Payroll in South Carolina: Everything Employers Need to Know

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The South Carolina Employers’ Liability Act covers a broad range of issues that employers should be aware of. Here are five things to know about the liability act, its definition of employer and some basic payroll tips for employers in South Carolina.

The “sc payroll calculator” is a tool that provides the necessary information for employers to calculate their payroll. The site also includes helpful articles and calculators.

Because most of its rules are in conformity with federal labor standards, South Carolina is one of the easiest states to handle payroll in. For withholding and unemployment accounts, you’ll need an employee identification number and to register with the South Carolina revenue and employment agencies. Apart from tax registrations, there are a few payroll/HR laws to be aware of. Using the steps in our instructions below, you’ll be guaranteed to process payroll properly in South Carolina.

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Gusto is a great place to visit.

How to Run Payroll in South Carolina: Step-by-Step Instructions

Step 1: Register your company as an employer. You must apply for an employee identification number (EIN) and create an account in the Electronic Federal Tax Payment System on the federal level (EFTPS).

Step 2: Get your company registered in South Carolina. The South Carolina Department of Revenue allows you to establish a withholding account online. After enrolling online, you will get your South Carolina withholding file number and tax deposit schedule within 24 hours.

In addition, you’ll need to open an unemployment tax account. The South Carolina Department of Employment and Workforce has an online registration system. Two to three weeks after enrolling, you will get a seven-digit South Carolina State Tax ID and an unemployment tax rate in the mail.

Step 3: Create a payroll system. Whether you perform your own payroll or utilize payroll software, you’ll need to figure out a payroll procedure that works for your company and complies with South Carolina’s laws and regulations. This involves determining when and how you will pay workers, how you will collect and submit Forms for Payroll as needed, and how and when you will verify employee hours worked, among other things.

Collect employee payroll paperwork in step four. During the onboarding process, it’s important to gather employment paperwork from new recruits. The W-4, I-9, and a direct deposit permission form are all federal Forms for Payroll. Employees in South Carolina must additionally complete an extra paperwork known as the SC W-4 for state withholding.

Collect, evaluate, and approve time sheets in step 5. Regular paydays must be created and presented to all workers in writing upon hiring, according to South Carolina law. Collect and approve timecards a few of days before payday to ensure your staff is always paid on time and in compliance. If you don’t have have a time and attendance system in place, use one of our free timesheet templates to get started.

Step 6: Work out your payroll and pay your staff. There are many methods for calculating payroll, and you must choose the one that is ideal for your company. You may use payroll software, a calculator (for some simple time calculations, try our free time card calculator), or even Excel (we have a free template).

Step 7: Submit your payroll taxes to the government. EFTPS is required for federal tax payments. According to the IRS schedule allocated to your firm, you must deposit federal income tax withheld, as well as both employer and employee Social Security (6.2 percent of each employee’s wages) and Medicare taxes (1.45 percent). You may be assigned to one of the following depositing schedules by the IRS:

Monthly Depositor: This option requires you to deposit employment taxes on payments received throughout the month by the 15th of the following month.
Semiweekly Depositor: Requires you to deposit employment taxes by the following Wednesday for payments made on Wednesday, Thursday, and/or Friday. Taxes paid on Saturday, Sunday, Monday, and/or Tuesday must be deposited by the following Friday.

It’s vital to remember that the deposit and reporting of taxes follow different schedules. Employers that deposit both monthly and semiweekly should only file Form 941 or Form 944 quarterly or yearly to report their taxes.

Step 8: Submit your payroll taxes to the South Carolina Department of Revenue. Employers in South Carolina must submit and pay taxes withheld from employee earnings. Filings are required quarterly, and payments are due quarterly or monthly, depending on the amount withheld.

Payments are required quarterly if the total withholding amount is less than $500 every quarter and the remittance is due by the last day of the month after the end of the quarter.
Payments are required monthly if the total withholding amount is greater than $500 every quarter and the remittance is due by the 15th of the following month.

Returns and payments may be sent to the correct address or submitted online using the MyDORWAY website. Employers that withhold more than $15,000 per quarter or make more than 24 withholding payments per year must file and pay electronically.

The following are the deadlines for submitting your return:

Step 9: Keep track of your payroll data by documenting and archiving them. It’s critical to retain records for all of your workers for at least three to four years, even if they’ve been fired. More information about keeping payroll records may be found in this article.

Step 10: Finish your payroll reports for the year. W-2s must be completed for all employees, and 1099s must be completed for all independent contractors. By January 31 of the following year, both employees and contractors must have received these papers. Individual copies for each employee, as well as a form that summarizes the information on each employee, must be sent to the IRS (W3 Form summarizes all W2 forms, and Form 1096 summarizes all 1099 forms).

Check out our article on how to handle payroll for a more comprehensive overview of what you need know when conducting payroll according to federal regulations.

South Carolina Payroll Law, Taxes & Regulations

Although processing payroll in South Carolina is rather straightforward, there are a few rules and requirements to be aware of. Unlike some of the other states that are less difficult, South Carolina does have a personal income tax that must be withheld and returned on time in order to stay in compliance. There are a few more aspects of payroll that are noteworthy. Everything you’ll need to know is right here.

Payroll Taxes in South Carolina

Payroll taxes, as well as Social Security, Medicare, and federal unemployment (FUTA) taxes, are all paid by employers in South Carolina. Employees will have the employee share of Social Security and Medicare taken from their paychecks, while the employer portion will be your responsibility.

You will be accountable for the following rates as an employer for each of these tax amounts:

6.2 percent of each employee’s income goes to Social Security.
1.45% of each employee’s earnings goes to Medicare.
FUTA – 6% of the first $7,000 in salary for each employee

In addition to federal tax obligations, you must ensure that you are properly withholding and remitting state and local taxes.

Income Taxes in the State

South Carolina has a simplified income tax structure that follows an employee’s federal taxable income. Your employee’s federal taxable income is the starting point in determining their Income Taxes in the State liability. Individual income tax rates range from 0% to a top rate of 7% on taxable income. Tax brackets are adjusted annually for inflation.

You will be responsible for regularly withholding and remitting income taxes to the South Carolina Department of Revenue. The latest up-to-date tax tables may always be found in the SC1040.

Taxes on local income

South Carolina has no municipal or city taxes, making it one of the easiest states to submit payroll taxes in. The only thing you’ll have to be concerned about is state withholding.

Unemployment Insurance Contribution

South Carolina has a state unemployment insurance fund that protects people from losing their jobs by providing them with temporary income. Employers are responsible for the first $14,000 each employee makes in a calendar year, which is the program’s principal source of revenue. Employer rates vary from 0.06 percent to 5.46 percent and are calculated using a variety of parameters. Employees who are newly enrolled normally start at a rate of 0.49 percent.

Tax rate schedules in South Carolina are adjusted annually based on a formula that takes into account the estimated benefits cost for the year (the “base rate”) and the projected amount necessary to restore the Trust Fund to an appropriate balance (the “solvency surcharge”). To support these components, tax rates are established each year.

In addition to the base rate and interest surcharge, each employer is accountable for a 0.06 percent Departmental Administrative Contingency Assessment (DACA) surcharge. Total Tax Rate = Base Rate + Solvency Surcharge (zero) + DACA Total Tax Rate = Base Rate + Solvency Surcharge (zero) (0.06 percent ).

It’s vital to keep in mind that you’ll be paying for FUTA taxes as well. On the first $7,000 of each employee’s taxable earnings, the standard rate is 6%. The highest tax per employee is $420 ($7,000 multiplied by 6%).

Tip: If you pay state unemployment taxes, you may be eligible for a 5.4 percent FUTA tax reduction. This may cut your tax payments to the IRS by as much as 6 percent to 0.6 percent.

Insurance for Workers’ Compensation

Workers’ compensation coverage is required in South Carolina for any businesses with four or more employees, including part-time employees and family members. Any private insurance carrier may give coverage.

This rule is subject to a few exceptions, including:

Working for a broker as a licensed real estate agent
State personnel employed by the federal government
Casual workers are those that do not work on a regular basis or just as required.
Employers having yearly payroll of less than $3,000 from the preceding year
Employees in the agriculture industry or those who sell agricultural goods
Employees of a railroad or a railway express business

South Carolina’s Minimum Wage Laws

There is no statewide minimum wage in South Carolina. Instead, it pays the $7.25 per hour federal minimum wage, which was last increased in 2008.

Tipped workers must be paid at least $2.13 per hour if their gratuities bring them up to the hourly minimum wage. If this is not the case, the corporation will be required to make up the shortfall.

Overtime Regulations in South Carolina

In South Carolina, employees who work more than 40 hours in a “single workweek” are entitled to 1.5 times their usual compensation. A single workweek is defined under the Fair Labor Standards Act (FLSA) as any seven days worked in a row.

South Carolina does not have daily overtime limitations, which oblige businesses to pay extra for a particular number of hours worked in a single day.

In South Carolina, there are a variety of ways to pay employees.

While there are a variety of methods to pay workers, the South Carolina Office of Wages and Child Labor requires that wages be paid in one of two ways:

It’s worth noting that South Carolina law does not expressly authorize or restrict the use of pay cards as a method of employee payment. To be safe, utilize one of the payment methods specifically authorized by the state labor rules.

Pay Stub Laws in South Carolina

Many jurisdictions have laws requiring companies to send paperwork with their paycheck that contains particular payment data. Employers in South Carolina are obliged to furnish each employee with an itemized statement that includes the following information:

The gross pay of the employee
All of his pay have been deducted.

While the only statutory pay stub requirements in South Carolina are gross salary and deductions, we nevertheless suggest include all key payment information as a best practice. To get started, download one of our free pay stub templates.

Minimum Pay Period

There are no laws in South Carolina that require obligatory paydays. Employees have the ability to choose when and how often they are paid by private companies. Employees of the state government must be compensated every two months (two times per month). Despite the fact that private firms are not required to pay their employees on a weekly or semimonthly basis, the majority choose biweekly or semimonthly. All that is required by federal law is that you be consistent.

Employers with five or more workers must provide written notice at the time of hiring, including the salaries to be paid, the estimated hours of work, and the time and location of payment (whether the payments will be made via cash, direct deposit, or check).

Payroll Deduction Regulations

Employers in South Carolina are not permitted to withhold any part of an employee’s compensation unless the following conditions are met:

It is legal in your state or country (Social Security, income taxes, etc.)
At the time of employment, the employer gave the employee written notice of the deduction.
The employer has provided the employee written notice of the deduction for at least seven days.

In South Carolina, there is a system of severance pay.

If your workers are dismissed or voluntarily quit your company in South Carolina, you are not required to give them with severance compensation. There are no legislative criteria that necessitate severance compensation after a set amount of time or on the basis of certain employment conditions.

Only a documented written agreement between an organization and an employee will compel you to provide severance payments to your workers under South Carolina labor rules. If an employer decides to offer severance compensation, the provisions of the agreement must be followed.

South Carolina’s Final Paycheck Laws

Employers in South Carolina are required to pay all outstanding wages to employees within 48 hours after separation or on the next regularly scheduled payday. The duration between separation and the last paycheck cannot be more than 30 days.

For company owners, terminating an employee may be a painful procedure that begins with informing them of their termination. Check out our guide to termination letters for tips and a free template.

Paid Time Off Payouts That Have Been Earned

Employers are not required by South Carolina state law to pay out earned PTO or vacation time unless it is clearly stated in the employer’s policy.

HR Laws in South Carolina That Affect Payroll

There aren’t many HR legislation in South Carolina that aren’t in line with federal labor standards. The majority of its requirements are simple and do not need any extra attention or paperwork. You’ll have no trouble staying in compliance as long as you submit all new recruits on time and follow all child labor standards.

New Hire Reporting in South Carolina

All new and rehired employees must be reported online using the New Hire Reporting in South Carolina portal. Employers have 20 days after the employee’s first day of work to report all new hires.

When filling out new hiring papers, be sure you include the following information:

Information about new hires may only be used for legal reasons, such as:

Child support orders should be established and enforced.
Detect overpayments of unemployment benefits and fraud.
Detect overpayments and fraud in workers’ compensation.
Overpayments and fraud in government programs should be detected (welfare, food stamps, etc.)

If a company fails to report newly recruited or rehired personnel, the following penalties apply:

The second offense will cost you $25, and each subsequent offense will cost you $25.
If the failure to report is the result of a conspiracy between the employer and the employee not to submit the necessary information or to supply incorrect or incomplete information, the penalty is $500 for each infraction.

Breaks for Meals

Employers are not required by South Carolina law to offer workers with breaks or a lunch time.

Even if you aren’t compelled by law to provide breaks or lunch intervals, you should think about how giving breaks might improve employee morale. If you opt to provide breaks, make sure your employee handbook specifies how long, how frequently, and whether or not the breaks will be compensated.

Paid Sick Leave and Paid Time Off are both available to employees.

There is no legislation in South Carolina that requires private-sector businesses to give paid or unpaid sick or vacation leave to their workers.

While providing time off is not required by law, it is crucial to note that promising it to workers might result in a legal responsibility to do so. Make your rules extremely clear to your staff and on all employee papers.

Laws Concerning Child Labor

South Carolina’s child labor laws and regulations are based on the Department of Labor’s Wage and Hour Regulations. Minors under the age of 14 are generally not permitted to work since employment under the age of 14 is considered harsh child labor.

There are, however, a number of limitations:

Furthermore, kids may distribute newspapers and/or work for a company owned and run entirely by their parents at any age.

For more information on federal Laws Concerning Child Labor, check out our guide to hiring minors.

Forms for Payroll

South Carolina has its own form for Income Taxes in the State withholding, as well as other withholding forms. Here are some of the important documents you will want to make sure you have on hand when processing payroll in South Carolina.

State of South Carolina Forms

The Withholding Allowance Certificate (SC W-4) is a state-specific withholding form that must be completed by all workers in South Carolina for their personal income tax withholding. In addition to the federal W-4, every employee will be required to fill out this form.

WH-1601 (Withholding Tax Payment): This form must be completed and submitted with all personal income tax withholding payments sent to the DOR, whether they are paid monthly or quarterly.
WH-1605 (Withholding Quarterly Tax Return): This form is used to record any personal income tax that has been withheld from workers and remitted during the quarter.
WH-1606 (SC Withholding Fourth Quarter and Annual Reconciliation Form): At the conclusion of the fourth quarter, all employers registered with the South Carolina Department of Revenue must complete a reconciliation return, stating all personal income tax withheld throughout the year. This will be the only return you will be needed to submit if you are an annual filer. A WH-1606 is still necessary even if no withholdings were made during the fourth quarter of the year.

Federal Forms for Payroll

Form W-4: Used by businesses to figure out how much tax to withhold from employees’ paychecks.
Form W-2: This form is used to record total yearly earnings (one per employee)
Employees’ total salaries and taxes are reported to the IRS on Form W-3 (summary of W-2s)
Form 940 is used to submit and compute unpaid unemployment taxes to the Internal Revenue Service (IRS).
To submit quarterly income and FICA taxes deducted from paychecks, use Form 941.
To report yearly income and FICA taxes deducted from paychecks, use Form 944.
Form 1099-MISC is used to report non-employee compensation and assist the IRS in collecting taxes on contract labor.

For a more detailed discussion of federal forms, check out our guide to federal Forms for Payroll you may need.

South Carolina Payroll Resources & Sources

Licensing and Regulation, South Carolina Department of Labor: Apply for a license (real estate commission, social work examiners, speech-language pathology and audiology, cosmetology, cemetery board, building codes council, etc. ), make a complaint, learn about OSHA standards, and research salaries and child labor.
Department of Employment and Workforce Development of South Carolina: Find out about unemployment rules and regulations, how to register for an unemployment account, how to keep your employer account up to date, and how to complete wage reports.
South Carolina Department of Revenue: Create a new company or tax account, check for compliance concerns including revoked or suspended licenses, apply for an alcohol license, pay bills, and more.

Also, check with your payroll software or provider for state-specific features and resources.

Conclusion

Overall, processing payroll in South Carolina is a pretty simple process. Though you’ll need to withhold Income Taxes in the State and be sure to remit it to the DOR on time, you won’t need to worry about any local/city taxes or complicated overtime calculations. This is great news for South Carolina businesses or anyone looking to expand there. For the most part, as long as you follow federal guidelines, there won’t be much you’ll need to change when you start processing payroll in South Carolina.

Consider utilizing a payroll program like Gusto to assist with payroll processing in South Carolina. It’s an all-in-one payroll software that will simplify your payroll process and help you manage your workforce. It is the best payroll software for small companies in our opinion. Gusto also promises that if one of its employees makes a mistake, you won’t suffer any IRS fines, providing you piece of mind. To begin a 30-day free trial, sign up now.