Understanding and Controlling the Unemployment Tax of your Business

0

Employees who are out of work receive the unemployment insurance money to sustain them until they find another job. What most people don’t know is that a higher percentage of this money comes from businesses.

As an employer, you need to learn some basics of unemployment taxes that can help you understand and control them. These taxes are of two main types, including the federal and State unemployment taxes.

 

  • Federal Unemployment Tax Act (FUTA)

 

This is a type of unemployment tax controlled by the department of labor. All businesses, except the government, educational, and religious organizations, must pay the FUTA tax to the federal government.

 

  • State Unemployment Tax Act (SUTA)

 

Each State has its guidelines for unemployment taxes. Except for the organizations relieved from the FUTA, all other businesses must pay SUTA to the State.

 

Unemployment Tax Rates

The unemployment tax rate is determined by the salaries and wages of your employees per year. The current FUTA rate is 6% for wages up to $7,000 a year. However, this rate can go as low as 0.6% in other instances.

The $7,000 is also known as the taxable wage base.  Wages above $7, 000 wages a year are not subject to the Federal Unemployment Tax.

Under SUTA, the rate ranges from 1% to 3.4%. The taxable wage base under SUTA differs from different states. Currently, the wage base goes up to $47,300 in Washington. 

Employers pay their FUTA and SUTA taxes when they make payroll contributions or quarterly to the Government or State. You can check with your local labor department to know where and when to pay your unemployment tax.

FUTA tax rates are constant, while SUTA rates are variable. The rate may be lower or higher, depending on the state, industry, or employer’s experiences. In some industries where unemployment is higher, like food industries, the unemployment tax rate is higher. 

New businesses are charged a fixed starting tax rate, which may increase or decrease over time. Organizations with a higher number of unemployment claims will be charged higher unemployment tax rates than those with lower unemployment claims.

 

How to Control Unemployment Tax Rates for your Business

If you are looking for ways to reduce the amount of unemployment tax you pay, you can incorporate the following practices.

 

 

  • Hire Conservatively and Assess Candidates

 

The unemployment tax rate you are charged partly depends on the unemployment claims filed against your organization or business. 

To control the tax you pay, ensure to employ short-term employees for short-term needs instead of employing many employees whom you will lay off when your business slows down.

Also, assess your candidates before employing them to ensure they are good for the position available. Carefully assessed candidates have a higher likelihood of working out.

 

 

  • Careful Handling of Terminations

 

In a situation where you must terminate an employee’s services, you can give them outplacement and severance benefits. 

Severance benefits will delay and or reduce the unemployment insurance benefits. Outplacement services will hasten the end of unemployment insurance since the claimant gets a new job.

 

 

  • Buy Unemployment Tax Rates

 

If your state allows, you can buy your rate annually. If you are eligible, you can save a lot of unemployment tax money.

If you want to learn more, visit Finimpact to get a good explanation about FUTA TAX and how to control it.

 

 

  • Train for Success

 

Ensure that you train your employees well to succeed in their position. 

If your employee fails to perform to your expectations and you terminate their employment, they may be awarded benefits. 

The main reason they are awarded benefits is that the listening officer will conclude that you did not train the employee to be effective in their position.

 

 

Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

hd sex videos free hd porn videos indian porn xnxx