South Carolina’s tax framework applies to a range of entities including C corporations, S corporations, partnerships, LLCs, and LLPs. C corporations are subject to a flat corporate income tax of 5% and must file using Form SC1120. Estimated taxes are required when liabilities reach USD 100 or more, with penalties and interest applied for late filing or payment.
S corporations, partnerships, LLCs, and LLPs are treated as pass-through entities, meaning that tax is not paid at the entity level. Instead, income flows directly to shareholders or partners, who report it on their personal tax returns. These entities must still file appropriate information returns and ensure their members make estimated tax payments.
Across all categories, South Carolina enforces strict filing deadlines and allows six-month extensions with the proper forms. Penalties for late filing can reach up to 25%, and interest is charged in line with federal rates. This blog explores the taxation requirements for each entity type in detail.
C Corporation Income Tax
C corporations doing business in South Carolina or earning income from state sources are required to file a South Carolina Corporate Income Tax Return.
Tax Rate
- The corporate income tax rate is a flat 5% of taxable income.
Due Date
- Returns are due on the 15th day of the fourth month following the end of the corporation’s tax year.
Filing Requirements
- Corporations must file using Form SC1120, which includes schedules and attachments to report income, deductions, and credits.
Extension
- Corporations can request an additional six months to file by submitting Form SC1120-T before the original due date.
Estimated Tax Payment
- Corporations with a tax liability of USD 100 or more must make estimated tax payments.
- Payments are made quarterly on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year.
- Estimated taxes must be filed and paid using Form SC1120-CDP, Corporation Declaration of Estimated Income Tax.
Interest and Penalty
- Late filing penalty: 5% of the tax due per month, up to 25%.
- Late payment penalty: 0.5% of the tax due per month, up to 25%.
- Interest: Charged at the federal rate, calculated on unpaid taxes excluding penalties, from the due date until payment.
S Corporation Tax (1/2)
S corporations conducting business or earning income in South Carolina must file a state return.
Pass-Through Status
- S corporations are treated as pass-through entities and do not pay income tax at the entity level.
- Instead, income is passed to shareholders, who report it on their individual state tax returns.
Due Date
- Returns are due on the 15th day of the third month following the end of the tax year.
Filing Requirements
- S corporations file using Form SC1120S, which reports income, deductions, and credits.
Extension
- An additional six months can be obtained by filing Form SC1120-T before the due date.
Estimated Tax Payment
- S corporations do not make estimated payments at the entity level.
- Instead, individual shareholders must make quarterly estimated payments on their share of the income.
Interest and Penalty
- Late filing penalty: 5% per month, up to 25%.
- Late payment penalty: 0.5% per month, up to 25%.
- Interest: Calculated at the federal rate on unpaid tax, excluding penalties.
Partnership LLC & LLP Tax
Partnerships, LLCs, and LLPs are treated as pass-through entities in South Carolina.
Pass-Through Status
- These entities do not pay income tax at the entity level.
- Instead, income or losses pass through to members or partners, who report it on their individual returns.
Due Date
- Returns are due on the 15th day of the third month following the end of the entity’s tax year.
Extension
- An additional six months can be requested using Form SC8736, filed before the original due date.
Filing Requirements
- Partnerships, LLCs, and LLPs must file Form SC1065.
- This includes a Schedule K-1 for each partner or member, showing their share of income, deductions, and credits.
Estimated Tax Payment
- Partnerships, LLCs, and LLPs do not make estimated payments at the entity level.
- Instead, individual members or partners must make quarterly estimated payments on their share of the income.
Penalty and Interest
- Late filing penalty: 5% per month, up to 25%.
- Late payment penalty: 0.5% per month, up to 25%.
- Interest: Charged at the federal rate, calculated on unpaid taxes from the due date until full payment.
Conclusion
South Carolina’s tax system is built on a balance between corporate taxation and pass-through treatment for other entities. C corporations face a 5% flat tax, mandatory estimated payments, and strict compliance rules. Meanwhile, S corporations, partnerships, LLCs, and LLPs are not taxed at the entity level, but members and shareholders must handle their share of taxes individually.
Across all structures, the state enforces penalties of up to 25% for late filings or payments, alongside interest tied to federal rates. Extensions provide breathing room, but only if applied for in advance.
For businesses operating in South Carolina, timely filing, accurate reporting, and proactive payment of taxes are essential to avoid penalties and ensure smooth compliance with state tax obligations.
