How to Become a Contractor in South Dakota

South Dakotan contractors will need a state-issued Contractor’s Excise Tax License, as well as any licenses required at the local (municipal or city) level. Once you establish your contracting business, you can apply for a tax license online. Once you have the tax license, you can apply for your local license or registration. 

Let’s dive into this process by looking at tax licensing, as well as local licensing in two of the biggest SD cities: Sioux Falls and Rapid City.

Do You Need a Contractor’s License in South Dakota?

There is no state-wide contractor’s license; however, all contractors- regardless of their revenue – are required to hold a state Contractor’s Excise Tax License. Completing contracting work without this license is a Class 1 misdemeanor and could result in a fine of $1,000 or up to 1 year in jail.

On the local level, you may also be required to have a contractor’s license within your city. To verify this information call or visit your local licensing and/or building department. 

SD Contractor’s Excise Tax License

The Contractor’s Excise Tax License is for all contractors, regardless of the structure of their business. The tax total amounts to 2% of total gross receipts for all prime contractors who engage in construction or realty improvement in SD. 

You can apply for this license online after your business is registered with the state. 

See here for more details or contact the South Dakota Department of Revenue with any questions.

Contractor Licenses in Sioux Falls, SD

Commercial contractors do not need to be licensed in Sioux Falls, but each of their plans must be reviewed and they should acquire all required permits for their projects. Apartment buildings are considered commercial in Sioux Falls.

Specialty contractors like those working with electric or plumbing have specific requirements. 

If you’re a residential contractor working on 1- or 2-family homes and townhouses within Sioux Falls, you must get your Residential Building Contractor’s License. This is required for any residential work that requires a permit. 

To get this license, you’ll first apply for, take, and pass the Construction Supervisor Examination. Once your application for examination is approved, you’ll receive the local Code Handbook. The exam is open book and costs $75. It is offered monthly. 

After taking and passing the exam, you’ll apply for your license. You’ll need:

  • A $20,000 Compliance Bond
  • At least $300,000 liability insurance

Contractor Licenses in Rapid City, SD

Rapid City contractors can choose from 9 licensing classes:

  • Commercial & residential contractor A
  • Residential contractor B
  • Roofing R
  • Siding
  • Mechanical
  • Gas
  • Plumbing
  • Electrical
  • Sign

All applicants will go through similar application processes. You will need to:

  • Complete the application
  • Include a copy of your state license (if applicable)
  • Include a copy of your Excise Tax License
  • Provide a Certificate of Insurance
  • Provide Worker’s Comp or a signed Worker’s Comp statement
  • Pass an official test
  • Pay all fees

Exam and fee information for each license class can be found on the application. Most licenses cost around $200 and exams are based on local or national code books. 

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