Should I register my Etsy shop as a 'business' or an 'individual' if I have a South Dakota LLC?

If you have an EIN and file taxes as a business entity (not a disregarded entity), register as a business. Etsy then verifies the entity name and EIN against IRS records, so the name has to match your South Dakota Articles of Organization. A single-member South Dakota LLC taxed as a disregarded entity can register as an individual and provide an SSN or ITIN.

What happens if I do not complete Etsy's seller verification?

Etsy withholds payouts until verification is complete, whichever state the shop's LLC comes from. If you miss the deadline shown in your Shop Manager dashboard, you have 90 days before the shop may be closed.

I do not live in South Dakota. Can I still use a South Dakota LLC on Etsy?

Etsy does not check where you live, only that the South Dakota entity is validly registered and that the details you enter match South Dakota's record. The catch is not Etsy, it is the state you actually operate from: states require an out-of-state LLC to register as a foreign LLC before it transacts business there, which is a second filing and a second fee on top of South Dakota's $150. Forming in South Dakota while working somewhere else usually means paying both states, not one.

Do I need a South Dakota sales-tax permit before my first sale through Etsy?

Not for your Etsy orders themselves. South Dakota charges a 4.2% state rate and, like every sales-tax state, has a marketplace-facilitator law that makes Etsy collect and remit it for you. You need your own South Dakota registration once you also sell off-marketplace and either have physical presence in South Dakota or cross its remote-seller threshold of $100,000 in sales in the previous or current calendar year (no transaction-count threshold).

Marketplace Verification

How to pass Etsy verification with a South Dakota LLC

What Etsy asks for at signup, and which South Dakota LLC documents satisfy each requirement.

By Edmond Hui · Last updated: August 4, 2026

Edmond Hui · Founder, MyStateLLC

Edmond Hui is a software engineer and serial entrepreneur based in New York who has founded multiple online businesses across e-commerce, media, and information publishing. Before transitioning into tech, he spent years as a commercial real estate professional closing deals totaling over 100,000 square feet, giving him firsthand experience with business formation and entity structuring. He built MyStateLLC to provide the free, state-specific LLC guidance he wished existed when forming his own companies.

A South Dakota LLC is generally eligible for Etsy verification — you will need to provide your Articles of Organization, EIN, beneficial-owner ID, and a valid US business address. Nothing about forming in South Dakota blocks approval, and nothing about it guarantees approval either: the final call is Etsy's.

Etsy requires sellers using Etsy Payments to complete identity and tax verification before receiving payouts. For a South Dakota LLC registered as a business (not a disregarded entity), Etsy collects the entity name as it appears on your Articles of Organization, the legal address, the EIN or other taxpayer number, and verifies this information against the IRS database. Etsy also requires a government photo ID and selfie via its identity-verification partner Persona, plus a bank account linked to receive Etsy Payments disbursements.

In South Dakota the entity behind that check is an LLC created by filing Articles of Organization, which costs $150. South Dakota does not publish a processing time for LLC filings, so treat state approval as the open-ended step in your timeline rather than the Etsy review. Because South Dakota names a member or manager on a routine public filing, the owner name Etsy asks you to confirm is already a matter of public record.

South Dakota has 7,120 solo retail trade businesses with no employees, averaging $46,113 in annual receipts (U.S. Census Bureau, Nonemployer Statistics (NES), 2023).

Not legal advice: Verification requirements change, and so do South Dakota's filing fees and forms. Confirm current platform rules with Etsy, and current filing rules with the South Dakota filing office, before you file. Etsy's requirements were last reviewed 2026-07-21, and South Dakota's figures on this page come from its own published schedule.

What Etsy requires, and how a South Dakota LLC meets each

Requirement	How your South Dakota LLC satisfies it
LLC entity name verified against IRS	Use the exact LLC name as South Dakota recorded it on your Articles of Organization; it must match your bank account holder name.
Employer Identification Number (EIN)	Provide your federal EIN (free from the IRS; non-US founders without an SSN must apply via Form SS-4 by fax or phone rather than the online tool) — independent of South Dakota.
Taxpayer information and IRS verification	Complete the tax interview. A South Dakota LLC owned by US persons typically submits a W-9 using its EIN; non-US owners of a disregarded-entity South Dakota LLC generally use a W-8 form instead.
Government photo ID and selfie (via Persona)	Provide a government ID for each beneficial owner named in your South Dakota filings. South Dakota names a member or manager on a routine public filing, so at least one name already matches state records.
Bank account for Etsy Payments disbursements	Link a US business bank account opened with your EIN and your South Dakota Articles of Organization.

South Dakota-specific things to watch

South Dakota names a member or manager on a routine public filing, so Etsy's beneficial-owner check will line up with public state records — you still upload a government ID for each owner. (South Dakota's annual report confirms the LLC's ownership/management each year on the public record.)
Etsy payouts flow through to your personal return, and South Dakota won't tax them under a personal income tax: No personal income tax.

South Dakota sales tax & nexus rules for Etsy sellers

South Dakota charges a 4.2% state sales-tax rate, and like every state with a sales tax it has a marketplace-facilitator law — Etsy collects and remits South Dakota sales tax on your marketplace orders for you. You still need your own South Dakota registration if you also sell off-marketplace (your own site, invoices) and either have physical presence in South Dakota — an in-state location, inventory, or employees — or cross the state's remote-seller economic-nexus threshold of $100,000 in sales in the previous or current calendar year (no transaction-count threshold).

South Dakota is the state that brought us economic nexus — its law was the subject of South Dakota v. Wayfair (2018), the Supreme Court case that allowed states to tax remote sellers. South Dakota broadly taxes services, digital goods, and SaaS. The state is an SST full member. South Dakota's 4.2% base rate is among the lower rates nationally. Note: South Dakota repealed its 200-transaction economic-nexus trigger (effective 2023); only the $100,000 sales threshold now applies.

How to verify your South Dakota LLC on Etsy

LLC entity name verified against IRS. Use the exact LLC name as South Dakota recorded it on your Articles of Organization; it must match your bank account holder name.
Employer Identification Number (EIN). Provide your federal EIN (free from the IRS; non-US founders without an SSN must apply via Form SS-4 by fax or phone rather than the online tool) — independent of South Dakota.
Taxpayer information and IRS verification. Complete the tax interview. A South Dakota LLC owned by US persons typically submits a W-9 using its EIN; non-US owners of a disregarded-entity South Dakota LLC generally use a W-8 form instead.
Government photo ID and selfie (via Persona). Provide a government ID for each beneficial owner named in your South Dakota filings. South Dakota names a member or manager on a routine public filing, so at least one name already matches state records.
Bank account for Etsy Payments disbursements. Link a US business bank account opened with your EIN and your South Dakota Articles of Organization.

Non-US founders with South Dakota LLCs

Non-US sellers can use Etsy Payments in supported countries, but a South Dakota LLC's seller account must be linked to a US bank account or an eligible payment method. Non-US beneficial owners of a South Dakota LLC must still complete identity verification via Persona with a valid government ID.

Frequently Asked Questions

: If you have an EIN and file taxes as a business entity (not a disregarded entity), register as a business. Etsy then verifies the entity name and EIN against IRS records, so the name has to match your South Dakota Articles of Organization. A single-member South Dakota LLC taxed as a disregarded entity can register as an individual and provide an SSN or ITIN.
: Etsy withholds payouts until verification is complete, whichever state the shop's LLC comes from. If you miss the deadline shown in your Shop Manager dashboard, you have 90 days before the shop may be closed.
: South Dakota charges $150 to file Articles of Organization, and that is the state's fee to create the LLC. South Dakota does not publish a processing time for LLC filings, so treat state approval as the open-ended step in your timeline rather than the Etsy review. Etsy charges nothing for verification itself, so the $150 filing fee and South Dakota's ongoing obligations are the real cost of getting verified as a South Dakota entity.
: Etsy does not check where you live, only that the South Dakota entity is validly registered and that the details you enter match South Dakota's record. The catch is not Etsy, it is the state you actually operate from: states require an out-of-state LLC to register as a foreign LLC before it transacts business there, which is a second filing and a second fee on top of South Dakota's $150. Forming in South Dakota while working somewhere else usually means paying both states, not one.
: Not for your Etsy orders themselves. South Dakota charges a 4.2% state rate and, like every sales-tax state, has a marketplace-facilitator law that makes Etsy collect and remit it for you. You need your own South Dakota registration once you also sell off-marketplace and either have physical presence in South Dakota or cross its remote-seller threshold of $100,000 in sales in the previous or current calendar year (no transaction-count threshold).