How to Start a Hair Salon in South Dakota (2026)

Last updated: May 4, 2026

Opening a hair salon in South Dakota requires two layers of licensing that work independently: an individual practitioner license from the South Dakota Cosmetology Commission (under the Department of Labor and Regulation) and a separate salon establishment registration. The Commission licenses cosmetologists at 1,500 training hours, estheticians at 600 hours, and nail technicians at 400 hours — with an exam fee of $120 that includes the first license. All operator licenses renew annually, which is less common than the biennial cycle used in most states. Two features of South Dakota’s salon regulatory environment stand out nationally: salon services are taxable at the 4.2% state rate (most states do not tax salon services), and hair braiding has been exempt from licensing since 2017 (HB 1048) — one of the earlier state-level deregulations of hair braiding in the country.

The SD salon market is anchored by Sioux Falls (population ~210,000), the state’s largest city and primary commercial market. Rapid City serves the Black Hills tourism corridor. The Sturgis Motorcycle Rally (August 7-16, 2026) creates a concentrated 10-day peak for any salon in the Sturgis/Meade County area. Booth rental and salon suite models (Sola Salons, Phenix Salon Suites, and similar concepts) are growing in Sioux Falls alongside traditional employee-based salons.

Hair Salon Requirements in South Dakota at a Glance

Requirement	Agency	Cost	Timeline
Cosmetologist license (individual)	SD Cosmetology Commission (DLR)	$120 exam + first license included	After 1,500 training hours + exams
Esthetician license (individual)	SD Cosmetology Commission (DLR)	$120 exam + first license included	After 600 training hours + exams
Nail Technician license (individual)	SD Cosmetology Commission (DLR)	$120 exam + first license included	After 400 training hours + exams
Annual license renewal	SD Cosmetology Commission	Contact Commission at 605-773-6193	Annual renewal required
Salon/establishment registration	SD Cosmetology Commission	Contact Commission for current fee	Before opening salon location
Hair braiding	N/A — exempt from licensing since HB 1048 (2017)	No license required	N/A
LLC formation	SD Secretary of State	$150 online + $55/year annual report	~1 business day
Sales tax license (required)	SD Department of Revenue	Free	Before first client
Local business license	City hall	Varies by city	Before opening
Workers’ comp (voluntary)	Private carrier	Varies / NCCI 9586	Recommended before hiring

How to Start a Hair Salon in South Dakota (Step by Step)

Step 1: Get Your Individual Practitioner License

The South Dakota Cosmetology Commission, which operates under the Department of Labor and Regulation at dlr.sd.gov/cosmetology, issues individual practitioner licenses for:

Cosmetologist

• Training hours: 1,500 hours from a Commission-approved cosmetology school
• Age requirement: 18 years or older
• Exams: NIC (National-Interstate Council) national written theory exam + South Dakota Laws and Rules exam
• Exam/first license fee: $120 (includes initial license)
• Renewal: Annual (more frequent than most states’ biennial cycle)
• Covers: Hair, nail, and skin services

Esthetician

• Training hours: 600 hours from a Commission-approved esthetics program
• Age requirement: 18 years or older
• Exams: NIC national written theory + SD Laws and Rules
• Exam/first license fee: $120
• Renewal: Annual
• Covers: Skin services only

Nail Technician

• Training hours: 400 hours from a Commission-approved nail technology program
• Age requirement: 18 years or older
• Exams: NIC national written theory + SD Laws and Rules
• Exam/first license fee: $120
• Renewal: Annual
• Covers: Nail services only

Annual renewal — a South Dakota distinction

South Dakota’s operator licenses renew annually. The vast majority of states use biennial (2-year) renewal cycles; SD’s annual requirement is unusual nationally and means one more renewal step per year compared to most states. For the current renewal fee amount, contact the SD Cosmetology Commission directly at 605-773-6193 or cosmetology@state.sd.us, or check the forms page at dlr.sd.gov/cosmetology/forms.aspx.

Instructor licenses

Cosmetology, nail technology, and esthetics instructor licenses are available from the Commission. Instructor licenses require 12 hours of instructor continuing education on teaching methodology at renewal. The standard operator licenses do not have a continuing education requirement for renewal — just the annual fee.

Step 2: Hair Braiding — No License Required

South Dakota exempted natural hair braiding from cosmetology licensing in 2017 under HB 1048, signed by Governor Dennis Daugaard. Prior to HB 1048, South Dakota required 2,100 hours of cosmetology training for hair braiders — the highest requirement in the nation. The 2017 law eliminated the requirement entirely.

As of 2026, no cosmetology license, no training hours, no Commission registration, and no exam are required to braid hair commercially in South Dakota. Hair braiders may operate as sole proprietors or form an LLC, and they still need a sales tax license (salon services including braiding are taxable) and any applicable local business license — but no state occupational license is required.

Step 3: Register Your Salon Establishment

In addition to individual practitioner licenses, the salon or booth rental location itself must be registered with the South Dakota Cosmetology Commission. This establishment registration is separate from and in addition to each practitioner’s individual license. Contact the Commission at 605-773-6193 or dlr.sd.gov/cosmetology for the current establishment registration fee and requirements.

If you are opening a booth rental salon (where individual practitioners rent a booth rather than being employed), each booth renter is responsible for their own individual practitioner license. The salon owner is responsible for the establishment registration. Verify with the Commission whether each booth renter is also required to obtain their own establishment license for their specific booth, as requirements for booth rental structures can vary.

Step 4: Form a South Dakota LLC

File Articles of Organization with the SD Secretary of State online for $150 at sosenterprise.sd.gov. Annual report: $55/year. An LLC separates your personal assets from business liability — client claims, employee disputes, and property damage can expose a sole proprietor’s personal finances. Apply for a free EIN at irs.gov. Open a dedicated business bank account.

Step 5: Register for a South Dakota Sales Tax License

Salon services are taxable in South Dakota at the 4.2% state rate. South Dakota taxes “the sale of all services,” which includes haircuts, hair color, manicures, pedicures, facials, waxing, and other personal care services. Retail product sales (shampoo, styling products, nail polish) are also taxable. You must collect and remit the combined rate from every client invoice.

Register for a free sales tax license at dor.sd.gov before your first client. Combined rates: 6.2% in Sioux Falls and Rapid City (4.2% state + 2% municipal); 4.2% in rural/unincorporated areas.

This is a meaningful difference from most states — in the majority of US states, personal services like haircuts and manicures are exempt from sales tax. In South Dakota, the salon owner must collect sales tax on every service rendered.

Step 6: Get Local Business Licenses

Contact your city hall for local requirements. Sioux Falls and Rapid City both require local business licenses for retail and service operations. A salon operating from a home may need a home occupation permit from the city. The health/sanitation inspection for the salon location may be conducted by the city or county health department in addition to the Commission’s inspection at establishment registration.

Step 7: Workers’ Compensation and Employment

Workers’ compensation is voluntary in South Dakota. The SD DLR states there is no law requiring employers to carry it. Salon work involves chemical exposure (relaxers, color chemicals, disinfectants), sharp implements, and ergonomic injury risk. Salon owners with employees typically carry voluntary workers’ comp for both the protection it provides and to meet the expectations of commercial landlords or suite operators. NCCI class code 9586 applies to beauty shops and barber shops.

Minimum wage: $11.85/hour in 2026 (CPI-indexed annually). Tipped employees (some salon roles): minimum cash wage $5.925/hour, with tips making up the difference to $11.85. Register for UI (Reemployment Assistance) with SD DLR before first employee. New ER rate: 1.2% on $15,000 wage base. South Dakota has no state income tax — no state income tax withholding from employee paychecks.

South Dakota Salon Market: Where the Demand Is

Sioux Falls is the dominant salon market in South Dakota, with a growing healthcare and financial services professional population that supports premium salon services. The booth rental and salon suite model (Sola Salons, Phenix Salon Suites) is the fastest-growing segment, driven by experienced stylists seeking independence without the capital cost of a full salon buildout.

Rapid City serves the Black Hills tourism corridor. The summer peak (Memorial Day through Labor Day) and the Sturgis Motorcycle Rally week (August 7-16, 2026) drive concentrated demand. Salons near the event area and Rapid City strip benefit from walk-in traffic during Rally week.

Tribal communities: South Dakota’s nine reservations represent communities with salon service demand that is not fully served by commercial salon operators based in urban centers. Businesses opening on tribal trust land may be subject to tribal licensing requirements separate from the SD Cosmetology Commission’s framework — verify with the relevant tribe’s business office before opening a salon on reservation land.

Hair braiding market: With South Dakota’s full hair braiding exemption since 2017, entrepreneurs offering natural hair braiding services face no occupational licensing barrier. The Sioux Falls and Rapid City markets have established demand for natural hair services, particularly serving African American and Native American communities.

Cost to Start a Hair Salon in South Dakota

Item	Cost	Notes
Cosmetology school (1,500 hrs)	$8,000-$20,000+	Tuition varies by school; financial aid often available
Cosmetologist exam + first license	$120	NIC theory + SD Laws and Rules exams included
Annual license renewal	Contact Commission	Annual; fees at dlr.sd.gov/cosmetology
Salon establishment registration	Contact Commission (605-773-6193)	Required for salon location
LLC formation	$150	One-time; $55/year annual report
Sales tax license	Free	Required before first client
Local business license	$0-$100/year	Varies by city
General liability insurance	~$500-$1,500/year	$1M per occurrence recommended
Salon build-out or booth rental	$0 (booth) to $20,000+ (full build)	Booth rental is lowest-cost entry
Workers’ comp (voluntary, if hiring)	Varies / NCCI 9586	Not legally required; recommended
Year 1 Total (booth rental, no build)	~$500-$2,000	After licensing; booth rent paid separately
Year 1 Total (standalone salon)	~$15,000-$40,000+	Includes build-out, equipment, licensing

Related South Dakota Business Guides

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• How to Start a Food Truck in South Dakota
• How to Start a Daycare in South Dakota
• How to Start an HVAC Business in South Dakota
• How to Start a Landscaping Business in South Dakota
• How to Become a Private Investigator in South Dakota

← Back to all South Dakota business guides

Frequently Asked Questions

How many hours are required for a cosmetologist license in South Dakota?

1,500 hours of cosmetology education from a South Dakota Cosmetology Commission-approved school. You must also be 18 or older and pass the NIC (National-Interstate Council) national written theory exam and the South Dakota Laws and Rules exam. The exam fee of $120 includes your first license. Licenses renew annually.

Is hair braiding licensed in South Dakota?

No. South Dakota exempted hair braiding from cosmetology licensing under HB 1048, signed in 2017 by Governor Dennis Daugaard. No training hours, no exam, and no Cosmetology Commission registration is required to braid hair commercially in South Dakota. Hair braiders still need a free sales tax license (SD taxes salon services) and any applicable local business license, but no state occupational license.

Do salon services have to collect sales tax in South Dakota?

Yes. South Dakota taxes the “sale of all services,” including haircuts, color, manicures, pedicures, facials, and waxing. The state rate is 4.2%. Municipal taxes add 1-2% in most cities (6.2% combined in Sioux Falls/Rapid City). Retail product sales are also taxable. Register for a free sales tax license at dor.sd.gov before your first client.

How often do cosmetology licenses renew in South Dakota?

Annually. South Dakota cosmetology operator licenses (cosmetologist, esthetician, nail technician) renew every year. Most states use biennial (2-year) cycles; SD’s annual renewal is unusual nationally. Instructor licenses also renew annually and require 12 hours of continuing education on teaching methodology. Contact the SD Cosmetology Commission at 605-773-6193 for the current annual renewal fee and deadline.

What are the training hours for estheticians and nail technicians in South Dakota?

Estheticians: 600 hours from a Commission-approved esthetics program. Nail technicians: 400 hours from a Commission-approved nail technology program. Both require the NIC national written theory exam and the SD Laws and Rules exam. Exam fee: $120, which includes the first license.

Is workers’ compensation required for salon employees in South Dakota?

No. Workers’ comp is voluntary in South Dakota — the SD DLR states there is no law requiring it. Salon owners with employees often carry voluntary coverage given chemical exposure, sharp implement use, and ergonomic injury risks. Workers’ comp class code 9586 applies to beauty shops and barber shops. Contact a licensed SD commercial insurance broker for quotes.