If you start a business in South Carolina, you will probably need a retail license. Every person who engages in business in this state as a retailer must obtain a retail license before making any sales. The retail license must be obtained by all retailers, including those making infrequent sales in this state. If you have more than one business outlet, you must have a separate retail license for each location.

How to Get a Retail License
Apply for the retail license on Form SCTC-111, Business Tax Registration Form, available at all Department of Revenue taxpayer service centers. The fee for each permanent retail license is $50. If an outstanding debt exists for state taxes, the retail license will not be issued until the taxes are paid.

Purchaser's Certificate of Registration - A purchaser's certificate of registration is required for someone who does not make retail sales but who purchases tangible personal property from outside this state to store, use or consume in South Carolina. Those licensed as retailers do not need a purchaser's certificate of registration. Apply for the certificate on Form SCTC-111.

Temporary license - A temporary retail license is available to transient retailers making sales in this state for no more than 30 consecutive days. The fee for the temporary license is $50.

Artists and crafters - Artists and crafters selling at arts and crafts shows and festivals products they have created or assembled may obtain a permanent retail license for $20. Apply for this special license on Form 110, Retail License Application for Artists and Craftsmen.

Transient sales - If you have no permanent retail location, you can obtain a transient retail license which will allow you to make sales throughout the state, but in only one location at a time.

Nonresident retailers - Nonresident retailers with a physical presence in South Carolina must obtain a retail license to do business in this state. A nonresident retailer is one who does not have a business location in this state, but solicits business from South Carolina residents by means of sales representatives, manufacturers' agents, catalogs, advertising or other means.

Flea market and yard sales - Persons who make sales at a flea market or at a yard sale no more than once a calendar quarter, are not required to obtain a retail license.

Charitable organizations - Certain non-profit, charitable organizations are exempt from the sales and use tax on sales made for charitable purposes and are not required to obtain a retail license. Application for the exemption must be made on Form ST-387. Purchases made by the organization for its own use are taxable.

Special events sales - Retailers making sales at special events, which include promotional shows, trade shows, fairs or carnivals for which an admission fee is required, or festivals listed in PRT's calendar of events, and last less than 12 consecutive days, are not required to obtain a retail license. Instead, retailers are required to file a special event tax return for sales made at the event. The return must be filed within five days after the completion of the event. However, qualified PRT festivals are not required to file a special event return.
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Purchasing a Business

If you buy a business, all taxes that may be owed by the previous owner are considered to be due at the time of the sale of the fixtures and equipment.. The taxes owed are a lien against the business inventory and equipment. You cannot obtain a retail license until the tax is paid.

New Location

If you move to a new location within the same county, you maintain your same retail license number but you should request an updated license to show your new address. If you move to a new location outside the county, you will be assigned a new retail license number. The $50 license fee is not charged when the business location changes.

Closing Your Business

If you close your business, you should file a final tax return with the Department of Revenue and return your retail license. This will prevent you from getting unnecessary notices and bills for unpaid taxes.

Accommodations Tax

The rental of transient accommodations is subject to a 2% accommodations tax in addition to the 5% sales tax (and the 1% local tax, if applicable). If you rent out rooms or spaces at hotels, campgrounds, boarding houses, mobile home parks, etc., you are required to obtain a retail license and collect and pay the accommodations tax at the same time you file your sales tax return.

Rentals of the same room to the same person for at least 90 continuous days are not subject to the tax. If you rent a room in the house in which you live and the house has less than six bedrooms, you are exempt from the tax. If you rent transient accommodations for no more than one week each calendar quarter, you are not required to obtain a retail license, but you still must report and pay the tax annually.

Additional guest charges such as movie rentals, room service, valet services, etc. are subject to the 5% sales tax.

Maximum Sales Tax

A maximum sales tax of $300 is imposed on the sale or lease of motor vehicles, boats, aircraft, motorcycles, trailers or semi-trailers pulled by a truck tractor, horse trailers, recreational vehicles and self-propelled light construction equipment. The $300 maximum tax also applies to the sale of musical instruments and office equipment sold to religious organizations. Sellers must submit Form ST-382 for capped items sold to religious organizations.

Sales of new or used motor vehicles, trailers, semi-trailers, pole trailers and horse trailers to residents of another state are taxed at the rate imposed by the purchaser's state of residence. The tax cannot exceed the $300 maximum tax imposed by South Carolina on motor vehicles and trailers (except pole trailers). When a nonresident will not receive credit for sales tax paid to South Carolina for a motor vehicle or trailer and his home state does not grant reciprocity to South Carolina residents, no sales tax will be charged. Form ST-385 must be completed on each vehicle sold to a nonresident.

Mobile Homes

The first 35% of the selling price of a new or used mobile home is exempt from sales and use tax. After allowing for the exemption, the maximum tax imposed on the sale is $300 plus 2% of the remaining sales price exceeding $6,000. The 2% may be waived if certain energy efficiency levels are met in the mobile home.

Local Sales and Use Tax

Twenty-five counties in South Carolina impose an additional 1% local option sales tax. The combined sales tax rate in these counties is 6%. The counties which have approved a local tax are: Abbeville, Allendale, Bamberg, Barnwell, Berkeley, Charleston, Cherokee, Chesterfield, Clarendon, Colleton, Darlington, Dillon, Edgefield, Florence, Hampton, (Two counties in South Carolina impose an additional 2% local sale tax. The combined sales tax rate in these counties is 7%. The counties which have approved two local taxes are Chesterfield and Jasper) Kershaw, Lancaster, Laurens, Lee, Marion, Marlboro, McCormick, Pickens, Saluda, Sumter and Williamsburg. Elections may be held each November and additional counties may approve the local tax at that time. If the tax is approved by voters, the tax will become effective in that county on May 1 following the election. Items limited to the $300 maximum sales and use tax are not subject to the local tax. The local sales and use tax is reported on Form ST-3. You must complete Form ST- 389, Schedule for Local Taxes. Cherokee County voters have approved a special local 1% sales and use tax to be used entirely for schools in that county. The 1% tax in Cherokee County does not apply to items with a $300 sales tax cap, foods which may be purchased with food stamps and items exempt from the sales tax.

More About Sales Tax

The sales tax also applies to the fair market value of tangible personal property purchased by the retailer at wholesale for resale, but used by the retailer or any other person.

In addition to applying to items one normally thinks of as tangible personal property -furniture, appliances, clothing, etc. - the sales and use tax also applies to communications like paging services, laundry and dry cleaning services, and electricity.

Casual Excise Tax

South Carolina imposes a casual excise tax of 5% on the fair market value of all motor vehicles, motorcycles, boats, motors and airplanes transferred between individuals. The maximum casual excise tax is $300. Transfers between members of the immediate family are exempt from the tax. Licenses for motor vehicles or boats will not be issued without proof of payment of the tax.

Use Tax

Anyone who buys tangible personal property from out-of-state and brings it into South Carolina is responsible for paying a use tax of 5% on the sales price of the property. Businesses which regularly make non-taxed purchases from out of state report and pay the use tax on their monthly sales and use tax return, Form ST-3. Individuals not in business who make non-taxed purchases from out of state should report the use tax on Form UT-3, Individual Purchase Use Tax Return. This form is included in the South Carolina individual income tax forms package mailed to taxpayers each year.

A use tax credit will be allowed for sales tax paid and due in another state, if the other state has similar reciprocity with this state. The same rules for sales tax also apply to use tax.

Reporting and Paying the Tax

After you receive your retail license or purchaser's certificate of registration, you will receive pre-printed forms for reporting and paying the sales and use tax. The sales, use and local option (if applicable) tax must be reported and paid monthly on Form ST-3, Sales, Use and Local Option Tax Return. Businesses required to collect and pay accommodations tax should file Form ST-388, Sales, Use, Accommodations and Local Option Tax Return. Returns and payment are due no later than the 20th of the month following the month in which the sales were made. The tax is remitted for the month the sale was made regardless of whether the tax was collected from the customer in that month. Depending on the amount of tax paid, the Department of Revenue may authorize certain businesses to pay quarterly, seasonally or annually, rather than monthly. A tax return must be filed even if no sales were made during the period. For general information about sales tax filing, call the Contact Center at (803) 898-5788.

The Department of Revenue mandates taxpayers paying over $20,000 in one filing period to report sales tax through the EFT/EDI Program. Voluntary participation is encouraged. The program allows your company the ability to file and pay your sales tax electronically. To get started in the EFT/EDI filing program or for technical information on the program, call the EFT/EDI Helpdesk at 1-800-379-9409.

Reporting when Tax Amount due is Zero

Although you can file by paper, the Department of Revenue encourages business owners that have zero gross proceeds of sales, rentals, use tax or withdrawals for personal use to file their sales tax return using the Business Tax TeleFile System. The system is available 24 hours / 7 days a week with the use of a touchtone telephone. First time filers must register and receive a PIN to access the system. Registration can be accomplished on the initial phone call prior to filing the first return. The entire registration and filing process takes less than 5 minutes initially, and about 2 minutes each time there afterwards. The process is 100% paperless with nothing to mail to the Department of Revenue. To utilize the system, dial (803) 898-5918 and follow the verbal instructions. Additional "How To Instructions" can be found on the web at www.sctax.org in the "What's New" section under Business Tax TeleFile System. For TeleFile support issues, contact the Business Tax TeleFile Help Line at (803) 898-5783.

Discount

If returns are filed and the taxes paid in full by the due date, you will be allowed a discount on taxes due. For taxes less than $100, you may take a 3% discount. For taxes of $100 or more, your discount is 2%. The maximum discount allowed per taxpayer (all locations included) during the fiscal year is $3,000. Nonresident retailers not required by law to collect South Carolina sales tax, but who voluntarily register to do so, are allowed a maximum discount of $10,000 each fiscal year. In calculating the maximum discount, begin with the June return filed in July and end with the May return filed in June. Cash Deposit or Bond Transient retailers who have no permanent business location from which retail sales are made may make a sufficient cash deposit or bond with the Department of Revenue to cover at least their annual sales tax liability. This cash deposit or bond must be made before receiving a retail license.

Exemptions and Exclusions

Generally, all retail sales are subject to the sales and use tax. However, there are a number of sales exempt from the tax, most notably, certain items used in farming and manufacturing, medicines sold by prescription and sales to the federal government. Items excluded from the sales and use tax primarily include sales of goods for resale. Other excluded items include certain property used in the manufacturing process, materials used to ship manufactured goods for sale and items brought into the state which are for use outside the state. In addition, sales to individuals 85 or older are excluded from 1% of the tax. The following items are exempt from sales and use tax: