WHICH GOODS AND SERVICES ARE TAXABLE?
Determining whether or not the products or services your company sells are taxable in South Carolina is the first step in sales tax compliance.
Traditional Goods or Services
Goods that are subject to sales tax in South Carolina include physical property, like furniture, home appliances, and motor vehicles.
Prescription medicines, groceries, and gasoline are all tax-exempt.
Some services in South Carolina are subject to sales tax. For a detailed list of taxable services view this PDF from the South Carolina Department of Revenue.
Digital Goods or Services
A digital good or service is anything electronically delivered, such as an album downloaded from iTunes or a film purchased from Amazon.
South Carolina does not require businesses to collect sales tax on the sale of digital goods or services.
However, South Carolina has one exception to this policy. Businesses must collect sales tax on pre-written computer software that is sold online.
HOW TO REGISTER FOR SOUTH CAROLINA SALES TAX
If you determined that you need to charge sales tax on some or all of the goods and services your business sells, your next step is to register for a seller's permit. This allows your business to collect sales tax on behalf of your local and state governments.
In order to register, you will need the following information:
- Business information
- Type of ownership
- Personal information of business owners; partners; officers; and members
You will need this information for all partners, corporate officers, or LLC managers/members.
Save Money with a Resale Certificate
With a resale certificate, also known as a reseller's permit, your business does not have to pay sales tax when purchasing goods for resale.
COLLECTING SALES TAX
After getting your seller's permit and launching your business, you will need to determine how much sales tax you need to charge different customers. To avoid fines and the risk of costly audits, it's important for business owners to collect the correct rate of sales tax.
When calculating sales tax, you'll need to consider the following kinds of sales:
- Store Sales
- Shipping In-State
- Out-of-State Sales
For traditional business owners selling goods or services on-site, calculating sales tax is easy: all sales are taxed at the rate based on the location of the store.
Here's an example of what this scenario looks like:
Mary owns and manages a bookstore in Rock Hill, South Carolina. Since books are taxable in the state of South Carolina, Mary charges her customers a flat-rate sales tax of 7.000% on all sales. This includes South Carolina’s state sales tax rate of 6.000% and Mary’s local district tax rate of 1.000%.
The state of South Carolina follows what is known as a destination-based sales tax policy. This means that long-distance sales within South Carolina are taxed according to the address of the buyer. This policy applies to state, county, and city sales taxes.
Consider the following example:
Steve runs his own business selling electronics on eBay out of his home in Myrtle Beach, South Carolina. A customer living in Columbia finds Steve’s eBay page and purchases a $350 pair of headphones. When calculating the sales tax for this purchase, Steve applies the 6.000% state tax rate for South Carolina, plus 1.000% for Columbia’s city tax rate and 1.000% for his customer’s local tax district. At a total sales tax rate of 8.000%, the total cost is $378.00 ($28.00 sales tax).
South Carolina businesses only need to pay sales tax on out-of-state sales if they have nexus in other states. Nexus means that the business has a physical presence in another state.
Common types of nexus include:
- A physical location, such as an office, store, or warehouse
- An employee who works remotely or who is a traveling sales representative
- A marketing affiliate
- Drop-shipping from a third party seller.
- A temporary physical location, including festival and fair booths.
FILE YOUR SALES TAX RETURN
Now that you’ve registered for your South Carolina seller's permit and know how to charge the right amount of sales tax to all of your customers, you are all set to file your sales tax return. Just be sure to keep up with all filing deadlines to avoid penalties and fines.
Recommended: Hiring a business accountant can help your business file tax returns as well as issue payroll and manage bookkeeping. Schedule a consultation with a business accountant today to save thousands of dollars on your taxes.
How to File
South Carolina requires businesses to file sales tax returns and submit sales tax payments online.
How Often Should You File?
All Businesses in South Carolina will pay sales tax on a monthly basis for at least the first 6 months that they are in business. At the end of the year, the State will examine your account and determine if you are eligible to pay sales tax at a quarterly or monthly rate.
Note: South Carolina requires you to file a sales tax return even if you have no sales tax to report.
All South Carolina sales tax return deadlines fall on the 20th day of the month, unless it is a weekend or federal holiday, in which case the deadline is moved back to the next business day.
Annual filing: January 22, 2020
- Q1 (Jan. - Mar.): Due April 20
- Q2 (April - June): Due July 20
- Q3 (July - Sept.): Due October 22
- Q4 (Oct. - Dec.): Due January 22
Monthly filing: The 20th day of the following month, or the next business day, e.g. April 20 for the month of March, or May 22 for the month of April.
Penalties for Late Filing
South Carolina charges a late filing penalty of 5% per month.
South Carolina also charges a late payment penalty that is equal to 0.5% per month.
The state assesses the unpaid tax with a starting interest rate of 0.25% and is compounded daily until all sales tax is paid.
South Carolina Helpful Resources
Sales and Use Tax Help Number: