South Carolina Small Business Taxes: The Employer’s 2024 Guide

South Carolina offers a vibrant environment for business with about 480,000 small businesses, employing 42% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in South Carolina is crucial. This guide provides an overview of the various taxes small businesses in South Carolina must navigate, including tax rates, filing requirements, and deadlines.

Types of Business Taxes in South Carolina

Business owners in South Carolina may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:

1. Corporate Income Tax

   • Applicable Entities: C corporations, LLCs with C corp elections

   • Tax Rate: 5%

   • Filing Requirements: File Form SC1120 by the 15th day of the fourth month after the tax year ends.

   • Estimated Payments: Required if liability is $100 or more.Payments are due by the 15th dayof the fourth, sixth, ninth, and 12th months of the tax year.

2. Pass-Through Entity (PTE) Tax

   • Applicable Entities: S corporations, partnerships, LLCs taxed as partnerships

   • Tax Rate: 3%

   • Filing Requirements: File Form I-435 by the 15th day of the third month following the close of the tax year.

   • Estimated Payments: Required if liability is $100 or more. Payments are due by the 15^th day of the fourth, sixth, and ninth months of the tax year and the first month of the following tax year.

3. Corporate License Fee

   • Applicable Entities: C corporations, S corporations, LLCs taxed as C or S corps

   • Tax Rate: 0.1% of capital and paid in surplus, plus $15. The minimum fee is $25.  

   • Filing Requirements: File Form SC1120 (for corporations) by the 15th day of the fourth month after the tax year ends or Form SC1120S by the 15^th day of the third month after the tax year.

4. Sales and Use Tax

   • Applicable Activities: Retail sales, certain services

   • Tax Rate: 6% (local rates may apply)

   • Filing Requirements: File Form ST-3 monthly, quarterly, or annually based on sales volume.

5. Withholding Tax

   • Applicable Entities: Employers with employees

   • Tax Rate: Varies

   • Filing Requirements: File Form WH1065 by April 30, July 31, and October 31, and Form WH1066 by January 31.

6. Unemployment Insurance Tax

   • Applicable Entities: Employers with employees

   • Tax Rate: Varies based on business’s experience rating

   • Wage Base: $14,000 per employee per year

   • Filing Requirements: File quarterly reports electronically by April 30, July 31, October 31, and January 31.

7. Personal Property Tax

   • Applicable Entities: Businesses using personal property

   • Tax Rate: Based on property type and value

   • Filing Requirements: File Form PT-100 by four months after the business’s accounting closing period.

8. Nonresident Withholding Tax

   • Applicable Entities: Pass-through entities with nonresident members

   • Tax Rate: 5% on distributive share income

   • Filing Requirements: File Form SC1120S-WH by the 15th day of the third month following the close of the tax year.

How to File and Pay South Carolina Business Taxes

Business taxes in South Carolina can be filed and paid through various methods:

• Online Filing and Payment: Use MyDORWAY for electronic submissions and payments.

• Mail: Send forms and payments to the address indicated on the form (where applicable).

Important Deadlines

Keep track of these key dates to avoid penalties:

• Corporate Income Tax Returns: Due by the 15th day of the fourth month after the tax year ends.

• Estimated Tax Payments: Due by the 15th dayof the fourth, sixth, ninth, and 12th months of the tax year.

• Sales and Use Tax Returns: Monthly, quarterly, or annual filing based on sales volume.

• Withholding Tax Returns: Due quarterly by April 30, July 31, and October 31—and Form WH1066 by January 31.

• Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31.

Tax Credits and Incentives

South Carolina offers several tax credits and incentives for small businesses, including:

• Small Business Jobs Credit: This credit is available to qualified businesses with 99 or fewer employees worldwide that increase employment in South Carolina by at least two full-time jobs in a year. Depending on the county, the credit ranges from $1,500 to $25,000 per job and is limited to 50% of tax liability.

• Abandoned Buildings Revitalization Credit: Available to businesses that rehabilitate, renovate, or develop an eligible abandoned building site to be put into operation for income-producing purposes. The credit generally equals 25% of actual expenses, up to $700,000.

• Research and Development Tax Credit: Available to businesses that claim a federal income tax credit for increasing research activities for the taxable year. The credit equals 5% of qualified research expenses.

South Carolina business tax breakdown by business type

Business taxes can be complicated, so we’ve included a chart below that breaks down the taxes that different business structures usually pay. 

Remember that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns. 

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As a business owner, your time and energy are valuable, finite resources. So, instead of managing your taxes manually, let Gusto give you a hand. Our easy-to-use software automatically files all your payroll taxes each time you run payroll—freeing up your bandwidth for the work that matters most. 

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