What payroll taxes do small businesses need to pay?

Payroll Taxes for Small Businesses in South Carolina

Small businesses operating in South Carolina must manage several payroll tax obligations to stay compliant. Understanding these taxes helps ensure accurate payroll processing and timely payments.

Key Payroll Taxes to Pay

• Federal Income Tax Withholding: Employers must withhold federal income tax from employee wages based on IRS withholding tables and employee W-4 forms.
• Social Security and Medicare Taxes (FICA): Employers and employees each contribute 6.2% for Social Security and 1.45% for Medicare. Employers must withhold the employee portion and match it.
• Federal Unemployment Tax Act (FUTA): Employers pay FUTA tax to fund unemployment benefits. The standard rate applies to the first $7,000 of each employee’s wages.
• South Carolina State Income Tax Withholding: Employers must withhold state income tax from employee wages according to South Carolina withholding tables.
• South Carolina Unemployment Insurance (SUI): Employers pay state unemployment taxes based on their assigned rate and taxable wage base. This funds state unemployment benefits.

Operational Considerations

• Registration: Register with the South Carolina Department of Revenue for withholding tax and the Department of Employment and Workforce for unemployment insurance.
• Payroll Systems: Use payroll software or services that automate tax calculations, withholdings, and filings to reduce errors and save time.
• Filing and Payment Deadlines: Submit federal and state payroll tax returns and payments on time to avoid penalties. South Carolina typically requires quarterly filings for withholding and unemployment taxes.
• Recordkeeping: Maintain accurate payroll records including wages, tax withholdings, and payments for at least four years for audit readiness.
• Employee Classification: Correctly classify workers as employees or independent contractors to ensure proper tax treatment and avoid compliance issues.

As of 2026, staying current with federal and South Carolina payroll tax rates and regulations is essential for smooth business operations and compliance.