LLC Annual Report and Tax Filing Requirements in South Carolina

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. Complying with these ongoing legal requirements will help keep your LLC in good standing with the state. Let's review the most important ongoing reporting and state tax filing requirements for South Carolina LLCs.

No South Carolina LLC Annual Report

Unlike most states, South Carolina doesn't require LLCs to file an annual report.

State Business Taxes in South Carolina

In South Carolina, LLCs are considered pass-through tax entities, meaning the income passes through the LLC to the owners. The owners then pay taxes on their share of the LLC income. By default, multi-member LLCs are taxed as partnerships, and single-member LLCs are taxed as disregarded entities (like sole proprietorships).

No franchise tax. Some states have a tax on companies for the privilege of doing business in the state. This tax is called a "franchise tax." South Carolina doesn't impose such a tax.

Electing corporate tax status. While an LLC is taxed as a partnership by default, owners can elect to have their LLC taxed as a corporation instead. If you elect to have your LLC taxed as a corporation at the federal level (by filing IRS Form 8832), then your LLC will be taxed as a corporation in South Carolina as well. LLCs taxed as corporations must pay South Carolina's corporate license fee and corporate income tax. Corporations use Form SC1120 for corporate income tax. LLCs can pay the corporate license fee by submitting Form CL-1 to the South Carolina Department of Revenue (SCDOR). You must register and pay the fee within 60 days of conducting business in this state.

To learn more about how South Carolina taxes different business entities, read our article on South Carolina business income tax.

South Carolina Employer Taxes

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 aren't covered here. South Carolina employers must also pay taxes to the state.

Withholding employee wages. Employers must withhold and pay employee income taxes to the SCDOR. You need to obtain a withholding file number from the SCDOR. You can obtain your number online using MyDORWAY or by submitting an SCDOR-111, Business Tax Application. You can file your withholding tax returns online through MyDORWAY. Most employers will need to file quarterly returns. You'll also need to file an annual reconciliation return. For more, check out the South Carolina Withholding Tax Information Guide.

Unemployment insurance (UI) tax. In addition, you'll probably need to register to pay state UI taxes. South Carolina's Department of Employment & Workforce (DEW) administers this tax. You can register for these taxes online through the State Unemployment Insurance Tax System (SUITS) or on paper with Form UCE-151. You can make your UI tax payments when you submit your quarterly reports through SUITS. For more information, check the DEW website.

South Carolina Sales and Use Tax

If your LLC will provide taxable goods and services to customers in South Carolina, you must collect and pay the state sales tax. Additionally, if you have retail sales (including online sales), you need to obtain a retail license.

You can register to pay and report sales and use tax through MyDORWAY. You can use the Business Tax Application to obtain your retail license and register for sales and use tax. You must make either monthly, quarterly, or annual payments to the SCDOR.

In addition to state sales and use tax, you might be responsible for reporting and paying sales and use tax to your city or county. Make sure you check with your local taxing authorities for your reporting responsibilities.

You can learn more details on the sales tax section of the DOR website.

LLC Registration in Other States

Sometimes, business owners will form their LLCs in one state but do business in another state. Other times, businesses will expand across state lines. In either case, if you organize your LLC in one state but do business in another, you'll likely need to register with that other state. The process is called "foreign registration" or "foreign qualification."

Each state has rules for when and how a business must qualify to do business in their state. Generally, if you have a physical connection to a state (for example, you've opened a store, office, or warehouse in the state), then you'll need to register as a foreign (out-of-state) business. You should check the state's laws for what qualifies as "doing business" in that state.

For further guidance, check our state guide to qualifying to do business outside your state.