If you plan on owning a successful business in South Carolina, you’ll need to stay on top of your tax obligations. So, here’s what aspiring entrepreneurs and business owners need to know about the Palmetto State’s business taxes and filing guidelines:
What business taxes do you pay in South Carolina?
The state taxes a company pays typically depend on factors like its business structure, employer status, industry, and business activities. In South Carolina, businesses pay income taxes, franchise tax, sales tax, employer taxes, and any industry-specific or local taxes that might apply to them.
In the following sections, we’ll look at the taxes South Carolina businesses are obligated to pay, along with their tax rates and filing requirements.
South Carolina personal income tax
Pass-through entities—like sole proprietorships, partnerships, limited liability companies (LLCs), and S corporations—typically don’t pay income taxes themselves. Instead, the tax liability is passed on to their owners, partners, members, or shareholders, who pay the tax on their personal returns at the state’s established rates.
The 2023 South Carolina income tax rate ranges from 0% to 6.5% of taxable income.
How to file and pay
Personal tax returns (Form SC1040) are due by the 15th day of the fourth month after the end of the fiscal year (or April 15 for calendar year filers).
You can file and pay your taxes through South Carolina’s online tax portal MyDORWAY. Alternatively, you can file by mail if your annual tax liability is below $15,000. Paper filers should send their tax returns to the appropriate address listed on the tax return form.
Taxpayers who expect to owe $100 or more in income taxes must pay estimated taxes throughout the year on a quarterly basis. Estimated tax payments are due on the 15th day of the fourth, sixth, and ninth months of the fiscal year and the 15th day of the month following the end of the fiscal year. Pay your taxes online via MyDORWAY or send your payment (along with Form SC1040ES) to this address:
South Carolina Department of Revenue
IIT Voucher
PO Box 100123
Columbia, SC 29202
Find further information on the South Carolina individual income tax by visiting the Department of Revenue (DOR) website.
South Carolina partnership tax return
In addition to the tax returns their business owners file, partnerships and LLCs that are taxed as such must file a separate return on behalf of the business.
Although pass-through entities generally don’t pay income taxes themselves, they may be required to withhold 5% of the income distributed to nonresident partners and report the withholdings on the business tax return.
How to file and pay
Partnership tax returns (Form SC1065) are due by the 15th day of the third month following the end of the partnership’s fiscal year. Any income taxes withheld from nonresident partners are also due at this time. File your return through MyDORWAY or mail it to the proper address on the tax form.
If your partnership expects to owe $100 or more in income taxes (not including nonresident withholdings), you’re required to pay estimated taxes by the 15th day of the fourth, sixth, and ninth months of the fiscal year as well as the 15th day of the first month following the end of the fiscal year. Pay these taxes via MyDORWAY, or send them by mail along with Form SC1065ES to the address below:
South Carolina Department of Revenue
Partnership Income Tax Payment
PO Box 125
Columbia, SC 29214-0036
Keep in mind that partnerships with a tax liability of $15,000 or more must pay their taxes electronically.
Visit the Department of Revenue website to learn more about the South Carolina partnership tax return.
South Carolina pass-through entity tax election
Instead of filing multiple returns for the business and its owners, certain pass-through entities (which include partnerships, S corporations, and LLCs that are taxed as either entity) can choose to file one income tax return on behalf of the entity and its owners.
Electing pass-through entities pay a tax rate of 3% on active trade or business income from South Carolina sources. Use Form I-435 to identify your business’s taxable income under these guidelines and calculate your tax liability.
How to file and pay
Pass-through entities can make this election on the partnership or S corporation tax return form (more information on S corporation tax filing guidelines in the next section) by checking the box for the active trade or business election.
Note that each election only applies to the tax year it was filed, so you’ll need to make this election every year if you want to continue paying taxes this way.
Pass-through entities making this election can file the rest of their tax returns in the same way that standard partnerships and S corporations do.
For more details on the South Carolina pass-through entity tax election, review the state’s Revenue Rulings 21-15 and 22-5.
South Carolina corporate income tax
C corporations (as well as LLCs that are taxed as C corporations) that do business in South Carolina must pay corporate income tax. The state assesses a 5% tax on all C corporation taxable income attributable to South Carolina.
Because S corporations are considered pass-through entities, they don’t pay corporate income taxes. However, they must file a return and withhold 5% of income distributions made to nonresident shareholders.
How to file and pay
C corporation tax returns (Form SC1120) are due on the 15th day of the fourth month after the end of the company’s fiscal year. If your company follows the calendar, your deadline is April 15.
S corporations file their tax returns (Form SC1120S) on the 15th day of the third month following the end of the tax year (or March 15 for calendar filers). Withholding tax reports (Form SC1120S-WH) and withholding payments for nonresident shareholders are also due at this time, but they should be submitted separately from the S corporation tax return.
Electronic filing via MyDORWAY is recommended for all corporations, but it’s required for those with an annual tax liability of $15,000 or more. If you don’t meet this threshold and prefer to file by mail, send your tax return to the appropriate address on the tax form.
Corporations that expect to owe $100 or more in taxes must make quarterly estimated tax payments to the Department of Revenue. Submit these payments by the 15th day of the fourth, sixth, ninth, and 12th months of the fiscal year via MyDORWAY or by mail using Form SC1120-CDP.
More information on the corporate income tax can be found on the Department of Revenue’s C corporation webpage and S corporation webpage.
South Carolina corporate license fee
Many states levy a franchise tax on corporations for the privilege of doing business in the state. In South Carolina, this tax is known as the corporate license fee. It’s imposed on C corporations, S corporations, and LLCs that elect to be taxed as either entity.
These companies pay a tax equal to $1 for each $1,000 of capital and paid-in surplus, plus an additional $15 annual fee. The minimum corporate license fee is $25.
How to file and pay
The corporate license fee is filed using the corporate income tax returns, so the deadlines and filing guidelines are the same. You can get more information on the South Carolina corporate license fee on the state’s Department of Commerce website.
Sales and use tax
Businesses that sell physical goods and certain taxable services must collect sales tax from consumers at the point of purchase and send it to the Department of Revenue. Remote sellers without a physical presence in the state must also collect sales tax if they make more than $100,000 in sales from South Carolina transactions.
If your company buys goods from out of state for use within South Carolina, you may be required to pay use tax on those purchases as well.
In 2023, the South Carolina sales and use tax rate is 6%.
Because not all products and services are subject to sales tax, check with the DOR or your tax professional to determine whether you should be collecting sales tax.
How to file and pay
Businesses that make retail sales in South Carolina should first register for a retail license with the state. Apply for your permit through MyDORWAY’s Business Tax Application.
Sales and use tax returns are submitted monthly and are due on MyDORWAY by the 20th of the month following the tax period. So tax returns and payments for June are due by July 20, for example.
If your tax liability is less than $15,000, you can file by mail instead. Paper filers should send Form ST-3 and Form ST-389, along with any payment, to the appropriate address on the ST-3 tax form.
All registered businesses must submit a sales tax return for each filing period, even if they didn’t make any sales during that time.
Learn more about the South Carolina sales tax on the DOR website.
Withholding tax
Companies with employees who live or work in South Carolina must withhold a percentage of those employees’ wages and send it to the Department of Revenue. These taxes are known as withholding taxes or employment taxes.
Withholding tax rates differ between employees because each employee’s withholding rate is determined by their wages and withholding allowances. In 2023, the South Carolina withholding tax rate ranges from 0% to 6.5%. Use the DOR’s withholding tables and withholding tax formula to determine how much to withhold from each employee’s paycheck.
How to file and pay
Before you can pay withholding taxes, you need to register for a MyDORWAY account with the South Carolina Department of Revenue (if you haven’t already).
Registered businesses will usually be assigned a monthly or quarterly payment schedule, depending on the location of your business and your quarterly withholding tax liability:
- Resident employers submit payment according to their federal withholding schedule.
- Nonresident employers that owe less than $500 in quarterly withholding taxes should submit payment by the last day of the month following the end of the quarter.
- Nonresident employers that owe $500 or more send monthly payments by the 15th of the month following the tax period.
All employers must also file quarterly withholding tax returns by April 30, July 31, October 31, and January 31. Note that, once you register, you must file returns every tax period even when you have no employees during that time.
You can file these returns by mail—just make sure to use Form WH-1605 for the first three quarters of the year, and Form WH-1606 for the combined fourth quarter and annual return. Mailing addresses for the returns can be found on the tax forms.
Businesses that withhold $15,000 or more in quarterly withholding taxes or make 24 or more withholding tax payments in a year must file electronically via MyDORWAY, although the DOR encourages all employers to do so.
Finally, employers must file employee information returns through MyDORWAY by January 31. If you plan on filing by mail, submit the returns with Form WH-1612.
Visit the DOR website for more information on the South Carolina withholding tax.
Unemployment compensation tax
South Carolina also requires employers to pay state unemployment insurance taxes. These contributions cover unemployment benefits for eligible workers who leave the company through no fault of their own.
In 2023, new employers pay 0.45% on the first $14,000 of each employee’s wages. After one year, these employers are assigned a new rate. The 2023 rate for established employers ranges from 0.06% to 5.46%.
How to file and pay
Employers must first register for an employer account through the Department of Employment and Workforce registration portal.
Registered employers file wage reports and pay unemployment taxes each quarter on April 30, July 31, October 31, and January 31. This is done through the South Carolina Unemployment Insurance Tax System (or SUITS, for short).
If you need more information on the South Carolina unemployment tax, visit the Department of Employment and Workforce website.
Other industry-related and local taxes
Businesses may need to pay other state taxes in addition to the ones mentioned above, depending on your company’s industry, products or services sold, or business activities. In South Carolina, these taxes include:
- Admissions Tax
- Aviation Fuel Tax
- Bank Tax
- Cigarette Tax Stamps
- Dry Cleaning Facility Fee
- Public Utility Tax
- Rental Surcharge
- Savings and Loan Tax
- Utility Property Tax
Local governments in South Carolina might impose taxes on companies within their jurisdictions as well. For instance, the state sets the maximum local sales tax rate at 1%, so you may pay up to 1% in local sales taxes in addition to the statewide rate.
Additionally, many businesses must pay personal property taxes to their county tax authority or to the Department of Revenue. Go to the DOR business personal property tax webpage for further guidance.
Because the taxes mentioned in this section are determined by your location and the type of business you own, it’s best to talk with your accountant or tax advisor to get a complete picture of your tax obligations in South Carolina.
South Carolina tax breakdown by business type
To help you keep track of your business tax requirements, below we’ve included a chart that breaks down the different taxes that each business entity typically files in South Carolina.
Keep in mind that, similar to the state’s income taxes, pass-through entities generally don’t pay federal income taxes at the entity level. Instead, their owners pay taxes on their share of the business’s profits on their personal returns.
| Business type | Personal income tax | Partnership tax return | Pass-through entity tax | Corporate income tax | Corporate license fee | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | No | No | No | Yes | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes (pass-through), if not making the PTE election | No | Yes, if it makes the election | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC | Yes (pass-through), if not making the PTE election | Depends on how it’s structured | Yes, if it makes the election | Depends on how it’s structured | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes (pass-through), if not making the PTE election | Yes | Yes, if it makes the election | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietor | Yes (pass-through) | No | No | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
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