South Carolina LLC Taxes
If you plan to create a South Carolina limited liability company (LLC), you’ll need to understand the state’s tax regulations, which are based on your LLC’s structure, location, and business activities.
This guide will give you a rundown of South Carolina LLC taxes at the local, state, and federal levels, with steps on how to file your taxes correctly and keep your LLC compliant with the state.
Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.
How Is an LLC Taxed in South Carolina?
Taxation in South Carolina isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.
While LLCs typically benefit from pass-through taxation by default, they can elect to be taxed as one of the following:
- C Corporations: The LLC is treated as a separate entity to its owners, paying corporate income tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
- S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay self-employment tax or FICA tax on them.
The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in South Carolina to help you ensure your LLC navigates them effectively.
South Carolina Local Taxes
Below we’ve delineated the main local taxes that your LLC may be required to pay in South Carolina.
Local Option Taxes
If your LLC provides retail sales of tangible goods and specific services within applicable counties in South Carolina, you may be subject to the state’s local option tax.
If this is the case, you will need to collect and remit this tax to the South Carolina Department of Revenue (SCDOR).
Keep in mind that the tax rate for this varies by county, ranging from 1% to 3%, and is combined with the state sales and use tax rate of 6%. This means that the total sales and use tax rate in South Carolina can be between 7% and 9%, depending on the county in question.
There are various sales and use taxes that may need to be additionally paid at the local level, including:
- Capital Projects Tax: The 1% Capital Projects Tax is imposed by select counties specifically to fund specific capital projects such as roads, bridges, public facilities, recreation facilities, and water and sewer projects.
- County Green Space Tax: The county green space tax is a new sales and use tax of up to 1% that applies to all taxable sales and uses within a county. This tax rate is intended to support conservation efforts, preserve open spaces for public enjoyment and benefit, and encourage economic development and tourism in rural areas. As of 2023, only Beaufort County has adopted this tax.
- Education Capital Improvement Tax: Certain school districts in South Carolina impose a countywide local sales and use tax of 1% on the sales price of tangible personal property and certain services. This tax applies to both businesses and consumers who make purchases within the county where the school district is situated.
- Maximum Tax: The maximum tax rate depends on what kind of business you have and where it’s located. For example, some counties can charge you up to 3% for retail sales and up to 2.5% for wholesale sales. Some municipalities can charge you up to 2% for retail sales and up to 1.5% for wholesale sales.
- School District Tax: In some counties, a 1% school district tax is levied where the revenue generated from this tax is used for the benefit of schools. The authority to impose this tax is granted by the General Assembly to certain school districts within their respective counties.
- Tourism Development Tax: The local tourism development sales and use tax is a tax on all retail sales, applicable in municipalities located in counties where the state accommodations tax revenue exceeds $14 million. This tax is specifically for tourism promotion aimed at non-South Carolina residents and is collected by the SCDOR on behalf of these municipalities.
- Transportation Tax: This 1% local sales and use tax can be imposed by certain counties and municipalities for specific transportation-related projects on the gross proceeds of sales of goods and services subject to the state sales and use tax. Motor carriers are taxed at a lower rate of 0.5%.
Note: LLCs must file sales and use tax returns electronically if their tax liability is $15,000 or more per filing period.
If your LLC owns property in South Carolina, you will need to file property taxes, which are calculated based on the assessed value of your LLC’s property. The county assessor determines this value, which is multiplied by the tax rate in order to determine your annual tax liability.
The assessment ratio for real and personal property for manufacturers is 10.5%. However, for all other businesses, the ratio is 6% (real property) or 10.5% (personal property).
Note: For detailed information on the taxation, exemptions, and incentives of properties in South Carolina, see the Local Property Taxes and Incentives page on the Department of Commerce website.
Recommended Service: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant.
South Carolina State Taxes
Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below is a list of the most relevant state-level taxes for LLCs in South Carolina.
If your LLC is taxed as a sole proprietorship, partnership, or disregarded entity, you won't have to file a separate business tax return in South Carolina. Instead, your business income will be reported on your personal income tax return (Form SC1040). The individual income tax rates in South Carolina range from 0% to 6.5%, depending on your taxable income.
If your LLC is taxed as a C corporation, you'll need to file a corporate income tax return (Form SC1120) and pay the 5% corporate income tax rate. Additionally, C corps are required to pay the annual license fee, which is calculated as 0.1% of capital and paid-in-surplus plus $15, with a minimum fee of $25.
If an LLC has employees or payees in South Carolina, irrespective of their location or tax registration, it must withhold and remit the appropriate amount of withholding tax and file a withholding tax return (Form WH-1605) to the SCDOR on a quarterly basis.
The withholding tax is deducted from the income of employees and payees by their employers or other withholding agents. The rate of withholding tax is determined by the type and amount of income, as well as the filing status and exemptions of the payee.
Note: See the South Carolina Withholding Tax Information Guide to learn more about the requirements, payments, and filing instructions for this tax.
State Sales and Use Taxes
If your LLC provides taxable goods or services to customers in South Carolina, you'll need to pay the state sales and use tax of 6%, regardless of whether you're located in the state or not.
It's worth noting that if your LLC engages in retail sales, including online sales, you'll be required to obtain a retail license from the SCDOR for a fee of $50.
However, there are some exemptions to this tax, which include most non-prepared food items, prescription drugs, medical supplies, items for resale, property becoming a component of an item for resale, and recycling property used at facilities.
We have included a list of the different types of sales and use taxes in South Carolina that may additionally apply to your business depending on its industry:
- Accommodations Tax: If you offer short-term lodging at places like hotels, campgrounds, boarding houses, or mobile home parks. Besides the 6% sales tax and any applicable local tax, you also have to charge a 2% accommodations tax for these rentals.
- Arts and Crafts Tax: If you sell your own handmade or assembled products at craft shows and festivals more than four times a year, you need an Artist & Craftsman License ($20). This lets you charge and collect the 6% sales and use tax and any local taxes.
- Aviation Fuel Tax: If you sell aviation fuel in South Carolina, you have to pay a tax of 6% of the total amount you receive for the fuel. This tax applies to all kinds of aviation fuel, whether it is gasoline, diesel, kerosene, jet fuel, or anything else.
- Dry Cleaning Tax: If you sell dry cleaning services in South Carolina, whether they are alterations, repairs, or laundry, then you have to pay a tax of 6% of the total amount you charge for the service.
- Rental Fee: If you rent out your property in South Carolina, you can charge a rental fee of 2.5% to your tenants. The rental fee may include different charges, such as security deposit, utilities, maintenance fees, etc.
- 900 and 976 Telephone Services: If you provide 900 or 976 telephone services in South Carolina, you are subject to state and local sales and use tax at a rate of 11%.
Note: For more information on how South Carolina’s local sales and use taxes may apply to your business, see the SC Sales and Use Tax Manual.
State Excise Taxes
South Carolina’s excise taxes are levied on certain goods or services by the state. Some of the goods or services that are subject to excise taxes are:
- Alcohol: If you sell alcohol in South Carolina, you have to pay state excise taxes on liquor, wine, and beer. The tax rates for each item vary; however, liquor-by-the-drink has a tax rate of 5% in addition to the state and local sales taxes.
- Cigarette and Tobacco: If you sell cigarettes and tobacco products in South Carolina, you have to pay state excise taxes on them. The tax rate is $0.0285 on each cigarette and 5% of the manufacturer’s price for other tobacco products.
- Casual Excise Tax: If you sell a boat, motor, or airplane in South Carolina, you have to pay a casual excise tax on the sale. The tax rate is 5% of the fair market value of the item sold and may not exceed the $500 maximum tax.
- Motor Fuel: If you sell motor fuel in South Carolina, you have to pay a state excise tax on gasoline and diesel. The tax rate is currently at $0.28 per gallon.
- Solid Waste: If you dispose of solid waste in South Carolina, you have to pay a state excise tax on it. The tax rate is $0.80 on importation of motor oil, $2 per retail sales of tires, $2 per retail sale of lead-acid batteries, and $2 on wholesale of white goods for resale.
- 911 User Fees: If you’re a phone service provider offering emergency services through landline phones, you will be charged a fee of $0.62 per mobile identification number (MID) for wireless telecom providers and $0.03 per MID for CMRS/VoIP providers.
Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below are some of the main types your LLC may be required to pay for federal tax purposes:
By default, the Internal Revenue Service (IRS) will not treat single and multi-member LLCs as separate entities from you for tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income tax on them at the personal rate of your tax bracket.
Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.
In addition to income tax, members of single- and multi-member LLCs will need to pay federal self-employment taxes on the share of the business’s profits that they report on their personal tax return at the end of the year.
This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.
If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.
Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.
If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.
Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.
How to File LLC Taxes in South Carolina
Below, we’ve outlined the general process an LLC in South Carolina will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in.
Step 1: Gather Your Documentation
To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:
- You and your partner’s Social Security number, date of birth, and residential address
- The previous year’s tax returns
- Your LLC’s Federal Tax Identification Number or Employer Identification Number (EIN)
Then, you’ll need to gather all documentation related to your business’s income, such as:
- Invoices you’ve issued
- Sales transaction logs
- Electronic payment reports from services like PayPal or Stripe
Lastly, assemble all records pertaining to your business expenses, which should cover:
- Lease receipts for your business premises
- Bills for utilities
- Records of office supplies purchases
- Documentation of business-related travel
- Payroll records for employees
Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return.
Step 2: Find The Right Tax Forms
Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:
- Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
- Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
- C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
- S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The deadline for filing taxes using 1120-S is March 15 or the following business day.
Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.
With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.
Step 3: File Your Taxes
The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:
- Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
- State Tax Returns: You can file your South Carolina taxes at the state level online using the SCDOR's free online tax portal, MyDORWAY. This is the fastest and easiest way to complete your return, as well as to access copies of past returns and payment notices.
- Local Tax Returns: You can pay taxes at the local level by using MyDORWAY. However, you may need to check with your county or city government for specific requirements and deadlines. Some counties may have their own online portals or forms for filing local taxes, fees, and business licenses.
Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form.
For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings.
Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes.
Keep Your South Carolina LLC Compliant
While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant.
South Carolina Annual Report
To maintain active status in South Carolina, newly established LLCs that are taxed as corporations must submit an initial report using Form CL-1 within 60 days of their formation. Subsequently, these LLCs are obligated to file an annual report along with their state income tax return each year.
The specific form used for the annual report depends on the corporate structure in question:
It's important to note that LLCs taxed as disregarded entities or partnerships do not have the obligation to file this annual report.
Licensure and Tax Requirements
In South Carolina, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:
- Retail Licenses: If your LLC engages in business as a retailer in South Carolina (including internet sales), you will need to obtain a retail license from the state. You can register and apply online through the South Carolina Department of Revenue’s MyDORWAY or use the Business Tax Application (Form SCDOR111).
- Professional Licenses: If your LLC provides professional services such as accounting, law, medicine, or real estate, you will need to obtain a professional license from the appropriate state agency. Those that wish to conduct professional services can additionally form as a PLLC with the Secretary of State.
- Environmental Permits: If your LLC engages in activities that may affect the environment, such as waste disposal, air pollution, water contamination, or land use, you will need to obtain an environmental permit from the South Carolina Department of Health and Environmental Control (DHEC).
Note: For a list of the licenses, permits, and registrations required for new businesses in South Carolina, please refer to the SC Business One-Stop.
South Carolina LLC Taxes FAQs
There are different types of local, state, and federal taxes that LLCs may need to pay, such as South Carolina employer taxes, property taxes, and state income taxes.
This will ultimately depend on each LLC’s specificities (e.g., location, industry, etc.). You can learn more about these taxes in our section on South Carolina LLC Taxes.
This depends on how your LLC is taxed. In general, South Carolina LLCs are not required to file annual reports. However, LLCs taxed as a C corporation or S corporation must file an annual report with their state tax returns each year.
To see the differences in how LLCs are taxed, check our LLC Taxes guide.
South Carolina is a favorable location for starting an LLC due to its business-friendly environment.
The state offers low startup costs, limited liability protection, pass-through taxation, and no annual report filing requirement for LLCs. Additionally, the state’s growing economy and supportive resources for small businesses enhance its attractiveness for new LLCs.
The primary fee for an LLC is $110 for filing the Articles of Organization. There is no annual fee or report requirement for LLCs in the state, though LLCs taxed as corporations (C corp or S corp) will have to pay the annual License Fee (a minimum of $25).
To help you get started, you can use a third-party LLC formation provider, a business law attorney, or you can follow our step-by-step guide on how to start an LLC in South Carolina.