If you want to start and run a South Carolina limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for South Carolina LLCs.
Unlike most other states, South Carolina does not require LLCs to file an annual report.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states do impose a separate tax or fee on LLCs for the privilege of doing business in the state. South Carolina, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of South Carolina, like almost every other state, has a corporation income tax. In South Carolina, the corporate tax generally is a flat 5% of the business's entire net income. Use the state's corporation income tax return (Form SC-1120) to pay the tax to the Department of Revenue (DOR). For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOR website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, South Carolina employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOR. Begin by registering your business with the DOR either online or on paper (Form SCDOR-111). Once you've registered, you'll need to file withholding taxes online on a periodic basis (typically monthly or quarterly) using Form WH 1601, WH 1605, or WH 1606. You'll also need to use some version of Form WH-1606 each year to reconcile your LLC's tax withholding. For more information, check the DOR website.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through South Carolina's Department of Employment & Workforce (DEW). You can register for these taxes online or on paper (Form UCE-151). Then, each quarter, use Form UCE-120/101 to report on wages and pay the UI taxes. For more information, check the DEW website.
If your LLC will sell goods to customers in South Carolina, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Revenue and then make periodic sales tax payments for goods sold. You can register online or on paper (Form SCTC-111). After you've registered, you'll be issued a sales tax license. Then, on a periodic basis (usually monthly or quarterly), you must submit sales tax returns to the DOR. You can do this by mail (Form ST-3) or online.
If you will be doing business in states other than South Carolina, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.