Employer Tax Increase in 3 States has PEO Services Implications
"Employers in three states get FUTA tax hit"
Talx, a human resources, payroll and tax services firm, reported in its blog that employers in Indiana, South Carolina and Michigan will pay more in federal unemployment taxes (FUTA) because those states had outstanding loans from the federal government as of Nov. 10 to pay unemployment insurance obligations.
Employers pay both federal and state unemployment taxes. The federal rate is 6.2% on the first $7,000 in wages per employee. Employers usually receive a 5.4-percentage point credit that reduces their federal unemployment tax rate to 0.8% from 6.2%. But that credit falls by 0.3 percentage points each year a state has a balance on its federal unemployment insurance loan after two years." Read more...
This is definitely not something to be writing home about!
Unfortunately, these costs will have a direct impact on these employer’s bottom lines. Both employer and employee will feel the pain in the long run becuase with these payouts there are usually cutbacks on other services or benefits, job losses, production loss etc… How many of these employees are permanent and how many are contractors? Are the contractors being processed internally?
Many companies will use a PEO services company to manage these issues. A Professional Employer Organization's internal payroll experts understand local, state or provincial and federal regulations and ensure that all the necessary remittances are made at the outset. They are responsible as they become the Employer of Record reducing risk and streamlining operations for the companies they work with. Is it time for your company to source a PEO?
Is your company looking for professional employee management services in the USA or Canada? We're here to help!