RATE OF SALES TAX:
6.00%
LOCAL & COUNTY MAXIMUM RATES:
3.00%
What Are the Taxable Goods and Services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in South Carolina.
Traditional Products and Services
Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in South Carolina.
Prescription medications, food, and fuel are all free from sales tax.
Some South Carolina services are subject to sales tax. View this PDF from the South Carolina Department of Revenue for a complete list of taxable services.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Businesses in South Carolina are not required to collect sales tax on the sale of digital products or services.
South Carolina, on the other hand, has one exemption to this restriction. Businesses are required to collect sales tax on pre-written computer software offered online.
How to Register for Sales Tax in South Carolina
If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
Information about business
Ownership Structure
Personal information about company owners, partners, officials, and members
This information is required for all partners, corporate executives, and LLC managers/members.
A Resale Certificate might help you save money.
When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Retail Sales
Shipping inside the state
Out-of-State Purchases
Retail Sales
For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.
Here’s an illustration of how this situation may look:
Mary runs a bookshop in Rock Hill, South Carolina. Because books are taxable in South Carolina, Mary charges a flat-rate sales tax of 7.000% on all purchases. This includes the state sales tax rate of 6.000% in South Carolina and the local district tax rate of 1.000% in Mary.
Sales inside the state
South Carolina has what is known as a destination-based sales tax regime. This implies that long-distance transactions inside South Carolina are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.
Consider the following scenario:
Steve operates his own eBay electronics company from his house in Myrtle Beach, South Carolina. A Columbia consumer discovers Steve’s eBay website and purchases a $350 set of headphones. Steve adds the South Carolina state tax rate of 6.000% to this transaction, plus 1.000% for Columbia’s city tax rate and 1.000% for his customer’s local tax district. The total cost is $378.00 ($28.00 sales tax) at an 8.000% total sales tax rate.
Out-of-State Purchases
Businesses in South Carolina must only pay sales tax on out-of-state sales if they have nexus in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your South Carolina seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in South Carolina are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
For at least the first six months, all businesses in South Carolina must pay sales tax on a monthly basis. The State will analyze your account at the end of the year to decide if you are entitled to pay sales tax at a quarterly or monthly rate.
Deadlines for Filing
The deadline for all South Carolina sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day.
Penalties for Filing Late
South Carolina imposes a 5% monthly late filing penalty.
South Carolina additionally imposes a late payment penalty of 0.5% each month.
The unpaid tax is assessed by the state at a beginning interest rate of 0.25% and is compounded daily until all sales tax is paid.