Are you tired of navigating the State Unemployment Tax Act (SUTA) and the associated costs? What if we told you a Professional Employer Organization (PEO) could help alleviate this burden?
If you’ve been searching to streamline your SUTA tax process and reduce costs, let us share how a PEO can be your secret weapon in tackling unemployment and slashing those SUTA tax expenses. Get ready to revolutionize the way you handle your business’s tax obligations!
Reducing SUTA tax liability is a goal for many employers. A company’s SUTA taxes are calculated based on an employer’s assigned SUTA rate multiplied by its wages paid which are subject to SUTA taxes. Understanding how these rates are determined and finding ways to minimize them can result in significant cost savings for businesses.
An employer’s SUTA rate varies from state to state and based on the employer’s claim history. When an employer has a higher number of benefit payouts, their SUTA rate tends to increase. On the other hand, the wage base in a given state is determined by that state and will generally apply to all employers in that state. Therefore, adopting strategies to manage and minimize benefit claims can have a positive impact on the SUTA tax costs.
Although employers have limited flexibility to change the states where their job sites are located, they can still take proactive measures to reduce their SUTA tax costs. One effective approach is to focus on reducing employee turnover and maintaining a stable workforce. Businesses with high employee turnover and low wages will often have the most significant financial impact on SUTA costs. By avoiding terminations and layoffs whenever possible, employers can create a more stable work environment and potentially lower their SUTA rate.
Implementing strong human resources practices is another valuable strategy. Conducting regular employee performance reviews and documenting terminations properly can demonstrate a commitment to fair employment practices. These practices not only contribute to a positive work environment but can also be beneficial when contesting questionable unemployment benefit claims made against the company. Having well-documented evidence of poor performance or misconduct can help employers challenge claims that may be unjustified.
A PEO can help you stay informed about changes in state laws and regulations regarding unemployment benefits. By keeping up with the latest developments, you can proactively adjust business processes to comply with the requirements and mitigate potential risks.
While individual states have differing rules for how SUTA practices are handled when a company joins a PEO, there are many states (including Tennessee) where the PEO client’s wages are reported under the Federal Employer Identification Number (FEIN) of the PEO, using the PEO’s combined experience rating and corresponding SUTA rate.
The PEO handles the administrative burden of the filing of tax returns, tracking rates, filing returns, maintaining data, and providing claims information to states in the event of a dispute. In addition, a good PEO will offer professional expertise to assist their clients with implementing sound HR processes such as employee performance reviews and proper documentation of termination. All these procedures can result in less paperwork for the PEO’s clients and a favorable combined SUTA rate for the PEO. When selecting a PEO, please be sure to inquire about any combined rates which will now apply to your company.
Interested in learning more about how LBMC Employment Partners can help your business with SUTA taxes through our PEO services? Contact us today.
All content and services on this page are offered by LBMC Employment Partners, LLC. LBMC Employment Partners, LLC, is part of the LBMC Family of Companies and is an independent entity with services and products being provided exclusively by LBMC Employment Partners, LLC.
LBMC Employment Partners, LLC, a member of the LBMC Family of Companies, is a world-class professional services firm. LBMC Employment Partners provides a comprehensive suite of human resource-related services to businesses including Professional Employer Organization (PEO) services, HR Outsourcing (HRO), Payroll, Human Resource Consulting, Employee Benefits, and ACA Compliance Consulting. For more information visit www.lbmcep.com.
