Hiring your first employee in South Carolina

What do you have to register for before your first payroll?

South Carolina has no single payroll registration. Hiring one person means opening a withholding account with the Department of Revenue, a separate unemployment account with the Department of Employment and Workforce, reporting the hire to the Department of Social Services new hire directory, and buying workers compensation privately once you cross the headcount trigger. Four agencies, four independent obligations, and clearing one does not register you with the others.

Does South Carolina require income tax withholding?

Yes. You register with the South Carolina Department of Revenue, before your first south carolina payroll; allow up to five business days for the application to process.

If you have an employee performing work in South Carolina you must open a withholding account and file quarterly returns, even if your company has no office, property or other physical presence in the state. Wages are taxed where they are earned, so a remote worker sitting in Greenville pulls you into South Carolina withholding regardless of where your payroll is run. There is no charge to register.

What unemployment insurance does South Carolina charge a new employer?

A new South Carolina employer pays 1.06% on the first $14,000 each employee earns, so roughly $148 per employee in the first year. For 2026 a new employer pays a total effective rate of 1.06%, being a 1.0% base rate plus a 0.06% contingency assessment, on the first $14,000 each employee earns. That works out to a maximum of about $148 per employee for the year, among the cheapest in the country. Note the state's own press release quotes 1.0% for new employers, which is the base rate only and not the total actually billed.

Do you need workers compensation insurance in South Carolina?

Yes, once you reach 4 employees. Below that South Carolina does not require it, but read the counting rules before assuming you are under the line, because who counts is rarely obvious.

• employers who regularly employ four or more people in the same business in South Carolina
• part-time workers and family members count toward the four
• exempt if total annual payroll in the previous calendar year was under $3,000, regardless of headcount
• agricultural employees, casual employees, railroads and real estate agents on straight commission sit outside the Act regardless of size

The trigger is two tests joined by an or, and either one exempts you. Coverage is mandatory once you regularly employ four or more people in the same business, but you are exempt if you employ fewer than four or if your total payroll last year was under $3,000. The count is broader than owners expect: part-time workers and family members count, so three part-timers plus a working relative puts you at four.

South Carolina issues no exemption certificate and the Commission will not certify that an employer is exempt, so there is nothing to file to claim the small-employer exemption. The filing runs the other way: if you once carried coverage you stay under the Act until you file a Form 38 withdrawing. An employer who drops to three employees and simply cancels the policy without filing can still be treated as subject to the Act.

How quickly must you report a new hire in South Carolina?

Within 20 calendar days of hiring the employee. Reports go to the South Carolina Department of Social Services, Child Support Services.

Every employer must report each newly hired or rehired employee within 20 calendar days. Employers who transmit electronically may instead report twice a month in batches spaced twelve to sixteen days apart. This is a child support requirement that also feeds unemployment fraud screening, so it applies even to a single hire. Penalties are small for ordinary lapses but rise to $500 per offence where employer and employee conspired to withhold or falsify the report.

Does South Carolina have paid family leave or state disability insurance?

No. South Carolina runs no state paid family leave fund and no state disability insurance, so there is no payroll deduction of that kind and no extra account to open.

South Carolina runs no state paid family leave or temporary disability programme, so there is no payroll deduction to set up. Do not be misled by the name of the state's Paid Family Leave Insurance Act, which only authorises licensed insurers to sell voluntary family leave coverage to employers as a private product. It is not a mandate. The paid parental leave you may read about covers state government employees only.

Do you need a sales tax permit in South Carolina?

South Carolina charges $50 for a retail licence, per retail location, so a second storefront means a second $50. It is a one-time fee with no annual renewal while the same taxpayer keeps operating at the same location, but there is a trap on the way out: close the licence and later need one again and you pay the $50 over. The registration deadline is unusual and worth diarising, since nexus reached in December means a licence in hand by 1 February.

Security deposits. Transient retailers with no permanent business location may be required to post a cash deposit or bond covering at least their annual sales tax liability, and it must be posted before the licence is issued. This does not reach ordinary remote sellers or businesses with a fixed location.

Does a marketplace like Amazon or Etsy handle the tax for you?

The facilitator is treated as the retailer and must obtain the licence and remit tax on everything sold through its marketplace, including goods owned by third parties. If you sell exclusively through a marketplace you are not a South Carolina retailer and need no licence of your own. The catch is the threshold maths: your marketplace sales still count toward your own gross revenue test, so marketplace volume can push you over the line on your direct website sales even though the marketplace remits on its own share.

If your sales drop, when can you stop collecting?

South Carolina publishes no fixed trailing period, but two mechanisms keep you registered after your sales fall off. The economic nexus test looks at the previous calendar year or the current one, so a strong year carries the duty through the following one. And a registered seller keeps collecting and filing every period until it tells the Department the licence is being closed, which makes ending the obligation an affirmative act. Weigh that against the $50 you pay again if you close and later re-register.

Does South Carolina charge a tax on revenue rather than profit?

South Carolina has no gross receipts tax of the Washington or Ohio type, so revenue alone does not create a separate state-level business tax. Corporations do owe an annual licence fee, but it is computed on capital stock and paid-in surplus rather than on sales, at a $25 minimum. A foreign corporation pays that $25 minimum up front alongside its certificate of authority.

Do you have to register your out-of-state company in South Carolina?

$110 for a foreign LLC certificate of authority and $110 for a foreign corporation, but a corporation must also file an initial annual report for another $25, making the real corporate cost $135. A foreign nonprofit pays only $10.

Qualifying is triggered by transacting business in South Carolina rather than by making sales into it. Both entity types must attach a certificate of existence from their home state dated no more than 30 days before filing, which is the step that most often delays a filing because the home state has to issue it first.

Where these figures come from

Every number on this page was read on South Carolina's own agency pages, its statute, or a current-year official form, and this record was last reviewed on 2026-09-08. Where a state's explainer page disagreed with its statute or its current form, we followed the statute or the form and said so in the relevant section, because a state's consumer-facing pages are often the last thing updated when a figure changes.

Anything we could not confirm on a primary source is left blank rather than estimated. A missing figure on this page means we could not verify it, not that it is zero.

This is general information, not legal or tax advice. Rules change and your circumstances matter. Confirm anything you are about to act on with the agency named beside it.