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In the world of corporate taxation, managing state unemployment taxes is proven to be one of the most complicated and time-consuming tasks for employers. These tax rate calculations are complex with many variables and states often issue incorrect tax rate calculations to employers based on inaccurate data. In fact, each state has unique calculations and rules which can quickly overwhelm an employer’s administrative staff. Not to mention that employers are often issued outrageous penalties for failure to comply. Our consulting partners leverage their expertise in state laws and tax rate calculations to manage your state unemployment insurance taxes and minimize your costs with ease.
Unemployment taxes imposed by the state are one of the more complicated elements in business taxation. State agencies will administer various tax rate computations through the DOL. In absence of thorough unemployment tax planning, key resources of your organization and valuable time of your HR team may have to go towards ensuring these taxes are computed and administered correctly. This is where you can benefit from Quentelle’s partnership with ValeU Group to receive comprehensive unemployment tax planning, unemployment audit, and management services. Our consultants will carry out a detailed review of the annual state calculations for unemployment tax rate and utilize the best industry practices to optimize tax savings for your organization.
This is where you can benefit from Quentelle’s partnership with ValeU Group to receive comprehensive unemployment tax planning, unemployment audit, and management services. Our consultants will carry out a detailed review of the annual state calculations for unemployment tax rate and utilize the best industry practices to optimize tax savings for your organization.
How to Reduce Your Unemployment Tax Costs
Employers are liable to pay FUTA tax (federal unemployment tax) on wages paid to their employees. They are also required to pay state unemployment taxes, which can vary from one state to another. Although the FUTA tax rate is up to 6%, you have an opportunity to utilize tax credits to lower the effective FUTA tax rate substantially (but not eliminate it entirely). You will obtain the tax credit for the contributions you make to your state’s unemployment insurance fund.
To ensure compliance as an employer, make sure you have classified correctly between employees and independent contractors, and are able to provide records (such as payroll records) and answer questions in the event of an audit process. While cost control is vital when it comes to unemployment payments, making sure that you have reported correctly regarding the necessary employer's records will keep you on the right side of the law.
Consider the following approaches to help reduce your company’s unemployment tax costs:
Improve Your Hiring Process
Your total unemployment tax costs are likely to be impacted by how many ex-employees file for the state unemployment insurance claims. In general, the higher the number of these claims against your organization, the higher will be your tax bill. Quentelle offers automated solutions for Verification of Employment (VOE) to help you streamline your hiring process and select the right candidates for various job positions.
Before making new recruitments, your management team should carefully evaluate the number of permanent employees your organization actually needs. It costs your business in numerous ways, including higher unemployment taxes, if you hire more employees than necessary, and end up removing some of them later if the market conditions change. For short-term needs, you may consider hiring temporary workers or an independent contractor to minimize layoffs and unemployment benefits.
Capturing WOTC Tax Credits
Our suite of products is designed to help you maximization of tax credits available through federal programs such as the Work Opportunity Tax Credit. Since employees represent a significant cost in onboarding and training, WOTC tax credits can offset these costs.
Focus on Providing Adequate Job Training
In many instances, you may be forced to remove employees because their job performance was not up to the mark or they were unfit to participate in team projects. However, some of the former employees in this position may still be able to claim unemployment insurance benefits because the hearing officer may determine that you failed to provide them proper job training and orientation to succeed at the workplace.
Consider Outplacement Services for Terminated Employees
When terminating some employees is the only option, you may consider providing them outplacement service benefits. These services not only work as an incentive and deliver reputational advantages, but they can also bring a quick end to the claimant’s unemployment insurance benefits because they might manage to find a new job.
Outplacement assistance helps former employees to receive an updated resume, optimal social profile, individualized career counseling, and targeted access to job leads.
Joint Accounting and Voluntary Contributions
Depending on your corporate structure, Quentelle’s partner consultants may recommend a number of permissible unemployment tax planning and saving techniques, including Voluntary Contributions and Joint Accounting. At present, 11 states allow Joint Accounting, which combines the rating experience of multiple entities owned by the company.
Voluntary Contributions are permitted in 26 states. They involve paying forward into your company’s UI reserve balance in order to obtain a more cost-effective tax rating calculation. In simple terms, Voluntary Contributions are akin to the purchasing points on your mortgage.
Budgeting for Your Unemployment Tax Costs
Through its unemployment audit consulting partners, Quentelle can provide you estimations or forecasts of tax rates for each business entity within your organization for the next years. Our consultants will utilize various data points and analytics available to determine an educated estimate of what your tax rate might be in the following year. These projections will take into account the latest state legislative changes as well as the historical tax rate experience of your business entities.
We partnered with ValeU Group, a full-service Unemployment Tax Management consulting firm. Services are not administered like a vendor or service company but as a trusted advisor. The fee structure is flexible and can be a flat annual retainer, project basis, or contingent on secured savings. Clients look to us for proactive consulting and benefit from our experience and expertise.
Our consultants review every state’s unemployment tax rate calculation annually to make sure all taxes, benefit charges, taxable payroll and employment history are accurately reflected on the notice.
We appeal all inaccuracies, assessments or penalty assignments.
We review each state’s quarterly tax return for accuracy of payment.
We request and secure tax refunds/credits.
Expert advice on mergers, acquisitions and corporate restructure
State-specific techniques that lower your annual tax rates
Voluntary contributions and joint accounts reviewed where applicable
Tax savings analysis and completion of all applications prior to deadlines
Control Your Costs with Unemployment Tax Planning from Quentelle
Quentelle’s partnership with ValeU Group can provide professional unemployment tax planning and management services. Our team of consultants has the skills and experience to accurately review your state’s calculations for unemployment tax rate, make effective appeals where necessary, secure tax credits and refunds, and utilize the state permissible techniques to reduce your annual tax rates. Have any questions or concerns? We’d love to hear from you. Call us at (888) 565-5515 or fill out this online contact form.