll provider like Gusto may make handling your South Dakota payroll even simpler. Gusto helps you make sure your payroll is right every time, so you don’t have to pay fines, from electronically onboarding new workers to calculating and reporting South Dakota payroll taxes. For a 30-day free trial, sign up now.

Gusto is a great place to visit.

A Step-by-Step Guide to Payroll Processing in South Dakota

By typically following federal requirements, South Dakota makes payroll simple for companies. Attempting to compute South Dakota payroll taxes by hand, on the other hand, might result in expensive mistakes. The following are the fundamental procedures to running payroll in South Dakota.

Step 1: Register your company as an employer. To get a new Federal Employer Identification Number (FEIN), new businesses may need to use the federal Electronic Federal Tax Payment System (EFTPS) (FEIN). To pay federal taxes, you’ll need your FEIN.

Step 2: Register your company with the South Dakota Department of Commerce. If your company is brand new, you must register on the Secretary of State’s website in South Dakota. Any business that pays workers in South Dakota must register with the state’s revenue department.

Step 3: Set up your payroll system. Creating a regular payroll procedure requires deciding how and when to pay workers and tax authorities. You’ll also need to figure out how you’ll gather employee Forms for Payroll and other records-related paperwork. To assist you with your South Dakota payroll, you may process payroll by hand (not advised), create an Excel payroll template, or use a payroll service.

Step 4: Have staff complete the necessary paperwork. During the onboarding process, every firm that employs workers in South Dakota is required to gather specific paperwork. On their first day on the job, every employee must undergo I-9 verification. A completed W-4 must also be on file for new workers.

Step 5: Go through the time sheets and approve them. Collect and examine time sheets from your nonexempt workers many days before payroll is due so you may talk with anybody who could have committed a mistake. Employee time tracking may be done in a variety of methods, some of which are free.

Step 6: Work out the gross compensation and taxes for each employee. You’ll have to figure out each employee’s total salary, deductions, and tax withholdings, among other things. You’ll also owe the federal government employment taxes, which must be paid. If you need additional information, look into how to calculate payroll.

Step 7: Reimburse employees for their salary, benefits, and taxes. The majority of businesses now pay all workers through direct deposit. However, you may also use cash or paper checks. The minimum wage in South Dakota is $9.45 per hour, which is more than the federal minimum wage of $7.25 per hour. You may pay your federal and state taxes online in South Dakota. If you utilize a benefits provider, they should collaborate with you to make deductions as straightforward, automated, and electronic as possible.

Step 8: Make a backup of your payroll data. It’s a good idea to keep track of your company’s finances. Although there are no rules in South Dakota mandating companies to preserve employee payment or payroll records, federal law mandates that you keep payroll records for at least three years and payroll tax paperwork for four years. More information about keeping payroll records may be found in this article.

Step 9: Register with the federal and state governments to file payroll taxes. All South Dakota state taxes must be paid on the due date, which is normally quarterly, to the appropriate state agency, which you may do online at the South Dakota Department of Revenue website. You may pay your federal taxes online using the EFTPS on one of the two schedules shown below:

When the IRS sets you a monthly schedule, you must deposit employment taxes on payments received during that calendar month by the 15th of the next month.
When the IRS gives you a semiweekly schedule, you must deposit employment taxes by the following Wednesday for payments made Wednesday, Thursday, and Friday, and by the following Friday for payments made Saturday, Sunday, Monday, and Tuesday.

Please keep in mind that the reporting and depositing of employment taxes are two separate things. You must submit taxes quarterly on Form 941 or yearly on Form 944, regardless of your payment schedule.

Step 10: Finish your payroll reports for the year. You’ll need to file payroll reports every year, including all W-2 and 1099 forms. These forms must be sent to workers by January 31 of the following year.

Check out our how to do payroll guide for more basic information on how to make payroll according to government requirements. You may obtain a free checklist to ensure you don’t miss any tasks.

Payroll Laws, Taxes, and Regulations in South Dakota

It’s critical to understand how to compute South Dakota payroll taxes and maintain compliance with all federal and state employment requirements to guarantee your payroll is right every time. Review the particular processes for doing payroll in South Dakota below to help you stay in compliance with payroll requirements.

Most employers in the United States are required to pay Federal Insurance Contributions Act (FICA) taxes, with a few exceptions. FICA tax rates for Social Security and Medicare are now 6.2 percent and 1.45 percent, respectively. These taxes will be paid by both the employer and the employee, with each contributing 7.65% of the total Social Security and Medicare taxes.

Taxes in South Dakota

South Dakota, like other states, has specific taxes that businesses must pay. There are no municipal taxes or a state income tax in South Dakota.

Unemployment Taxes for Employers

In South Dakota, all companies are required to pay State Unemployment Tax Act (SUTA) taxes. The current pay base is $15,000, with rates ranging between 1.2 and 6.0 percent. In South Dakota, all new nonconstruction employers will pay an SUTA rate of 1.2 percent for the first year and 1.0 percent for the second and third years. In their first year, new construction enterprises pay 6.0 percent, then 3.0 percent in years two and three.

Compensation for Employees

South Dakota does not require that businesses carry Compensation for Employees insurance, though it does recommend it. Compensation for Employees insurance provides benefits to employees who suffer on-the-job injuries and can help protect you from lawsuits.

For more information on Compensation for Employees, providers, and costs, check out our workers’ comp guide.

Taxes on income

South Dakota does not have state income tax, so you’ll only need to withhold federal Taxes on income unless the employee is exempt.

Minimum Wage in South Dakota

The state minimum wage in South Dakota is $9.45 per hour, up from $9.30 per hour on January 1, 2021. Tipped workers must be paid at least $4.725 per hour if their gratuities bring them up to the hourly minimum wage. If this is not the case, the corporation will be required to make up the shortfall. It’s important to clarify that the tipped minimum wage is not a misprint. The minimum pay for tipped employees in South Dakota must be at least 50% of the standard minimum wage. The tipped minimum salary rises in tandem with the minimum wage.

Overtime Calculation

The overtime restrictions in South Dakota are based on the standards of the Fair Labor Standards Act. For hours worked beyond 40 in a workweek, all businesses are required under the FLSA to pay workers 1.5 times their usual hourly rate. Failure to comply will result in underpayment of taxes and the possibility of future fines and costs.

Employee Remuneration

Employers in South Dakota are required by law to pay workers at least once a month on a regular basis. If your firm pays employees once a month on the 15th of the month, for example, you must pay them every 15th of the month.

Employers in South Dakota must also pay employees using one of the following methods:

Employers may also pay workers through any other agreed-upon method, such as a payroll card, under this rule. Use one of our free pay period calendars to help you keep track of your payroll periods and dates.

Pay Stub Regulations

Although there is no legislation in South Dakota mandating employers to deliver pay stubs to workers, we advocate it as a best practice. If you don’t have access to a payroll provider, you may utilize one of our free pay stub templates to get started right away.

Paycheck Deductions in South Dakota

There is no legislation in South Dakota that prohibits an employer from deducting earnings from an employee’s paycheck, nor does it specify what deductions are permitted. Because there is no legislation, you may probably infer that you can deduct wages from an employee’s paycheck for the following reasons:

Money shortages
Company property that has been damaged, lost, or stolen
Work attire or tools are required.

Please keep in mind that, according to the Department of Labor, a corporation cannot deduct from an employee’s salary if doing so would result in the person earning less than the federal minimum wage ($7.25 per hour) for the pay period. However, since South Dakota has a higher minimum wage, you must verify that the employee is paid at least $9.45 per hour.

Final Paychecks for Terminated Employees

Employers must pay recently separated workers their final payment on the next normal payroll run after the employee’s last day, according to South Dakota law. This is true for workers who:

Were you fired, fired, fired, fired, fired, fired, fired, fired, fired, fired, fired, fired, fired, fired, fired,
resigned or quit
Due to a labor disagreement, they were suspended or quit.

Use one of our suggested methods to generate a free payroll check if you need to pay an employee right away and aren’t presently utilizing a service.

HR Laws in South Dakota That Affect Payroll

There aren’t many state-specific HR regulations in South Dakota. Despite the fact that there are few, you must obey the federal requirements, which are mainly followed by South Dakota law.

New Hire Reporting in South Dakota

The South Dakota Department of Labor requires all employers to record new hires and rehired workers. This report, which must contain the employee’s name, address, and Social Security number, is used to enforce child support obligations.

Breaks and Meals

There is no legislation in South Dakota that requires companies to offer workers with lunch times or breaks. This implies that the federal regulation applies, which states that no lunch times or breaks are required. However, if a corporation gives lunch or break intervals, they must be at least 30 minutes long to be considered underpaid.

Child Labor Laws in South Dakota

Children aged 14 and 15 may work up to 40 hours per non-school week and 20 hours per school week under South Dakota law. They are not permitted to work in jobs that are deemed hazardous to their lives, health, or morality. Working hours must be between 7 a.m. and 7 p.m. on school days and between 7 a.m. and 9 p.m. on non-school days, according to federal legislation. There are no legal limitations on the number of hours or days that children aged 16 and above may work.

Requirements for time off and leave

There are no particular regulations controlling time off in South Dakota. UnPaid Vacation is required by federal law in certain circumstances.

Family Leave in South Dakota

South Dakota abides with the Family and Medical Leave Act (FMLA), which mandates that all qualified companies give up to 12 weeks of unpaid leave to workers with a qualifying disability. Pregnancy and caring for a sick family member are examples of this. The FMLA does not compel businesses to pay workers for time off, but it does require that the employee’s job, or one that is substantially comparable to it, be available when they return. State legislation in South Dakota does not provide for any extra family leave.

Paid Vacation

South Dakota has no laws requiring employers to provide employees with Paid Vacation (PTO). Companies in South Dakota are free to create PTO policies and may include whether they pay out accrued and unused PTO when an employee leaves. South Dakota does not require that companies do, so it’s a good practice to have this clearly defined in your company policy. The important thing is to follow the guidelines in your policy, or you can be held liable.

Use our free PTO calculator if you provide paid time off and need assistance calculating your workers’ PTO accumulation.

Click on each leave type below to view South Dakota’s additional leave laws.

There is no regulation in South Dakota mandating private enterprises to pay workers for holidays or to pay them a higher rate for working on a holiday. A business may choose to do so, but it must abide with the FLSA.

There is no legislation in South Dakota that requires companies to give paid or unpaid sick leave to their workers. Employers may set their own sick leave policies.

Employers are required by South Dakota law to offer employees with up to two consecutive hours of paid voting leave if they do not have two consecutive hours of time before or after their work shift. Employees may be required to vote at a certain time by their employer. If an employee seeks voting leave but does not get it, the employer may face fines and penalties.

In South Dakota, employers are not compelled to pay their employees for jury service. When an employee juror returns, you must provide them the same position, salary, and seniority as before. Furthermore, no employee may be fired or suspended for sitting on a jury.

Businesses in South Dakota are not required to give workers with bereavement leave. Companies are free to set a policy and must follow it if they do so.

Forms for Payroll

South Dakota does not have any state Forms for Payroll because the state has no income tax.

Federal Forms for Payroll

Here is a complete list and location of all the federal Forms for Payroll you should need.

W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state Taxes on income
W-2 Form: This form is used to record each employee’s total yearly pay.
W-3 Version: A summary form of the W2 that is used to report total yearly salaries for all workers.
Form 940 is used to compute and submit unpaid unemployment taxes to the Internal Revenue Service (IRS).
Form 941 is used to submit quarterly income tax returns.
Form 944 is used to submit yearly income tax returns.
1099 Forms: Provides details for contract work performed by non-employees.

For a more detailed discussion of federal forms, check out our guide on the federal Forms for Payroll you may need.

Payroll Tax Resources in South Dakota

Conclusion

South Dakota is one of the most straightforward states to manage payroll in. There are no municipal taxes, no state income tax, and no state tax papers to fill out. South Dakota HR rules, for the most part, mirror federal requirements, making your work easy and uncomplicated.

Despite the fact that it is one of the simplest states to conduct payroll in, errors can happen. You can avoid these blunders by utilizing payroll software like Gusto, which guides you through South Dakota’s payroll process step by step. It does your payroll taxes for you and pays your workers through direct deposit at no extra charge. Sign up for a free 30-day trial.