Business Returns in a Manufacturing and Research City
Brookings has the profile of a much larger city when it comes to business. Manufacturers that started here, such as Daktronics and Larson Manufacturing, sit alongside global companies, dairy and food processors, agricultural service firms and a cluster of technology start-ups at the Research Park at South Dakota State University. Most of the region's smaller firms are pass-through entities whose federal return flows to the owners. South Dakota imposes no corporate or personal income tax, so the federal return is the main annual filing, but it has to match the sales tax, excise tax and payroll records filed through the year, and Minnesota may expect a return too. BOMCAS prepares business returns for Brookings companies remotely and reconciles those filings before the return is signed.
Our South Dakota business tax page covers the statewide calendar and entity questions; this page adds the issues we see among Brookings manufacturers, dealers and start-ups.
The Brookings Industries We See Most
Manufacturers and their suppliers
The city's 2023 economic development plan counted more than 3,500 workers in the manufacturing cluster, which it found to be over 21 times as concentrated as the national average. Around the large plants are machine shops, plastics moulders, fabricators, electrical contractors and logistics firms that sell to them. Their returns turn on inventory costing, the choice between immediate expensing and depreciation for equipment, the treatment of tooling and the research costs that go into new products.
Agricultural inputs, dairy and food processing
Seed, feed, crop protection and equipment dealers, custom operators, dairies and food processors serve the farms of eastern South Dakota and western Minnesota. Their returns involve inventory that changes value with commodity prices, prepaid expenses, patronage dividends from cooperatives and, for dealers, floor-plan financing. Equipment sold to a farmer for exclusive agricultural use carries South Dakota's farm machinery excise tax rather than ordinary sales tax, and dealers need to keep that revenue separate.
Research Park and university spin-offs
Younger companies working in agricultural technology, bioscience, software and engineering often start as LLCs or C corporations funded by grants, angel investors or founders' savings. Their returns raise questions about the research credit, the treatment of grant income, start-up costs, stock issued to founders and employees, and whether a C corporation's stock may qualify for the federal exclusion for qualified small business stock when it is eventually sold. The 2025 federal tax law again allows domestic research costs to be deducted immediately rather than spread over five years, which changes the numbers for many of these firms.
Contractors and property owners
Residential growth around the university keeps builders, remodellers and landlords busy. Builders need contract accounting that matches their contractor's excise tax filings, and landlords who rent to students need depreciation schedules, records of repairs versus improvements and a clear split between personal and rental use.
When Minnesota Wants a Return
With the state line about 20 miles east, many Brookings firms install, deliver, service or build in Minnesota. Minnesota taxes corporate income and individual income, including a nonresident owner's share of income from Minnesota work. A Brookings C corporation with property, payroll or enough sales in Minnesota may owe a Minnesota corporate franchise tax return, and an S corporation or partnership may need to file and withhold or pay composite tax for nonresident owners. We look at where your people, equipment and customers were during the year and decide which returns are due before the federal return is completed.
Reconciling the Local Filings
Before we prepare the return, we compare the year's revenue with the gross sales reported on your South Dakota sales tax returns, and check that the city's 2 percent tax and the 1 percent tax on meals, drinks, lodging and admissions sit in liability accounts rather than in income. Hotels should also show the $2 nightly pillow tax as collected for the city. Contractors' gross receipts on the excise tax returns should agree with contract revenue. Small differences are usually timing, but larger ones point to a return that needs correcting.
Federal Items We Review
- Section 179 and bonus depreciation on plant equipment, vehicles and rental property.
- Inventory methods and the small business exceptions to inventory and long-term contract rules.
- The research credit and immediate deduction of domestic research costs.
- The qualified business income deduction for owners of pass-through entities.
- Owner compensation in S corporations.
- Form 1099 reporting for subcontractors, landlords and service providers.
Licences to Keep in Order
Residential contractors in Brookings need a city licence that is renewed each calendar year, with an excise tax number on file. Food trucks, temporary vendors and transient merchants need their own city licences. Every entity also files an annual report with the South Dakota Secretary of State. If we see that a registration has lapsed while preparing the return, we flag it.
How the Work Is Done
You send the year-end books, bank statements, sales and excise tax returns, payroll reports and last year's return through our secure portal. We review them, send one consolidated list of questions, prepare the federal and any Minnesota returns, and talk through the results with you before filing.
Brookings Business Tax Preparation Questions
Does a Brookings company file a South Dakota income tax return?
No. South Dakota has no corporate or personal income tax, so the annual income tax return is federal, along with sales, excise and payroll filings and the annual report to the Secretary of State.
Do I need a Minnesota return if I do jobs across the line?
Possibly. Minnesota taxes business income from work done there. Depending on your entity type and how much property, payroll and sales you have in Minnesota, you may need a corporate return or a pass-through return with nonresident withholding or composite tax.
Can my start-up at the Research Park claim the research credit?
Many can. Qualifying research wages, supplies and contract research may support a federal credit, and some small start-ups can apply part of it against payroll tax. Domestic research costs can again be deducted immediately under the 2025 federal tax law.
How should a farm equipment dealer report the farm machinery excise tax?
Keep the excise tax collected separate from sales tax and from revenue, report it on the South Dakota return, and make sure the federal return shows only the net sales.
Talk to BOMCAS About Business Tax Preparation in Brookings
For most Brookings companies, a clean return depends on current books and complete payroll records. We can prepare owners' individual returns in the same review, use the results for next-year planning and confirm that city and state sales tax has been reported correctly. Overdue years can go through our catch-up process, and Canadian founders should also review Canada–U.S. issues. Statewide context for other services is available in our South Dakota guides to individual returns, sales and use tax, bookkeeping, payroll, tax planning, late filing and cross-border tax, plus the South Dakota overview.
Share a few details about your Brookings situation, and BOMCAS will reply with practical next steps and the information needed for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. To compare services, return to the Brookings overview. This information is general and does not replace advice for your specific facts.