LLC Taxes In South Carolina – What You Need To Do
Are you a daring person looking to engage in entrepreneurship? The first step is to decide what kind of legal structure you would like for your business. Registering your business as a South Carolina Limited Liability Company(LLC) is the simplest legal structure you can choose for your business. Limited liability companies offer great benefits to the owner and to the business itself.
When you register your business as an LLC, your business and your personal assets like bank accounts, real estate, and vehicles are treated as separate entities. This means your professional assets will not interfere with your personal assets as is the case with lawsuits and reclamation of assets by creditors. This makes it the best legal structure if you’re looking to start a small business.
An LLC can also have more than one owner, you can partner with others to be co-owners of a single entity, co-owners of the LLC are referred to as members of the LLC. An LLC owned by a single person is known as a single-member LLC. A single-member LLC is not to be confused with a single proprietorship because a single proprietorship does not cover any liabilities which can make you very vulnerable and have different laws and taxes that govern them.
Compared to other legal entity structures, an LLC is the only structure to have very little paperwork needed to register a business. This makes starting a business less of a headache and allows you to concentrate on the success of your business.
LLC Taxes In South Carolina
Running a business in any state requires that you file certain paperwork and pay taxes. Each legal entity is taxed differently, that’s why it’s important to choose which is your preferred legal structure. Here are some of the paperwork and taxes required to be paid to the state of South Carolina:
The state of South Carolina does not require LLCs to submit any annual reports.
State Business Tax
Most LLCs are referred to as pass-through tax entities. This means that paying of federal income taxes is passed through to the members of the limited liability company. The members of the LLC pay income tax from funds they have received from their LLC, the LLC itself doesn’t have to file and pay income taxes.
South Carolina doesn’t charge any fee or separate taxes for the privilege of doing business in the state.
Members of an LLC can also choose to treat their LLC as a corporation for the sake of tax purposes. This can be made possible by filing IRS Form 2553, this form can be downloaded from their website. If members decide to treat their LLC as a corporation for tax purposes, the LLC starts to file its own separate tax return form. This means that default pass-through tax to members arrangement becomes unavailable. Corporations in South Carolina are expected to pay corporate income tax, this is 5% of the total net income the LLC will generate. The tax can be paid to the Department Of Revenue by filing the corporation income tax return (form SC-1120).
State Employer Taxes
If you have employed people to work in your LLC, the law requires that you pay employer taxes. The federal government requires that you pay employer taxes, this starts by first getting a Federal Employer Identification Number (EIN), this can be applied to and is given by the IRS.
The state of South Carolina also expects employers to pay employer taxes. DOR requires that you withhold employee income taxes and remit them. First, you must register your LLC with DOR, you fill a form called Form SCDOR-111. The form can be filled online or on physical paper. Once registration is successful, periodically file withholding taxes with the DOR, you can do it either monthly or quarterly. The forms used are WH 1601, WH 1605, or WH 1606.
At the end of the year, you will have to reconcile all the withheld taxes and fill another version of the form WH 1606.
Other taxes to be paid include the state unemployment taxes(UI). Registering to pay these taxes can be done online using form UCE-151 in the South Carolina Department of Employment and Workforce (DEW) website.
Sales And Use Taxes
If your LLC is looking to sell physical goods in South Carolina, your business will need to collect and pay sales taxes. You will have to register with the Department Of Revenue in order to collect sales taxes. After registering, you are required to pay the sales taxes periodically for all goods sold through your business. Registration can be done by filing form SCTC-111 online or on paper. After registration is successful, the LLC will be issued with a sales tax license. Sales tax returns can be submitted by mail or online, you can choose to remit the taxes monthly or quarterly.