With April almost around the corner, this is arguably the perfect time for your business to make sure everything is in order.

Umm… Sorry?

You see, we’re nearing the end of the first quarter. That means you’ll be filing your state unemployment taxes soon. And while most other taxes have a standard tax rate, state unemployment taxes are updated at the start of every year.

Have you verified your SUTA tax rate for the current year?

Also, the first quarter is a time period when most companies revise salary packages. As such, using a wrong tax rate can lead to serious penalties.

You don’t want to pay unnecessary fines, right?

This post serves as a reminder to verify that you’re using the correct SUTA tax rate for calculating the tax amount due for the first quarter.

But first, the basics…

State unemployment taxes are “employer-only” taxes. This means, they are not withheld from employee wages. Instead, it’s the employer who pays them from their own pocket. These taxes are calculated as a percentage of an employee’s wages. Every state sets its own tax rate, which must be complied by the employers. There is a separate tax rate for new employers and a separate one for old employers.

What do the states do with these tax payments?

They re-pay them as benefits to employees who lose their job.

State unemployment taxes are also commonly referred to as state unemployment insurance.

How to get your updated SUTA tax rate?

If you’re a new employer and paying state unemployment taxes for the first time, you’ll need to register a SUTA tax account with your respective state government, that is, if you haven’t done so already.

Once you’ve signed up, your state will email you what your contribution rate is as a new employer. Your state will also keep you updated on any changes made to the tax rate through emails.

To find out what your current SUTA tax rate is, contact your state government for tailored guidance. Or…

You can also reach out to A&B Accounting and Business Solutions for help; we provide all types of business tax services to small and medium sized businesses all across the country.

For further reading: A list of important employee federal payroll tax forms