Being concerned about your unemployment tax rate shouldn’t wait until tax season rolls around. Failing to anticipate changes could lead to budgetary surprises, meaning you’re left scrambling. Because UI is one of the highest employer taxes, many companies consider it a cost of doing business and don’t think they have control.
Contrary to this belief is the truth; unemployment insurance tax is a controllable tax. By understanding the law and putting in the time, you can significantly reduce your rate. Here are five ways to improve your UI tax rate.
1. Consider a Work-Sharing Program
When times become tough, layoffs become more common. Instead of immediately letting workers go and leaving them to qualify for UI, consider a state work-sharing program. With this, employees can stay on at reduced hours with the option to prorate unemployment benefits.
2. Keep Records of Everything
If you want to protest the awarding of benefits, your tax rate, or your liability, accurate records are your best support. For example, if you plan to contest a claim because an employee was let go due to misconduct, you want to make sure you have detailed records explaining the incidents to use in your case.
3. Answer all Requests Promptly and Verify Everything
Unnecessary charges can occur when you're late to answer certain requests for information. By responding promptly, you avoid the risk of incurring extra expense. If you want to protest a claim, missing the appeal date can lead you to paying an employee who wasn't qualified.
Similarly, you want to look into the claims to make sure employees are claiming the correct wages. Assuming their honesty could mean thousands of dollars in overcharges for your company each week. Reconcile the benefit charges from the statements you receive from the state UI agency. Overpayments and other mistakes by the state are common, but it is up to you to catch those mistakes and protest those charges.
4. Watch Your Language
If someone is a voluntary termination because they stopped showing up to work, don't use the words terminated or discharged to describe their status. This implies you let them go, making them eligible, instead of leaving the company themselves.
5. Understand UI Tax Laws Across the State
Deciding to expand your company isn't a choice made in a day. There are many areas of interest to consider, including the UI tax rate of the state you're considering. Do your research about its tax rates before making a decision.
Make Monitoring Easy With Unemployment Tracker
Around the U.S., overpaid unemployment claims top $3 billion. It's time you took control of your unemployment insurance. With Unemployment Tracker, we help you monitor and track your UI claims to make sure you never miss a date or unnecessary charges. Request a free live demo today and see our software in action.