PEO in South Dakota [2024]

Across the US, more and more companies are turning to professional employer organizations (PEOs) to help them save time and money. But what exactly is a PEO? Simply put, a PEO is a service that helps small and medium-sized businesses outsource, streamline, and automate common administrative human resources tasks, like payroll services, workers’ compensation, benefits administration, and more.

Partnering with a PEO can help South Dakota businesses alleviate some of their administrative HR burden and secure access to higher-quality benefits at lower rates—which is great for attracting and retaining top talent! 

But before choosing a PEO, it’s important to consider how it can cater to your business’s unique needs. We’ll walk you through that (and more) in this article. With features like automatic state tax registration and remote device management, Rippling PEO makes it easy to hire and onboard employees in South Dakota and across the US.

Benefits of using a PEO in South Dakota

Using a South Dakota PEO service can mean less administrative HR work for your team. You’ll also get access to cost-effective benefits, gain crucial support and expertise, and more. 

Offload administrative HR work

PEO providers typically operate under a co-employment model, meaning the PEO and your business share employer responsibilities. As a business owner and the worksite employer, you retain complete control over decisions like hiring, salaries, and overall business strategy. On the other hand, the PEO assumes the role of the administrative employer, employing your workforce under their federal tax identification number (EIN). 

This division allows the PEO to take over time-consuming, employment-related HR tasks like payroll management, benefits administration, HR compliance, and more. With a combination of technology, expert knowledge, and streamlined processes, PEOs can efficiently manage these tasks for you—freeing up your HR team to focus on strategic initiatives that drive your company forward. 

Better employee benefits, at a lower price

PEOs across the US co-employ 4.5 million workers at 200,000 businesses, according to the National Association of Professional Employer Organizations (NAPEO). Because of the sheer number of workers in each PEO’s network, they’re able to negotiate lower-cost benefits with insurance providers—resulting in more accessible benefits plans for small to mid-sized businesses than they can typically offer on their own.

PEOs can also leverage their economies of scale to provide access to more robust, comprehensive plans to their clients’ employees. These benefits often include healthcare plans, life and disability insurance, mental health support, retirement plans, and even commuter benefits. 

Employers with 50 or more full-time employees must comply with the federal Affordable Care Act (ACA), which requires them to provide health insurance benefits. Although South Dakota doesn't impose mandates for additional state-specific benefits, businesses can still gain a competitive edge by enhancing their benefits offerings through a PEO. In today's highly competitive talent acquisition market, benefits packages play a significant role in employment decisions.

Worry-free compliance with South Dakota laws

In addition to federal laws like the ACA, a PEO can help your business navigate state-level South Dakota employment and labor laws, which are complex and frequently changing.

For example, South Dakota's state minimum wage is $11.20 per hour, which is higher than the federal minimum. If you employ workers in multiple states, it can be difficult to keep up with the different minimum wage laws that apply to different jurisdictions. A PEO like Rippling will automatically notify you of any minimum wage violations based on where your employees live, ensuring you never violate local laws.

But PEOs can cover much more than just minimum wage regulations. They can also manage compliance for:

• Payroll regulations: These include accurately classifying employees and contractors, issuing and filing tax forms, and adhering to overtime requirements. A PEO ensures that payroll taxes are correctly reported, collected, and deposited with the right authorities on time.
• Benefits laws: South Dakota may not have state-specific benefits requirements beyond federal mandates, but PEOs assist in navigating federal laws like the ACA, COBRA, FSAs, and HSAs
• Labor laws: This includes providing workers’ compensation insurance, ensuring adherence to Equal Employment Opportunity (EEO) laws, and displaying state-required labor posters

Non-compliance with these laws can result in substantial fines and penalties. The IRS estimates that 40% of small businesses incur payroll penalties annually, making the compliance support offered by PEOs invaluable. 

Dedicated support team

PEOs can provide much-needed HR expertise, especially for startups and small businesses that may not have the same resources internally. A PEO can help you streamline benefits administration, write an employee handbook, train managers, review your safety practices, and tackle any other unique HR challenges your team might face.

What to consider when evaluating a PEO service in South Dakota

Selecting the right PEO company in South Dakota requires careful consideration of a few factors. Here's what to keep in mind:

• Your business needs: Determine the specific services you need from a PEO. Common offerings include payroll processing, tax filing, benefits administration, recruiting and onboarding, compliance and risk management, time and attendance tracking, regulatory compliance, and HR outsourcing.
• Your budget: Understand the pricing structure of the PEO. PEOs typically charge either per-employee per-month fees or a percentage of each payroll run. Consider future costs, especially if your business has plans to grow. Will you be able to continue to afford the PEO as you hire more employees?
• Experience and reputation: Research the PEO's track record in South Dakota. Check online reviews on platforms like G2 and Capterra to gauge their reputation and the satisfaction level of their clients.
• Benefits: Investigate the quality, range, and cost of the benefits plans the PEO offers access to. Ensure they meet your employees' needs and align with your business objectives.
• Benefits renewal rates: Understand how the cost of benefits plans may change over time. Opt for a PEO that is transparent about benefits renewal rates to avoid unexpected future costs. 
• Integrations: Assess how the PEO will integrate with your existing systems, tools, and technology. Seamless integration is crucial for efficient operations.
• Industry specialization: If your business operates in a niche sector, such as agriculture or tourism—prominent in South Dakota—it may be beneficial to find a PEO experienced in these industries.
• Legal or compliance specialization: If your business is subject to certain state or federal regulations, you may want to choose a PEO with expertise in areas relevant to your business.
• Your exit strategy: Consider the ease of transitioning away from the PEO service, in case you decide to move HR in-house or switch providers. It’s important to understand the implications and processes involved, as most PEOs are difficult to leave—and require you to start from scratch after removing their systems.

Why Rippling PEO is the right choice for your South Dakota business

Rippling PEO syncs HR, IT, and Finance in one platform. Unlike traditional PEOs that often rely on outdated software, Rippling PEO is built on modern, user-friendly technology. This enables the streamlining of many manual HR and IT tasks, from rapid 90-second onboarding to remote IT management.

Rippling PEO handles your most important compliance tasks, like setting up state and local tax accounts and managing workers’ compensation for you, while offering access to top-tier benefits at affordable costs.

The benefits of choosing Rippling include:

• Integrated HR, IT, and Finance in one platform: Rippling brings HR, IT, and Finance together, simplifying your business processes and reducing your administrative load
• Customizable reporting: Powerful reporting tools give you insights into your employee data, enabling better decision-making
• Remote team management tools: With features like state and local tax registration and paperless onboarding, managing remote teams becomes effortless
• Access to superior benefits plans: Rippling provides access to benefits plans with below-average, predictable PEO renewal rates, ensuring your team can keep their quality benefits without unexpected cost hikes
• Automated compliance monitoring: Rippling automatically flags any federal, state, and local compliance issues and offers recommended solutions, ensuring your business stays compliant with various regulations
• Comprehensive risk management: This includes administration of ACA and COBRA, anti-harassment training, and distributing digital labor law posters to employees
• Rich resource library: Get access to hundreds of HR resources, guides, and templates to equip your business with the necessary knowledge

Furthermore, if there comes a time when you decide to bring HR management in-house or switch to a different solution, transitioning away from Rippling PEO is simple and straightforward. Unlike other PEOs that may have a complex and disruptive switching process, Rippling allows you to smoothly transition to our all-in-one workforce management platform. Your HR, payroll, and employee data remain intact, your system integrations are preserved, and your employees continue using Rippling with the same logins.

FAQs about PEOs in South Dakota

What is a PEO, and how does it work?

A professional employer organization (PEO) is a firm that partners with businesses to manage HR-related tasks, such as payroll processing, benefits administration, and compliance with employment laws. PEOs operate on a co-employment model, where the PEO becomes the administrative employer of a company’s staff for tax purposes. 

How does a PEO arrangement affect control over my employees?

In a PEO partnership, you retain complete control over business decisions, employee management, and daily operations. The PEO only handles the administrative aspects like HR, payroll, and compliance.

What is a Certified PEO?

A Certified PEO (CPEO) is a PEO that has met specific background, experience, and financial requirements set by the IRS. While the certification is voluntary and doesn’t equate to an endorsement by the IRS, it used to provide businesses added assurance regarding tax compliance and financial stability—but these advantages are largely obsolete now. 

What size company can benefit from a PEO?

Businesses of all sizes can benefit from a PEO, but they’re particularly valuable for small to mid-size companies. PEOs provide the expertise and infrastructure to manage HR tasks more efficiently and provide access to high-quality benefits plans for employees (that many small businesses wouldn’t otherwise be able to offer). 

How does a PEO charge for its services?

PEOs typically charge either a per-employee per-month fee or a percentage of the total payroll. This fee structure varies depending on the services provided and the size of your workforce.

What is the implementation process, and how long does it take to go live?

The implementation process involves setting up your business with the PEO's system, integrating their technology with yours, transferring employee information, and integrating payroll and benefits administration. They may also schedule onboarding sessions for your employees to help them adopt the new system and offer continuous support.

This process can take anywhere from a few weeks to a few months, depending on the complexity of your business needs.

Are PEOs regulated?

Yes, PEOs are regulated at both the federal and state levels. They must comply with various employment laws and regulations. Some even choose to receive additional accreditation from industry organizations. 

Are PEOs in South Dakota required to have special certifications or licenses?

There are no South Dakota state-specific certifications or licenses for PEOs. 

What happens if I want to terminate my relationship with a PEO?

Terminating a relationship with a PEO involves transitioning HR processes back to your business or another provider. This process can vary in complexity based on the terms of your agreement with the PEO and the scope of services provided. Generally, ending a relationship with a PEO can be a painful and disruptive process, as you’ll need to rip and replace the old PEO system with a new one. 

Rippling PEO makes moving off the PEO as simple as switching it off. You can move to our all-in-one workforce management platform, keeping your systems, data, and integrations intact.

In what states is Rippling PEO available?

Rippling PEO offers its services in all states across the US, including South Dakota.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.