It is budget time again for many payroll departments!   This is always difficult as we try to determine what our costs will be for next year.   The two most difficult factors for the budget is what will my unemployment rate be for 2018 and what will be the amount of my taxable payroll.   A very simplistic way to estimate your unemployment costs is to take the 2016 taxable payroll reported and multiply it by the 2017 tax rates.  For employers who use their budgets to price services, this technique is often not viable.     office-superhero_650

As mentioned in our August Guide, many of the state’s end the computation of the 2018 rates as of June 30, 2017 while a few others include the third and fourth quarters.    Each state collects the taxable payroll (contributions in some cases) and benefit charges over a period of time and assign a tax rate by reviewing your history (known as experience).   In a true estimate, it is important to know how to estimate the future rate as the majority of the rates are not issued until December which is well past the due date of the budget.

A second component of the estimated taxes, is determining the estimated taxable payroll.  Almost every year, at least twenty states increase the taxable wage base.    Our economy is growing as well as the individuals employed.   Both factors increase the taxable payroll adding on to the cost of unemployment.    Perhaps there are going to be some layoffs or a division is being sold?   Both of these factors would decrease the estimated taxable payroll.

Both the unemployment tax rate and the estimated taxable payroll can be effected by an acquisition, reorganization or any type of transaction moving employees from one state account number to another.  So, whether you need a general estimate of unemployment or an exact estimate will depend on what your organization uses the data to accomplish.    Your tax analyst at Corporate Cost Control are standing by to provide some assistance!

Contact CCC to see how we can save your organization time and money. Contact our Sales Team (800) 207-6926

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