Alright, let’s talk South Carolina LLC taxes without the BS. I’ve worked with over 250 Palmetto State entrepreneurs, and here’s what consistently surprises them: South Carolina has no annual report requirement. That’s right – while your buddies in North Carolina are forking over $200 every year, you’re sitting pretty.
But before you pop the champagne, let me walk you through what you WILL pay and the sneaky obligations that catch LLC owners sleeping.
The Good News: What South Carolina Doesn’t Charge
Unlike 46 other states, South Carolina won’t nickel-and-dime you with annual report fees. Once you pay that initial $110 formation fee, the Secretary of State leaves you alone. No yearly $50, $200, or $800 franchise tax nonsense like California.
The comparison that matters:
- Georgia: $50 annual registration
- North Carolina: $200 annual report
- Tennessee: $300+ minimum franchise tax
- Florida: $138.75 annual report
- South Carolina: Zero. Zilch. Nada.
That’s easily $2,000-4,000 saved over a decade. Not bad, right?
But here’s where rookies mess up – they think “no annual fee” means “no ongoing obligations.” Wrong.
The Tax Framework That Actually Impacts Your Wallet
Understanding South Carolina’s Pass-Through Game
Your LLC doesn’t pay income tax. You do. It’s that simple, yet I field confused calls about this weekly.
Think of your LLC as a funnel. Money flows through it directly to you, and that’s where taxation happens. The LLC itself? Invisible to the tax authorities for income tax purposes.
Single owner? Everything lands on your personal return.
Multiple owners? Each person reports their slice of the pie.
This isn’t a loophole or strategy – it’s just how LLCs work by design.
South Carolina’s Income Tax Structure (The Progressive Ladder)
Here’s where South Carolina gets interesting. Unlike North Carolina’s flat 4.5%, SC uses a progressive system that can actually benefit smaller operations:
2025 Tax Brackets:
- First $3,200: 0% (yes, zero)
- $3,201 – $16,040: 3%
- $16,041+: 6.4%
Real-world impact: If your LLC nets $50,000 profit:
- First $3,200: $0
- Next $12,840: $385.20
- Remaining $33,960: $2,173.44
- Total SC tax: $2,558.64
Compare that to North Carolina’s flat rate: $2,250 on the same income. Not a huge difference, but every dollar counts when you’re bootstrapping.
The Hidden Beast: Business Personal Property Tax
Here’s the tax that blindsides 40% of new LLC owners I work with: Business Personal Property Tax.
What it covers:
- Computers, equipment, furniture
- Tools, machinery, fixtures
- Basically everything except inventory and real estate
The timeline that trips people up:
- File PT-100 within 4 months of year-end
- County assesses value
- Bill arrives after September 1st
- Payment due January 15th
I had a Charleston tech startup forget about this. Result? $3,000 tax bill plus penalties on their server equipment and office setup. Don’t let this happen to you.
Pro tip: Depreciated equipment = lower tax. Keep those depreciation schedules handy.
Your South Carolina State Tax ID Number (Don’t Skip This)
Right after your LLC gets approved, hop on MyDORWAY and grab your state tax ID number. It’s free, takes 15 minutes, and you’ll need it for:
- Sales tax registration
- Withholding accounts
- Business personal property filings
- Any state tax correspondence
Skip this step and you’ll waste hours on hold with the Department of Revenue later. Trust me.
Sales Tax: The Revenue Generator You Can’t Ignore
South Carolina’s sales tax sits at 6% base rate, but here’s the kicker – local jurisdictions can add up to 3% more. Charleston County? You’re looking at 9% total in some areas.
When You Must Register:
Physical products? Obviously yes.
Digital products? As of 2025, many are taxable.
Services? Most are exempt, but accommodation services, communication services, and laundry services are taxable.
The Nexus Trap:
Got a home-based LLC selling on Etsy? Congratulations, you have nexus in South Carolina. One sale to a Greenville resident = sales tax obligation.
Economic nexus threshold: $100,000 in sales to SC customers triggers registration requirement, even if you’re based in Montana.
I helped a client who ignored this for two years. The back taxes, penalties, and interest? $12,000. On $180,000 in sales. Ouch.
The Four Tax Personalities of South Carolina LLCs
Type 1: The Solo Operator (Default Single-Member)
You’re a freelance designer, consultant, or solo service provider.
Your tax reality:
- Schedule C on your 1040
- Self-employment tax (15.3% on 92.35% of net)
- SC individual income tax
- Quarterly estimated payments (don’t forget these!)
Example: Mike’s web design LLC nets $65,000.
- Self-employment tax: ~$9,180
- Federal income tax: ~$7,000 (depending on deductions)
- SC income tax: ~$3,600
- Total tax hit: ~$19,780 (30.4% effective rate)
Type 2: The Partnership Play (Default Multi-Member)
You and your business partner run a boutique, restaurant, or agency.
Your obligations:
- Federal Form 1065 (partnership return)
- SC Form SC1065 (state partnership return)
- K-1s for each partner
- Each partner files individually
The gotcha: Partners often forget they’re responsible for taxes on their share of profits, even if the money stays in the business. I’ve seen partnerships implode over this misunderstanding.
Type 3: The S-Corp Strategist (Elected Status)
Once you’re consistently netting $60,000+ per owner, S-Corp election starts making sense.
The math that matters: Traditional LLC on $100,000 profit: ~$14,130 self-employment tax S-Corp with $65,000 salary + $35,000 distribution: ~$9,180 payroll tax
Annual savings: ~$4,950
But remember:
- Payroll service costs: $500-1,200/year
- Additional tax prep: $500-1,000/year
- Quarterly filings required
- “Reasonable salary” compliance
Net benefit kicks in around $70,000 profit per owner.
Tip: Choosing S-Corporation tax status comes with added costs and responsibilities. For most new LLCs, it’s best to wait until the business is stable with reliable revenue. Once each Member’s annual net income reaches around $70,000, talk to your accountant about whether this option makes sense.
Type 4: The Unicorn C-Corp Election
In 15 years, I’ve recommended C-Corp election exactly twice. Both were venture-backed startups needing specific investor structures. For 99.9% of South Carolina LLCs, avoid this like Columbia traffic at 5 PM.
Payroll Taxes: Where Complexity Lives
Hiring your first employee? Welcome to administrative hell.
Your New Best Friends:
- FICA: 15.3% total (you pay half, employee pays half)
- FUTA: 0.6% on first $7,000 per employee
- SUTA: 0.55% to 5.46% (new employers start at 2.73%)
- State withholding: Based on employee’s W-4
The Mistake Everyone Makes:
“I’ll just 1099 everyone!” No. Just no. The South Carolina Department of Employment and Workforce is aggressive about worker misclassification. Penalties start at $600 per misclassified worker.
My recommendation: Under 3 employees? Gusto runs $40/month plus $6/employee. Over 10 employees? Time for ADP or Paychex.
Industry-Specific Tax Landmines
Restaurants & Bars:
- Hospitality tax (2% in many counties)
- Admissions tax for entertainment
- Alcohol license fees and taxes
Construction:
- Contractor’s license bonds
- Workers’ comp (mandatory with employees)
- Use tax on out-of-state material purchases
E-commerce:
- Multi-state nexus headaches
- Marketplace facilitator rules
- International shipping complications
Professional Services:
- City business license taxes (Columbia charges based on gross receipts)
- Professional licensing fees
- B&O taxes in certain municipalities
My Tax Calendar for South Carolina LLCs
January 15:
- Business personal property tax due
- Q4 estimated taxes due
March 1:
- 1099s should be filed
- Start gathering tax documents
April 15:
- Individual returns due (with LLC income)
- Q1 estimated taxes due
April 30:
- Business personal property return due (if December year-end)
June 15:
- Q2 estimated taxes due
September 15:
- Partnership returns due (if extended)
- Q3 estimated taxes due
October 15:
- Individual returns due (if extended)
Red Flags That Trigger South Carolina Audits
Based on discussions with Department of Revenue auditors:
- Mismatched 1099s and reported income (they cross-reference everything)
- Excessive vehicle deductions (over 90% business use raises eyebrows)
- Round numbers everywhere ($5,000 advertising, $10,000 supplies = audit bait)
- Home office deductions exceeding 20% of home (unless you can prove it)
- Sudden massive losses after profitable years
The Tools That Keep You Compliant
After testing with hundreds of clients:
Bookkeeping: Wave (free) for under $50K revenue, QuickBooks Online for everyone else
Mileage: Stride (free and IRS-compliant)
Receipt tracking: Dext (formerly Receipt Bank)
Sales tax: Avalara for multi-state, TaxJar for SC-only
Payroll: Gusto (best interface and price point)
Tax prep: FreeTaxUSA for simple returns, CPA for anything complex
The Action Steps That Matter
Week 1 after formation:
- Get your EIN from IRS
- Register on MyDORWAY for state tax ID
- Open dedicated business bank account
- Set up bookkeeping system
Month 1:
- Determine sales tax obligations
- Register for necessary licenses
- Set aside 25-30% of revenue for taxes
- Schedule quarterly tax payment reminders
Quarter 1:
- Review S-Corp election benefits
- Find and meet with CPA
- Establish expense tracking routine
- File first business personal property listing
When Professional Help Pays for Itself
DIY works until it doesn’t. Get professional help when:
- Revenue exceeds $75,000
- Adding first employee
- Operating in multiple states
- Considering S-Corp election
- Facing any tax notice
A competent South Carolina CPA runs $1,200-2,500 annually for basic LLC work. The peace of mind and potential savings? Worth every penny.
Bottom Line Reality Check
South Carolina’s lack of annual fees makes it one of the most LLC-friendly states in the Southeast. But don’t let that lull you into complacency. The state makes up revenue through other channels – sales tax, business personal property tax, and aggressive enforcement.
The winners? Those who plan ahead, maintain clean books, and don’t try to outsmart the system.
Ready to form your South Carolina LLC? After testing every major service, Northwest Registered Agent at $39 plus state fees remains my top pick for straightforward formations. Need more support? LegalZoom at $149 plus fees includes document storage and legal consultations.
Questions about your specific tax situation? Drop them below. I personally respond within 48 hours because South Carolina entrepreneurs deserve straight answers, not runaround.
Remember: An LLC in Delaware isn’t magic. But a South Carolina LLC with zero annual fees and proper tax planning? That’s smart business.
About Jake Lawson: 15+ years guiding entrepreneurs through LLC formation and tax strategy across all 50 states. Over 1,200 businesses launched, countless tax disasters prevented. Former compliance consultant turned no-BS educator. Based in Austin, but I’ve helped enough South Carolina businesses to know every county’s quirks. No fluff, no upsells, just the intel you need to succeed.