Hiring Employees in South Dakota LLC – Wages, Laws, Compliance Guide


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Any business structure or corporation stands firm on its foundation laid by the employees. An LLC is no exception to this rule. Hiring employees in your LLC comes with some rules, regulations. Before understanding the rules of hiring employees in South Dakota LLC, we must understand what an LLC means.

A Limited Liability Company is a business structure that protects the owners from any personal responsibility of the debts or liabilities arising out of the LLC. If an employee action succeeds to liabilities, the owners get the protection against it. LLCs are a combination of the characteristics of a partnership firm & a sole proprietorship. 

Hiring Employees in South Dakota

In order to hire employees in South Dakota LLC, there are many requirements that a business has to fulfill. One should keep these points in mind while hiring employees in an LLC. These requirements include:

1. Federal & State Employment posters in South Dakota

The employers in South Dakota are required to show both Federal & State Employment posters mentioned in Equal Employment Opportunities Act, Americans with Disabilities Act, Fair Labour Standards Act (FLSA),  etc. You should seek professional help to fulfill all the norms or requirements.

2. Federal & State Required Forms

Hiring employees is a lengthier process that involves the filing of different forms & applications. Suppose you wish to hire employees in South Dakota. In that case, you must ask your employees to submit the Employment Eligibility Form, the Federal Tax withholding form, the W-4 Form, Workers Compensation Claim Form, Disability Self- Identification Form, U.S. Citizenship and Immigration Services Form, etc. These Legal forms are easy and free to download.

3. Requirements of South Dakota New Hire Reporting program

Employers of Business owners are bound by South Dakota’s New Hire Reporting Program, under which they have to submit a report consisting:

  • Company Name
  • Company Address
  • Company federal tax ID number
  • Employee’s Name
  • Employee’s Social Security Number
  • Employee’s Address
  • First Day of paid Work

In addition to the forms mentioned above, payments, taxes, tax forms, & requirements, there may be some additional compliance for hiring in South Dakota; you must adhere to those norms as well.

Can an LLC Hire Employees?

An LLC or a Limited Liability Company can be regarded as a corporation, partnership, or sole owner business. The owners of the LLC are often referred to as members. Individuals, Corporations &, in some cases, other LLCs can form an LLC as members.

The members form LLCs because of their limited or no liability provided to the owners or members. In the event of liabilities arising out of an employee’s action, the members of the LLC are not personally liable- the LLC is liable for the actionable claim.

Any LLC (even one with a single owner) can hire unlimited employees on wages or salary. (The single-member owner LLC may have different rules and regulations). In addition to the salaried employees, the LLC can appoint Independent contractors for certain tasks on a contract basis. 

Rules to Hire Employees in an LLC in South Dakota?

Just like any other business corporation, an LLC is also not immune from certain procedures & rules of hiring. An LLC files many documents & pays a number of taxes to various Government Agencies while hiring employees. Some of the essential rules or steps to hire employees in an LLC are:

  • Federal Employer Identification Number – Every LLC must obtain an Employer Identification Number (EIN) from the Internal Revenue Service. EIN helps report taxes & a few other documents to the IRS.
  • Employee Eligibility Form – It is mandatory for an LLC owner to check if the employee is eligible for employment in the U.S. An LLC has to ask the employees to submit the I-9, Employment Eligibility Verification Form to verify the identity of the employee & to authorize the employment. the I-9 form is a mandatory requirement while hiring an employee.
  • Employee’s Social Security Number – The employee has to have a valid Social Security Number (SSN) to work. LLCs have to ask the new employees to submit their SSN before employment. The SSN is helpful in payment & tax purposes.
  • Setting up a process for collection & payment of the appropriate taxes – There has to be a due process for the employees’ future collection & payment of taxes. This process needs to be set up by the employer (in this case, the LLC)
  • Employee handbook – In the hiring process, one of the crucial elements of hiring paperwork is an Employee Handbook. Although it is not essential in South Dakota, it is usually needed as one of the legal documents in many other states. An Employee Handbook consists of a complete list of all the basic rules & policies of the company.
  • South Dakota Payroll Taxes – An LLC that is running a business with employees or businesses with employees has to pay many federal taxes & state Taxes. Following the rules on payroll taxes is also an essential requirement.  After hiring employees, an LLC is subject to the State Unemployment Compensation Act. Under the said Act, an LLC will have to pay Unemployment tax to the state & to do that; the LLC must register itself with the South Dakota Workforce Commission. The process involves simple steps & can be completed in 20 minutes. 
    Payroll taxes also include Federal Income Tax withholding, an employer can withhold money from the employee’s account for the income tax.
  • Workers’ Compensation Insurance An LLC operating in the state of South Dakota has to carry workers’ compensation insurance & has to display relevant posters.
  • New Hire Report or Report of the New Employee – An LLC has to
    • Report about hiring the new employees in the form of “Report of New Employee(s)” to the South Dakota Workforce Commission within 20 days from the date of hire.
    • Deposit and report federal employment taxes as per the IRS procedures for payroll reporting & payment.

Laws Relating To Wages Of Employees

Labor laws are a set of guidelines that companies must follow in order to avoid legal repercussions. These statutes govern wages, including how much a company must pay an employee and whether overtime is necessary. Hiring and firing procedures are likewise governed by labor legislation as well as determining if a workplace is regarded safe for its employees.

  • Employees working in South Dakota are generally compensated at a minimum hourly salary of $9.95.
  • The South Dakota Labour Laws protect the employees under wage and hour regulations to ensure fair compensation to the employees during their employment.
  • There are additional rules prohibiting discrimination in recruiting and dismissal, as well as unfair treatment of current employees in the workplace.
  • Business LLC employers in South Dakota should ensure compliance with every Federal as well as State regulation.

Structure Of Wages Of Employees

State and federal authorities monitor wage and hour regulations, so it’s critical for companies to understand and follow the rules. Many state-specific wage and hour rules are available from the South Dakota Department of Labor and Regulation. We have listed down the important aspects followed under the wage structure in the State of South Dakota.

South Dakota Minimum Wage

Currently, the minimum wage applicable in South Dakota is $9.95 per hour. It is updated for inflation every year. Tipped employees may be paid a lesser minimum wage.

  • Tipped Minimum Wage: The minimum pay for tipped employees in South Dakota is $4.975 per hour. If an employer decides to pay the tipped minimum wage, it must also make certain that tipped employees get the regular minimum wage when tipped earnings and tips are added together.
  • Trainees: South Dakota’s minimum wage regulations enable companies to pay trainees under the age of 20 a subminimum wage rate of $4.25 per hour for the first 90 calendar days after they start working for the employer.

South Dakota Overtime Wage

To regulate overtime compensation, federal legislation is uniformly enforced in the State, as there are no State-determined laws in this regard. If an employee works beyond 40 hours in a given workweek, then such employee becomes eligible to receive overtime compensation for the number of extra hours at the rate of 1.5 times their standard pay rate.

Youth Labor

According to the South Dakota Department of Labor and Regulation, young children below 16 years of age shall not be employed at an establishment for more than 4 hours during the school days and up to 8 hours on a non-school day or a holiday. Minors are also prohibited from working in any vocation that is hazardous or dangerous in nature.

South Dakota Employee Rights

Employees have the benefits of employee rights in South Dakota. These rights are set by the state to protect the employees in the state. Below are the employee rights in South Dakota,

Anti-discriminatory Rights

The South Dakota Human Relations Act (SDHRA) bans discrimination and harassment based on protected characteristics such as race, color, creed, caste, religion, nationality, handicap, sex, age, and others.

Equal Pay

An employer may not pay wages to any employee in any occupation in the state at a rate that is less than the rate paid to any employee of the opposite sex for equivalent labor on tasks that have the comparable skill, effort, and responsibility requirements, but not physical strength.

Whistleblower Protection

Employees in South Dakota who choose to report any violations or unlawful acts conducted by their employers to any law enforcement body or a governmental agency are protected under the Whistle blower laws. Employers cannot harass, discriminate, or retaliate against such employees who report their employers for misconduct. Such employees are also protected by the courts from being terminated from their employment.

Organisational Safety

There are no specific rules in the state that oversees occupational safety and health in the public sector. The federal legislation, Occupational Safety, and Health Act oversee the safety measures to be adopted at a workplace to provide a safe and risk-free workplace to the employees. The South Dakota Bureau of Personnel is required to provide programs to increase the effectiveness of state employees, including training, safety, health, counseling, and welfare.

Employers in South Dakota have the freedom to decide whether or not to provide paid vacation and sick leave. However, the employers may be compelled under the Family and Medical Leave Act or other federal statutes to offer an employee unpaid leave in case of a health or family emergency.

Final Pay

Employees who are fired, or who voluntarily exit, or are separated from their jobs due to a labor dispute must be paid all final earnings by the next regularly scheduled payday or as soon as the employee returns any business property in their possession, according to state law.

How to Hire Employees Fast in Your South Dakota LLC

To hire employees for your South Dakota LLC you need to verify if the person is eligible to work in the US and then report him/her as ‘new hires’ to the state.

The process of hiring employees can be a confusing one. However, there are several resources available that can make the task of onboarding new employees less overwhelming.

Among the resources available are the South Dakota Department of Labor and Regulation website and tools that will make onboarding easier. These include a job posting service, employment laws, and free recruitment tools that are available to help businesses find the right talent. Whether you’re a startup or an established business, these resources can help you hire employees fast and easily.

During the hiring process, you’ll need to check that the person is eligible for the position. This can be done by asking for a W-4 or Employment Eligibility Form. You may also need to submit a Disability Self-Identification form. Additionally, you’ll need to have them fill out a Workers Compensation Claim form.

When you hire employees in South Dakota, you’ll have to register your business for the sales and unemployment insurance taxes. If you have employees in another state, you’ll need to report your new hires within 20 days. Similarly, you’ll need to register your business for an income tax withholding account.

Your new employee handbook is another important document. It will contain a complete list of your company’s policies. This will help you settle any disputes that might arise. Also, your handbook will be an invaluable tool when it comes to onboarding new employees.

Once you’ve hired your employees, you’ll need to pay them promptly. If you have an LLC, you won’t be responsible for any corporate taxes. However, you’ll be responsible for paying the sales tax to the Department of Revenue.

In addition, you’ll need to maintain a current unemployment insurance policy and update your workers’ compensation insurance. Lastly, you’ll need to deposit the federal employment taxes you’ve paid.

As a rule, you shouldn’t hire employees without the proper paperwork. This includes your Employer Identification Number (EIN) from the Internal Revenue Service. An EIN is a nine-digit number that is issued by the IRS and helps you identify your business for tax purposes.

In addition to registering your LLC for business and payroll taxes, you’ll need to register for a federally-issued Employee Identification Number. A Federal Employer Identification Number is necessary for you to be able to file taxes with the IRS. All LLCs in South Dakota must obtain an EIN.

Then, you’ll have to set up a bank account for your business. You can do this online through the South Dakota Secretary of State Business Services or by filing paper forms. If you choose to do this on paper, you’ll need to pay a $15 processing fee.

Once you’ve registered your business, you’ll have to notify the South Dakota Workforce Commission if you hire any new employees. You’ll need to fill out a report and show state and federal employment posters to confirm that you’ve hired people in the state. Likewise, you’ll need to display relevant posters in your workplace.

FAQs

What Is an LLC?

An LLC is a business entity that can be treated as either a corporation, a partnership, or a sole owner business.

Is the LLC liable for damages caused by employees?

The owners of the company are not personally liable for the actions of the employees, the LLC is liable for any such actions.

What is the IRS Form I-9?

Before hiring an employee, under federal law, the business has to verify an employee’s eligibility to work in the United States with the (IRS Form I-9). The business owner also has to make sure the employee has a valid SSN or Social Security Number.

What is LLC self-employment?

LLC members, or LLC owners, are self-employed according to the IRS because they pay themselves through the earnings of LLC.

In Conclusion

All the LLCs with employees are bound by many rules and regulations with reference to wages. It is always advisable to register a registered agent service to understand the laws better. Feel free to share your feedback with us in the comment section below.

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