State unemployment insurance (SUI) pays stipends to any worker who has lost their job through no fault of their own and is seeking employment.
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When an employee claims unemployment insurance, they typically get paychecks from their state’s unemployment agency until they have successfully found work or they reach the end of the time period allotted by their state.
Who pays for state unemployment insurance, or SUI?
Employers pay for SUI quarterly through their share of payroll taxes.
Each state taxes employers to fund SUI. Your SUI tax rate is specific to your business, and it’s based on the “wage base” set by each state, along with the number of former employees who have filed for unemployment benefits in the past.
In most cases, the more former employees of yours who have collected unemployment benefits, the higher your SUI tax rate might be.
Who qualifies for unemployment benefits?
Employees who were terminated for no fault of their own qualify for state unemployment benefits. In general, that means employees who were laid off, and not fired for misconduct, can claim unemployment insurance.
Furthermore, you can contest a former employee’s filing for unemployment insurance if you don’t believe they are eligible.
Is my company required to pay taxes to fund SUI?
If you have employees, then yes, you have to pay taxes to fund state unemployment insurance. The Federal Unemployment Tax Act (FUTA requires it for every state where your company has employees.
Now, if you have employees who work in multiple states, things can get trickier. You’ll want to work with a CPA or payroll provider to figure out which state you owe unemployment taxes for each employee.
I better get on this, huh?
In conclusion—yeah, state unemployment insurance is mandatory for all employers.
Depending on your company’s situation, it could be complicated. But, no worries, your CPA or online payroll service can help you manage it all.