HomeCareAtlas Team · Updated November 2026
Researched from primary state regulatory sources.
How to Start a Home Care Agency in South Dakota
Starting a home care agency in South Dakota costs roughly $25,000 - $50,000 and takes 4-8 Weeks. Here's every step, fee, and deadline — sourced directly from South Dakota Department of Health (does not license non-medical home care).
South Dakota does not license non-medical home care agencies. The Department of Health says plainly that non-medical providers who help with bathing, light housekeeping, or meals are not regulated by the department. You can offer companionship, meal prep, transportation, grooming, light housekeeping, and personal care without a state home care license. You must still form a legal business, get insurance, and follow federal and state employment laws. Skilled home health agencies (nurses and therapists) are a different type of provider. This guide covers the non-medical path only.
South Dakota does not require a state license to operate a non-medical home care agency. You can begin operations after completing standard business formation (LLC, EIN, business license) and obtaining insurance. Total startup costs range from $25,000 - $50,000, and you can be operational within 4-8 weeks. No state license for non-medical care and no state income tax. To bill Medicaid, work with DHS-LTSS for the HOPE Waiver and enroll with DSS Medicaid.
- License Required
- No — Business license only
- Regulatory Body
- South Dakota Department of Health (does not license non-medical home care)
- Application Fee
- $0 (no state license fee)
- Timeline
- 4-8 Weeks (our estimate, business setup)
- Total Startup Cost
- $25,000 - $50,000
- Key Requirement
- No state license for non-medical care and no state income tax. To bill Medicaid, work with DHS-LTSS for the HOPE Waiver and enroll with DSS Medicaid.
- Last Verified
- November 2026 against South Dakota Department of Health (does not license non-medical home care) regulations
Our Estimate, Business Setup
This is our best guess. Check with the South Dakota Department of Health (does not license non-medical home care).
Residents Age 70+
Moderate Opportunity
How South Dakota compares to neighboring states
| State | License Fee | Timeline | Startup Cost |
|---|---|---|---|
| South Dakota ← | $0 (no license) | 4-8 Weeks | $25,000 - $50,000 |
| North Dakota | $0 (no license) | 4-8 Weeks | $25,000 - $50,000 |
| Nebraska | $0 (no license) | 4-8 Weeks | $25,000 - $50,000 |
| Minnesota | $2,100 | 3-5 Months | $45,000 - $85,000 (our estimate) |
| Iowa | $0 (no license) | No timeline | $18,000 - $40,000 |
South Dakota Licensing Overview
The South Dakota Department of Health (does not license non-medical home care) oversees all non-medical agencies.South Dakota does not license non-medical home care agencies. The Department of Health says plainly that non-medical providers who help with bathing, light housekeeping, or meals are not regulated by the department. You can offer companionship, meal prep, transportation, grooming, light housekeeping, and personal care without a state home care license. You must still form a legal business, get insurance, and follow federal and state employment laws. Skilled home health agencies (nurses and therapists) are a different type of provider. This guide covers the non-medical path only.
No State Home Care License Needed
South Dakota does not require a specific state license for non-medical home care. You need a standard business registration with the Secretary of State, an EIN, and insurance.
No State Income Tax
South Dakota has no state income tax on people and no corporate income tax (SD Department of Revenue). Sales tax and other taxes still apply.
Medicaid Enrollment Available
To bill Medicaid, you work with two offices. The Department of Human Services, Division of Long Term Services and Supports (DHS-LTSS) runs the HOPE Waiver. The Department of Social Services (DSS) handles Medicaid provider enrollment.
Estimated Startup Costs (2026)
Budget for $25,000 - $50,000 to ensure 3-6 months of runway.
| Category | Low Est. | High Est. |
|---|---|---|
| Business Formation (LLC with SOS) | $100 | $400 |
| General Liability Insurance ($1M) | $400 | $2,500 |
| Professional Liability Insurance | $400 | $1,800 |
| Workers' Compensation Insurance (optional in SD, strongly advised) | $400 | $1,800 |
| Background Checks (initial staff) | $200 | $650 |
| Office Setup (or home office) | $400 | $3,000 |
| Scheduling & Billing Software | $400 | $1,800 |
| Initial Marketing & Website | $1,200 | $4,500 |
| Working Capital (3-6 months) | $12,000 | $28,000 |
We map every cost and file your South Dakota license for you.
How to Start a Home Care Agency in South Dakota
1-2 Weeks
Business Planning & Structure
Define your services (companionship, meal prep, transportation, grooming, light housekeeping). Choose an LLC or S-Corp. Develop a business plan with services, target market, financial projections, and marketing strategy.
1-2 Weeks
Register Your Business
File articles of organization with the South Dakota Secretary of State. Obtain an EIN from the IRS. Open a business bank account. Register with the South Dakota Department of Revenue for state tax IDs.
1-2 Weeks
Secure Insurance Coverage
Get general liability and professional liability insurance. Ask a broker what limits fit you. South Dakota law does not make employers carry workers' comp. The state says it is highly recommended. Without it, an injured caregiver can sue you in civil court.
2-3 Weeks
Develop Policies and Procedures
Write a full policy manual. Cover employee training, client care standards, safety, emergencies, complaints, and quality checks.
1 Week
Set Up Background Check Process
Set up a criminal background check process for all staff. No state home care rule requires it, but it protects clients. If you want Medicaid waiver work, ask DHS-LTSS what checks it needs.
2-4 Weeks
Set Up Operations
Secure an office space or set up a home office. Implement scheduling, billing, and client management software. Recruit and train qualified caregivers.
2-4 Weeks
Build Marketing & Referral Network
Build a professional website. Establish Google Business Profile and social media. Network with local hospitals, rehabilitation centers, and senior centers for referrals.
4-8 Weeks
Enroll as a Medicaid Provider (Optional)
To serve HOPE Waiver clients, contact DHS-LTSS (dhs.sd.gov/ltss, 1-833-663-9673). Ask for the current provider steps. You will also enroll as a Medicaid provider with DSS. Do not serve waiver clients until both are done.
We can do all of them for you in South Dakota.
New 2026 Legal Mandates
No State Home Care License Required
The South Dakota Department of Health does not regulate non-medical in-home care like bathing, housekeeping, or meal prep. There is no state license or fee. You must still follow federal and state employment laws, tax rules, and local business rules.
A 2026 License Bill Was Vetoed
In 2026, lawmakers passed House Bill 1138. It would have made these agencies get a state license. It also asked for worker training and background checks. The governor vetoed it on March 30, 2026. The House vote to override fell short (36-27). So no license is needed today. Watch for a new bill in 2027.
Workers' Compensation Is Optional (But Get It)
South Dakota has no law that makes employers carry workers' comp (SD Department of Labor and Regulation). If you skip it, an injured worker can sue you in civil court. The state says coverage is highly recommended. Nearly every agency should buy it.
Criminal Background Checks
Run background checks on all caregivers. No state home care rule requires this for private-pay agencies. It is still smart. Medicaid waiver providers must follow DHS rules.
No State Income Tax
South Dakota has no state income tax on people and no corporate income tax (SD Department of Revenue).
Federal Employment Compliance
Agencies must comply with IRS employment rules, FLSA wage and hour laws, I-9 verification, and OSHA workplace safety standards. Classify caregivers as W-2 employees, not 1099 contractors.
Our South Dakota licensing team tracks the law so you do not have to.
Caregiver Mandates
Important Warning
Even without a state home care license, misclassifying caregivers as independent contractors (1099) is a major compliance risk. The IRS and state enforce W-2 classification for caregivers working set schedules under agency direction.
- Criminal Background Check: Conduct criminal background checks on all caregivers before they begin working with clients.
- Initial Training: Provide orientation training covering agency policies, client care procedures, safety protocols, infection control, and emergency procedures. Ensure caregivers are properly trained before assignments.
- Client-Specific Training: Train caregivers on each client's specific care plan, preferences, and needs before they begin providing care.
- Ongoing Training: Provide regular in-service training to keep caregivers current on best practices, safety, and any changes to care standards.
Regional Billing Snapshots
*Regional rates vary by specialized care needs (Dementia, Parkinson's) and local competition.*
We launch South Dakota home care agencies start to finish.
Regional Market Opportunities
South Dakota has about 935,000 people. About 181,000 are 65 or older, or 19% (Census, July 2025). Most demand is in Sioux Falls and Rapid City. The middle pay for home health and personal care aides is $18.15 an hour (BLS OEWS May 2025, series OEUS460000000000031112008). The market is small, so plan where you will grow. The billing rates below are our estimates. Real rates depend on the area and who pays.
Sioux Falls Metro (Minnehaha, Lincoln Counties)
South Dakota's largest city and main home care market. Avera Health and Sanford Health are the big health systems here.
Key: Get to know Avera and Sanford discharge planners.
Rapid City / Black Hills
The second-largest market. Monument Health is the main health system. Tourism brings busy seasons.
Key: A good second market after Sioux Falls.
Aberdeen / Watertown / Brookings
Smaller college and regional towns. Families may have fewer home care choices.
Key: Check how many agencies already serve the town before you open.
Rural / Reservation Areas
Vast rural areas and Native American reservations with significant unmet need. Transportation distances are the main challenge — winter weather compounds this.
Key: Don't try to serve too large a geographic area. Focus on a manageable radius and account for winter driving conditions.
Cost of care in South Dakota
What agencies charge clients vs. what caregivers earn in South Dakota. The difference is the agency's gross margin per billable hour — before overhead like insurance, admin, marketing, and compliance costs.
$39
Avg. hourly rate charged to clients
$22.72
Avg. caregiver hourly wage
$16.28
Gross margin per hour
42%
Gross margin %
What this means for agency owners
In South Dakota, agencies keep roughly $16.28 per billable hour after paying the caregiver. That's a 42% gross margin.
This is a strong margin that gives you room to cover overhead costs (insurance, admin, marketing, compliance) and still run a profitable agency.
Sources: Avg. hourly rate from CareYaya and CareScout 2025 surveys (averaged). Caregiver wage from Care.com. Gross margin is before overhead costs like insurance, admin, marketing, and compliance.
South Dakota Medicaid Programs
HOPE Waiver (Home and Community-Based Options and Person-Centered Excellence)
South Dakota's main Medicaid waiver for care at home. It is for people 65 and older, and adults 18 and older with a qualifying disability, who need nursing-home-level care. It pays for in-home personal care, homemaker, adult companion, chore, and respite services (DSS HOPE fee schedule). DHS-LTSS runs it. A renewed waiver is set for October 1, 2026, pending federal approval.
Private-Pay First Strategy
Many new agencies start with private-pay clients. They add Medicaid once their systems are steady. In a small market, this can be a safer start.
Becoming a Provider
Essential 2026 Tech Stack for Owners
Tiles outlined in teal are areas HomeCareAtlas covers in our platform.
South Dakota Licensing FAQ
Do I need a license to start a home care agency in South Dakota?
No. The South Dakota Department of Health does not regulate non-medical home care. You need a business registration, an EIN, insurance, and to follow employment laws. Skilled home health agencies (nurses and therapists) are a different type of provider. A 2026 bill to license these agencies (HB 1138) was vetoed, so it is not law.
How much does it cost to start a home care agency in South Dakota?
Our estimate is $25,000 to $50,000. That covers forming the business, insurance, background checks, marketing, and cash to run. There is no state license fee.
How long does it take to start in South Dakota?
No state license is needed, so our estimate is 4-8 weeks. Most of that is forming the business, getting insurance, and hiring. Medicaid enrollment takes extra time.
Is South Dakota a good market for home care?
It is a small market. About 181,000 South Dakotans are 65 or older, or 19% (Census, July 2025). Sioux Falls and Rapid City have the most demand. No state income tax can help owners.
How do I get Medicaid clients in South Dakota?
Contact DHS-LTSS, which runs the HOPE Waiver (dhs.sd.gov/ltss, 1-833-663-9673). Ask for the current provider steps. You also enroll as a Medicaid provider with DSS. Many agencies start private-pay and add Medicaid later.
What are the biggest challenges in South Dakota?
Geographic distances and winter weather are the top operational challenges. Don't try to serve too large a geographic area — focus on a manageable radius. Recruiting caregivers in rural areas can also be difficult due to the small population.
What insurance do I need in South Dakota?
No state rule sets an amount. Get general liability and professional liability insurance. South Dakota does not make employers carry workers' comp, but you should. Without it, an injured caregiver can sue you. No state bond is required.
Starting in a Nearby State?
Licensing requirements vary a lot between states. Compare your options:
North Dakota
No state license required · 4-8 Weeks
Nebraska
No state license required · 4-8 Weeks
Minnesota
$2,100 fee · 3-5 Months
Iowa
No state license required · N/A
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Sizing up the competition? See the 225 home care agencies already operating in South Dakota →
Home care agencies in South Dakota
Want to see the competition up close? Look at who is already open, city by city.
- Home care agencies in Sioux Falls
- Home care agencies in Gossage Memorial
- Home care agencies in Mitchell
- Home care agencies in Rapid City
- Home care agencies in Watertown
Looking for care for a family member? Find agencies near you
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Where our numbers come from
We check each fact against South Dakota's own rules. Tap a source to read it yourself.
- License needed?NoSDCL Ch. 34-12 (health facility licensure covers skilled home health agencies only)· Oct 2026
- Who oversees itSouth Dakota Department of Health (does not license non-medical home care)SDCL Ch. 34-12· Oct 2026
- License name—SDCL Ch. 34-12· Oct 2026
- The rules—SDCL Ch. 34-12· Oct 2026
- First license feeno feeSDCL Ch. 34-12· Oct 2026
- License lasts—SDCL Ch. 34-12· Oct 2026
- BondNoneSDCL Ch. 34-12· Oct 2026
- Owner/manager trainingNo state minimumSDCL Ch. 34-12· Oct 2026
- Caregiver trainingNo state minimumSDCL Ch. 34-12· Oct 2026
- Background checksNo state requirement for private-pay non-medical agencies (Medicaid waiver providers follow DHS contract rules)SDCL Ch. 34-12· Oct 2026
- How long it takes4-8 WeeksBest guess — not confirmed yet
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This guide is for informational purposes only and does not constitute legal, regulatory, or business advice. Licensing requirements, fees, and regulations change frequently. Always verify current requirements with your state's licensing agency before making business decisions. HomeCareAtlas is not responsible for the accuracy or completeness of this information.
Researched and reviewed by
John Helmy, Founder of HomeCareAtlasBuilding tools and resources to help home care agency owners navigate licensing, compliance, and growth.