Everything employers need to know about South Carolina unemployment insurance taxes.
If your small company employs people in South Carolina, you must pay the state’s unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In South Carolina, the state unemployment insurance levy is simply one of numerous taxes that companies must pay. Other major employer taxes not mentioned here include the federal unemployment insurance tax, as well as state and federal withholding taxes.
Varied states have different UI tax policies and rates. The fundamental regulations for South Carolina’s UI tax are as follows.
Register with the Department of Labor and Employment.
As a South Carolina employer, your small company must open an employer account with the state and then have the state’s Department of Employment and Workforce (DEW) assess if you are due for unemployment insurance taxes. The majority of enterprises with workers are responsible. This procedure may be completed in two ways: online or on paper.
To get started, go to the South Carolina Business One Stop and fill out the UI Registration (UCE 151) form (SCBOS). DEW will analyze your application based on the facts you provide to determine whether you are due for UI tax contributions. If you are responsible, you will be sent your employer account number and tax liability information.
To conduct the procedure on paper, you must submit a form directly with DEW to determine your company’s UI tax amount. Employer Status Report Registration Form UCE-151 should be used. Blank versions of this form may be downloaded from the DEW website. Print the form, fill it out, and return it back to us.
There is no cost to register your company with DEW.
You will need a federal employer identification number to open an employer tax account (EIN). You may get an EIN by visiting IRS.gov. In most cases, if you apply online, you will obtain your EIN very instantly.
Unemployment Insurance Tax Liability Regulations
As a for-profit employer in South Carolina, you are normally required to pay state unemployment taxes if you fulfill any of the following conditions:
You pay $1,500 or more in wages in any calendar quarter, have at least one employee during any 20 weeks in a calendar year, acquire all or part of a business that was an employer subject to UI taxes at the time of acquisition, or you are liable under the Federal Unemployment Tax Act (FUTA) and have employees in South Carolina.
The first three of these factors are essentially the same as the principles governing liability under FUTA. As a result, if your company is accountable under FUTA, it is very certainly also liable under South Carolina’s UI rules, and vice versa. Different restrictions apply to agricultural (farm) workers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not included here.
One piece of good news is that state UI tax payments are often deductible from FUTA taxes.
Wage Structure and Tax Rates
Each employee’s salaries are subject to UI tax up to a certain yearly limit. This figure, referred to as the taxable wage base, is subject to change. It was just raised from $12,000 to $14,000.
The state unemployment insurance tax rate for new employers, often known as the normal starting tax rate, might alter from year to year. It has recently been declining somewhat each year, ranging from roughly 2.0% to around 1.4%. The rate is normally valid for at least the first 12 months of employment. Based on a “experience rating,” established employers are liable to a lower or higher rate than new firms. This includes, among other things, whether your company has ever had workers file claims for state unemployment benefits. As an experience-rated employer, the DEW should send you a yearly Notice of Contribution Rate Form informing you of your current year’s UI tax rate.
Check the rate tables on DEW’s employer information portal for the most latest historical information on tax rates.
Submit UI Tax Reports and Payments Quarterly
UI tax reports and payments are required in South Carolina on the last day of the month after the end of each calendar quarter.
Smaller businesses may submit reports and payments electronically or on paper. Larger businesses are required to submit reports electronically on magnetic media (magnetic tape, diskette, etc.). You may file online using the SCBOS or the South Carolina Automated Tax System. DEW urges all small companies to file electronically. If you want to file on paper, you must obtain a pre-printed Form UCE-120, Quarterly Contribution and Wage Report, for each quarter in which you do not file electronically. If you use SCBOS to submit reports online, the system will compute the taxes you owe and allow you to pay those taxes electronically. If you file on paper, you are responsible for computing your own taxes and mailing payment.
Even if your company pays no salaries, you still submit quarterly reports. In such circumstances, type “NONE” on your report. You may also submit these so-called zero reports by phone; contact DEW for further information. If you do not file, you will face a penalty.
Make a Public Notice (Poster)
You must publish a notice (poster) addressing state unemployment claims (and other labor rules) in a visible location for all workers. The poster gives basic information about filing a claim for unemployment benefits. A notification may be downloaded from a page on the DEW website.
Employees should not be misclassified as independent contractors.
Employers that hire independent contractors rather than employees are exempt from the UI tax. It is critical, however, that you should not misclassify an employee as an independent contractor. If you misclassify an employee, you may face penalties or fines.
Using Payroll Service Providers
You may decide that it is easier to delegate payroll obligations, including UI taxes, to an outside payroll agency. If this is the case, bear in mind that your company, or even you personally, may be held directly liable for errors made by an outside payroll firm.
Further Information
This page simply covers the most fundamental aspects of South Carolina UI taxes. Check the IRS and DEW websites for the most up-to-date information to avoid any fines. DEW also publishes an Employer Handbook, which may be downloaded from the DEW website’s Employer Resources section. Employers must also pay federal unemployment insurance, state and federal withholding taxes, and record new hires, in addition to state unemployment insurance.