Updated January 12, 2021
As a small business owner in one of the original 13 colonies, you’ve got history on your side. We want to help you make your own history. Whether you own the trendiest coffee shop in Charleston or the best bed & breakfast in Hilton Head, you’re showing what growing your own legacy means to you. Now we want to show you what it means to us.
We designed a handy payroll tax calculator to help you with all of your payroll needs. All you need to do is enter wage and W-4 information for each of your employees into the calculator. Before you know it, you’ll have all South Carolina and federal payroll taxes calculated for your employees.
See South Carolina tax rates
Federal Payroll Taxes
First and foremost, we have to pay Uncle Sam his due. Let’s calculate all your employees’ federal withholdings, as well as any additional taxes your business is responsible for paying.
Here’s a quick rundown of the components that go into federal tax withholdings. If you would like to see a more detailed explanation on all of the steps below, we invite you to head on over to our comprehensive step-by-step guide.
- Gross wages, which is simply the amount of money an employee has earned during the last pay period.
- For hourly employees, multiply the number of hours worked by their pay rate — and make sure you don’t forget to take overtime into consideration.
- For salaried employees, divide each employee’s annual salary by the number of pay periods you have over the course of a year.
- Bonuses, commissions, and tips are all part of gross wages as well.
- Calculate any pre-tax withholdings. If your employees have 401(k) accounts, flexible spending accounts (FSA), health savings accounts (HSA), or any other pre-tax withholdings, subtract them from gross wages prior to applying payroll taxes.
- Deduct federal income taxes, which can range from 0% to 37%. We won’t get into the nitty-gritty details here, but you can find all the withholding information you need from the IRS Publication 15-T.
- Deduct and match any FICA taxes to cover Medicare and Social Security taxes:
- For the Social Security tax, withhold 6.2% of each employee’s taxable wages until they hit their wage base for the year. The 2021 wage base is $142,800. Employers must match this tax dollar-for-dollar.
- For Medicare tax, withhold 1.45% of each employee’s taxable wages until they have earned $200,000 in a given calendar year. Employers also must match this tax. However, employees who earn more than $200,000 per year will need to pay what’s called an Additional Medicare Tax (very original name, by the way) of 0.9%, which brings the total employee Medicare withholding above $200,000 to 2.35%. As an employer, you are not responsible for paying the Additional Medicare Tax.
- Pay FUTA unemployment taxes, which is 6% of the first $7,000 of each employee’s taxable income each year. FUTA taxes come with a huge caveat that you will want to know about. You can claim a tax credit of up to 5.4% for state unemployment tax you pay, as long as you pay in full and on time. It’s an easy way to save a whopping 90%, so make sure you take advantage! Only you as the employer are responsible for paying FUTA taxes, so you don’t need to withhold FUTA from your employees’ paychecks.
- Subtract any post-tax deductions. Most of your employees won’t have any post-tax deductions, but you might need to withhold things like court-ordered wage garnishments, child support, etc. Make sure you take these into consideration as well.
South Carolina State Payroll Taxes
Now that we’re done with federal taxes, let’s look at South Carolina state income taxes. It’s a progressive income tax, meaning the more money your employees make, the higher the income tax. The tax rates range from 0% all the way up to a high of 7%.
South Carolina State Unemployment Insurance (SUI)
As an employer in South Carolina, you have to pay unemployment insurance to the state. The rate ranges from 0.06% all the way up to 5.46% on the first $14,000 in wages paid to each employee in a calendar year.
If you’re a new employer, you will pay a rate of 0.55%.
Cut Those Paychecks!
You’ve done it! You’ve checked “payroll taxes” off your to-do list so you can focus on growing your business. Once each employee’s net pay is calculated (taking deductions and withholdings into consideration), you’re in the clear.
All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and UI taxes. Those numbers can add up quickly!
You will need to use Form 941 to file federal taxes quarterly, and Form 940 to report your annual FUTA tax. You can pay taxes online using the EFTPS payment system. More details about employment tax due dates can be found here.
Additional South Carolina Payroll Tax Resources:
If all that wasn’t enough, here are a couple more links that can help you become the payroll whiz your small business needs you to be!
South Carolina Department of Employment and Workforce (803) 737-2400 | Unemployment Insurance Tax Rate Table | Unemployment Insurance Tax Forms