South Carolina Department of Revenue

SMALL BUSINESS TAX WORKSHOP South Carolina Department of Revenue Topics To Be Covered Today Checklist for New Businesses in South Carolina Purchasing the Assets of a Business The Retail License Sales & Use Tax /Local County Tax Income Tax Withholding Tax Property Tax Business Tax Incentives Closing a Business Tax Forms Electronic Services Contact Us Checklist Will you sell or lease any goods or provide any services? Will you have any employees? Will you purchase any items for your business? Does your business own equipment, furniture or fixtures? Will you be selling beer, wine or liquor? 1

Checklist Does your business provide overnight accommodations? Is your business a place of amusement? Will you own and operate coin devices, operated game machines or table games including juke boxes, pool tables or foosball tables? Do you sell tires, batteries, oil or appliances? Will your business incorporate? Will you purchase a business from a previous owner? Purchasing the Assets of a Business If you buy a business, all taxes owed by the previous owner transfer to you. The taxes owed are a lien against the business inventory & equipment. A Certificate of Compliance that is less than 30 days old may be required from the seller by the lending or closing agent in order to confirm that all tax issues for the business have been resolved. * A Certificate of Compliance may be obtained by completing a C-268 and submitting the $60.00 application fee. You cannot obtain a retail license until the tax liability is paid in full. The Retail License When is a retail license required? Selling/renting tangible personal property or providing some services; such as dry cleaning. (Ex: Retail location, home business, internet sales, etc.) Not required for a yard sale/flea market if held only once a calendar quarter. Most flea markets require it to rent a booth. Retail licensing may also be required on the city and/or county level. 2

The Retail License The required non-refundable retail license fee is $50.00. The required non-refundable Arts & Crafts license fee is $20.00. The Retail License How do I apply for a retail license? Mail Complete and mail application form SCDOR-111 to the Columbia office. (The license will be mailed back to you in approximately 2 weeks.) In Person Visit any of our Service Centers and receive your license the same day. (Same day licensing is only available if all outstanding tax liabilities are satisfied and all individual income tax returns are filed current.) On-line Visit (SCBOS) at www.scbos.sc.gov and pay with a credit card. The Retail License You are required to post your retail license in your business. Subject to random inspection by revenue officers in your district. Penalties apply for failure to obtain a license when selling to the general public. 3

The Retail License If the business is closed, the retail license must be returned to SCDOR. A final sales tax return must be filed for the last month or partial month of operation. Sales Tax Vendor Tax (collected by retailer) Due on all sales made within SC Pickups at SC locations Deliveries within SC The statewide rate is 6%. Sales Tax Elimination The statewide sales tax rate on unprepared food was eliminated in 2007. This elimination applies to any unprepared food eligible to be purchased with USDA food coupons (i.e. EBT cards). The 1% local tax collected for the counties still apply to unprepared food sales. 4

Sales Tax & Local County Taxes South Carolina imposes a 6% sales tax on the gross proceeds of sales of every person engaged in the business of selling tangible personal property at retail. The retailer is liable for the tax. Sales tax is also imposed on the fair market value of items originally purchased at wholesale that are withdrawn for use by the business. Most counties have voted in at least one local tax. Local Option Sales Tax Capital Projects Tax Transportation Tax School District Tax Education Capital Improvement Tax Tourism Development Tax This map can be found on our website, www.sctax.org, under Sales & Use Tax> Tax Rates/Comp. Sch. New for 2013 Effective February 1 st Marlboro County 1% School District Tax Effective May 1 st Bamberg County 1% Capital Projects Tax Hampton County 1% Capital Projects Tax Lee County 1% Capital Projects Tax Marion County 1% Capital Projects Tax Richland County 1% Transportation Tax 5

Sales Tax Forms Sales taxes are reported on the form ST-3. Sales Tax Forms Local taxes are reported on the ST- 389 This form must be filed along with the ST-3. Sales Tax Forms 6

Sales Tax Forms ST-388 Remit the 7% tax on transient accommodations along with any applicable local option tax, depending on the county in which the property is located. The county and/or city may impose additional local taxes. You will need to contact the appropriate county and municipality for registration information Also applies to individuals who rent their homes under certain circumstances Sales Tax Forms ST-455 For taxpayers who report both 5% state tax and 6% state tax. (Ex: new car dealers sell cars with a $300 tax max and parts that are taxable at 6% state tax.) ST-389 not required for retailers that only sell items that have a maximum tax (Ex: used cars dealer --tax cap of $300 etc.) Due Dates Monthly Filers Returns are due by the 20 th day of the following month. (Ex: January due by February 20 th ) Quarterly Filers Returns are due by the 20 th day of the month following the end of the quarter. (Ex: March due by April 20 th ) Exceptions *If the due date falls on a weekend or a holiday the return will not be due until the next business day. 7

Timely Filed & Delinquent Returns Discounts for timely filed returns: --2% if tax owed is $100 or greater --3% if tax owed is less than $100 Discount limit is $3,000 per fiscal year for each taxpayer. Delinquent Returns (filed after the 20 th ) Interest and penalties will be automatically applied. Always File a Tax Return Even if you have no sales during your filing period be sure to file a zero return! If you fail to file a return you will be automatically issued an estimated tax assessment! Is Labor Taxable? Fabrication labor is taxable Ex: interior decorator makes & sells curtains Ex: manufacturer makes a blouse Installation labor is not taxable Ex: interior decorator hangs curtains Ex: Car repairman installs a muffler. As long as there is a separation or breakdown of installation charges on the sales invoice. If not the total sale is taxable. 8

Exemption Certificates Some businesses will manufacture a product. Others are wholesalers. They both qualify for tax exemptions per SC Code of Laws. Apply on form ST-10. An auditor will be assigned to tour the mfg. operation to determine what exemptions the mfg. qualifies for or talk with the wholesaler about his business operations. A written report is submitted to the registration section in Columbia and they issue the certificate if approved. ST-8A Resale Certificate Retailers must charge sales tax on all sales unless a valid resale certificate ST-8A is received from the customer. The ST-8A must be completed and signed by the business owner, partner, corporate officer, etc. to be valid. If the retailer accepts the ST-8A in good faith, the tax liability shifts from the seller to the buyer. (Use good judgment) ST-8A 9

Purchaser s Certificate-Use Tax Use application SCDOR-111. No license fee required. Not selling/renting tangible personal property. Most common; Contractors-lawn care-heating/ac, plumbing if no retail outlet. Pay tax on untaxed merchandise purchased from out of state. SCDOR-111 Application Formerly the SCTC-111. Check our website for the most up to date form. Use Tax Use Tax is due on items purchased from outside the state but intended to be stored, used or consumed in SC. Use Tax is due on: Internet Purchases Mail order catalog orders, magazine subscriptions Untaxed out of state purchases or not enough tax paid on out of state purchases The statewide rate is 6%, the same as the sales tax. The total tax rate is determined by where the tangible personal property will be used, stored or consumed, regardless of where the sale actually takes place. 10

Use Tax Example: You, an SC resident goes to NC and buys a computer desk for the office. You are required to pay NC sales tax- You picked it up (took possession in NC). Your tax liability to SC has been satisfied if you have a tax paid receipt from the NC vendor. We have a reciprocal agreement with NC SC allows a credit for tax due & payable to NC. If no tax was paid to the NC vendor you owe use tax to SC. If not enough tax was paid-you owe the difference to SC. The local taxes apply to purchases delivered into SC also. Withdrawals untaxed inventory Ex: A grocery store owner withdraws a mop, a bucket & floor cleaner from the shelf to use to clean the floor. Tax is due on the FMV (fair market value) of the items withdrawn and used. These items were originally purchased tax free for resale. Tax is due to the SCDOR. Nexus When an out-of-state retailer ships goods to you in SC He should charge you SC tax or No tax If he has a physical presence in SC (Nexus) he must register with SC to collect SC tax. If he does not have a physical presence in SC we cannot require him to register to collect tax. 11

Reporting Use Tax Personal: SC1040 UT-3 Use Tax Business: ST-3 ST-389 ST-388 ST-455 *See Worksheet on reverse side of the ST-3, ST-389, ST-388 and ST-455. You can report Sales & Use on the same tax return each month or quarter. Income Tax Reporting your income tax depends on the type of organization of your business. Corporate Corporate Income Tax - Annual Annual Corporate License Fee Partnership Partnership Return SC1065 LLC Corporate or Partnership *For SC tax purposes you must file the same type of return as you filed with the IRS. Sole Proprietor All income for your business is reported on federal form Schedule C of your personal income tax return. Estimated Income Tax Payments If you are a sole proprietor, partner, shareholder of an S corporation or a single member LLC, you will be responsible for reporting and paying estimated tax on your income. Declare Estimated Taxes by completing the form SC1040-ES These payments are made quarterly. Due Dates: April 15 June 15 September 15 January 15 *Schedule C Corporations are due on the 15 th day of the 4 th, 6 th, 9 th, and 12 th months following the beginning of the taxable year. 12

Withholding Tax If you have at least one employee working for you, you will need to register as a withholding agent for state income tax. Withhold the state income tax from each employees' salary and remit it to the SCDOR on a regular basis. Most file Quarterly *1 st, 2 nd, & 3 rd quarter returns filed on the WH 1605 *4 th quarter annual return on the WH 1606 Pay Electronically (preferred) Mail in Payments Withholding Returns to File: 3 Quarterly Reconciliation Returns Use form WH-1605 Reconciles tax withheld with taxes paid. Should be a zero return if all taxes have been deposited. 1 st qtr due April 30th 2 nd qtr due--july 31 st 3 rd qtr due--oct 31 st If you are required to make a federal deposit, you are also required to make a state deposit using the form WH-1601 or DOR epay! 4 th Qtr & Annual Reconciliation: The 4 th qtr return( WH- 1606) is combined with the annual reconciliation. Report 4 th qtr on top portion of return. Report annual figures on bottom portion of return. It is due the last day of February. Do Not Attach W-2s to this return anymore Use Form WH-1612 13

Important If the tax liability is under $2,500, you will be assessed a $100 penalty for not making timely deposits. If the tax liability is greater than $25,000, you will be assessed a $1,000 penalty for not making timely deposits. WH-1612 Transmittal File W2 s Online For tax years 2011 and forward NO WH 1612 needed Free key entry or upload options Free Training Webinars! For more information, visit the SCBOS W2 Portal Page at www.scbos.sc.gov 14

Business Personal Property When you register for a retail license you are also registered for business personal property tax. You are required to file a business personal property tax return PT- 100 annually. Due 30th day of the 4 th month following end of your fiscal or calendar tax year. If Dec Yr. End-- due April 30 th -- No extensions allowed. Business Personal Property All furniture/fixtures/equipment are to be reported at acquisition cost with a deduction allowed for depreciation. Example: desks, chairs, computers, cash registers, shelving, counters, etc. This info is supplied to county and/or city governments, who issue & collect the property tax bills. File and pay Business Personal Property tax electronically through SCBOS! www.scbos.sc.gov 15

Business Tax Incentives WE WANT YOU to qualify for tax incentives for your new business!! Location of business Total capital investment Number of employees For more information, see the DOR publication Tax Incentives for Economic Development on our website at www.sctax.org. Closing a Business If you close your business South Carolina requires you to file the following: C-278 Final Sales Return Final Property Return Final Withholding Return (WH-1606) & W-2s Income Tax Return Return your License Tax Forms Can t seem to find your forms? Online: Visit the South Carolina Department of Revenue website at www.sctax.org. Go to Quick Links, click Forms and Instructions. Download and print the form you need. Email: Send the request to Forms@sctax.org. Telephone: Call the SC Department of Revenue at 803.898.5320 or 1.800.768.3676 and leave a voice message. In Person: Visit any of the six taxpayer service centers around the state. *Never use a pre-printed form for a different business or period covered. 16

Electronic Services E-Sales allows you to file returns directly on the SCDOR website and pay by bank draft or credit card. Sales Use Withholding E-file Incentive : Your discount will increase from $3000 to $3,100 per year with your first electronic transmission. *To be timely filed-your return with payment must be submitted by 3:00 PM(EST) on the banking day prior to the due date. Contact Us Charleston Columbia Florence Greenville Myrtle Beach Rock Hill 1 South Park Circle, Suite 100 Charleston, SC 29407 Phone: 843-852-3600 Fax: 843-556-1780 300A Outlet Pointe Boulevard Columbia, SC 29210 Phone: 803-898-5000 Fax: 803-898-5822 1452 West Evans Street Florence, SC 29502 Phone: 843-661-4850 Fax: 843-662-4876 545 North Pleasantburg Drive Greenville, SC 29607 Phone: 864-241-1200 Fax: 864-232-5008 1330 Howard Parkway Myrtle Beach, SC 29588 Phone: 843-839-2960 Fax: 843-839-2964 454 South Anderson Road Business and Technology Center Suite 202 Rock Hill, SC 29731 Phone: 803-324-7641 Fax: 803-324-8289 The Basics Our presentation today only covered the basics of sales, use, withholding and property tax. There are sometimes exceptions to the rule. We have regulations and policy documents that deal with specific industries and specific situations that cannot be covered in the time we have. Please contact our office with any questions you may have. 17

Additional Workshops The SC Department of Revenue offers FREE workshops throughout the year on Sales Tax Withholding Tax Corporate Tax Go to www.sctax.org/tax+workshops/default.htm You can also find tax manuals and helpful tutorials on this website!!! Questions 18