As a business owner, it’s important to understand your income tax liability when it comes to unemployment compensation. When you have a better understanding of things like unemployment insurance and how it can affect your business income tax liability and your employees.
What is Unemployment Insurance (UI)?
Unemployment insurance has been around for quite some time– since 1935, in fact. It came about during the Great Depression, and was a pillar of helping the unemployed during this time recover. Of course, as time has passed, different rules and regulations have been added to the original, but the basic premise has remained unchanged.
Unemployment insurance is basically a “reserve” that is comprised of anywhere between 3% – 7% of an employee’s gross wages. If for whatever reason that fails, the Federal Government steps in. They lend money to guarantee that an unemployed worker will receive pay. All businesses are required to pay unemployment insurance.
Many small businesses don’t think they need to pay for unemployment insurance, but if you have employees, you’re required to pay into the Federal Unemployment Insurance Act (FUTA) and State Unemployment Insurance (SUI).
So how can you offset this cost, and maximize tax benefits for your business?
Let the Work Opportunity Tax Credit Work for You
The work opportunity tax credit is a Federal tax credit that is available to companies like yours if you hire individuals from specific, targeted groups. The people in these groups often face challenges when it comes to getting jobs, so these tax credits are granted to companies to give them the incentive to hire people from these groups, giving them a shot at gainful employment.
Some of the people that you can hire from these target groups are ex-felons, qualified veterans, people receiving long-term family assistance, or a vocational rehabilitation referral (just to name a few).
By hiring people from these target groups, you can not only give them a chance to contribute to their society through their vocation, but you also have tax credit available to you.
By maximizing your use of the work opportunity tax credit, you can help to offset the costs that may arise from unemployment insurance.
When you work to take advantage of the work opportunity tax credit as much as possible, you can try to balance the amount of SUI and FUTA taxes you have to pay quarterly.
Quentelle Can Help Maximize Your Tax Benefits
Whether you’re dealing with the intricacies of unemployment insurance, the specifics of the work opportunity tax credit, or anything else regarding getting the maximum tax benefits, Quentelle can help.
Our software suite guarantees results that are optimal and effortless. We use pre-screening to determine a candidate’s eligibility, we handle all of the necessary forms through e-sign, and help our clients realize their maximum tax credit potential.
Our software is smart and simple, and we’d love to show you the savings we can help you achieve. Schedule a demo today by filling out a form, or giving us a call.