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What Do Therapists Need to Know About Taxes in South Carolina?

Running a therapy practice in South Carolina means navigating both federal and state tax systems, entity rules, and licensing requirements. This guide breaks it all down so you can structure your practice wisely and avoid tax surprises in 2025.


Who this guide is for

This guide is for:

  • Licensed South Carolina therapists (LPCs, LMFTs, LISWs, psychologists, etc.)
  • Solo and group practice owners
  • Clinicians providing in-person or telehealth services
  • Therapists earning self-employed or 1099 income

Step 1: Pick the right structure for your practice

Your business structure determines how you're taxed and what legal protections you get.

Sole Proprietorship

  • Easiest setup — no filing unless using a business name
  • No liability protection
  • Income taxed on your personal tax return
  • Must register a fictitious business name (DBA) with the SC Secretary of State if needed

PLLC (Professional LLC)

  • South Carolina allows licensed professionals to form PLLCs
  • Offers liability protection
  • Taxed as a sole prop by default
  • Can elect S Corp status with the IRS later
  • File with the Secretary of State and notify your licensing board

S Corporation

  • Reduces self-employment tax by splitting income into salary and distributions
  • Requires payroll and separate tax filings
  • Makes sense around $75K+ net income
  • SC recognizes S Corps and requires a separate return

Professional Corporation (PC)

  • Permitted for licensed professionals in SC
  • More formal and admin-heavy
  • Can elect S Corp taxation
  • Used more in group or multi-owner practices

Step 2: Know your state tax obligations

State income tax

    • South Carolina has progressive tax brackets up to 6.5% (2025)
    • Applies to income from PLLCs, PCs, and S Corps
  • File using Form SC1040

Business personal property tax

  • Applies to tangible business property (e.g., office equipment, furniture)
  • File PT-100 annually with the SC Department of Revenue
  • County governments assess and collect this tax

Annual reports

    • Required only for corporations, not LLCs or PLLCs
  • S Corps taxed as corporations must file SC1120S

Step 3: Pay taxes throughout the year — not just in April

Estimated taxes

  • Required if you expect to owe $100+ to SC or $1,000+ to the IRS
  • Due quarterly: April 15, June 15, Sept 15, Jan 15
  • Use Form SC1040ES or pay via the MyDORWAY portal

Self-employment tax

  • 15.3% on net income from sole props or default PLLCs
  • Avoided (partially) by paying yourself a W-2 salary through an S Corp

Filing requirements

  • Sole prop: Schedule C + SC1040
  • PLLC: SC1040 + PT-100 (if applicable)
  • S Corp: Federal 1120-S + SC1120S + payroll + PT-100

Step 4: Track and claim your deductions

Maximize your deductions to reduce both federal and state tax.

Deductible expenses for therapists

  • EHR and billing software
  • Malpractice and liability insurance
  • Office space or home office
  • Supervision, CEUs, license renewal
  • Internet, phone, supplies
  • Marketing and online directories
  • Health insurance (self-employed)
  • Retirement contributions (Solo 401k, SEP IRA)

Step 5: When it’s time to consider an S Corp

An S Corp helps reduce your tax liability once you start netting about $75K or more.

  • Pay yourself a W-2 salary
  • Take the rest of your income as distributions (not subject to self-employment tax)
  • File SC1120S and run payroll
  • Be aware of property tax filing (PT-100)

Step 6: Common mistakes therapists make

  • Missing personal property tax deadlines
  • Not registering a trade name when using one
  • Electing S Corp but failing to run payroll
  • Forgetting quarterly tax payments
  • Not tracking deductible expenses
  • Mixing business and personal accounts

Step 7: Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Sole prop or PLLC; stay on top of PT-100; track all deductions

$50K–$100K

Consider S Corp; setup payroll; start retirement contributions

Over $100K

Use full S Corp setup; optimize compensation and tax strategy; work with a CPA

Need help figuring this out?

We help South Carolina therapists structure their practices, manage compliance, and reduce their tax bills with smart planning and support.

Book a consult or email us at david@leichtercpa.com

Disclaimer: This guide is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, state laws and regulations can change without notice. You should consult a licensed professional in your state before making any decisions based on this information. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this guide.