I was hoping unemployment wouldn't be extended another year. Once again, we were getting to the end of the benefit period, employers were getting ready to hirer, and now...these people cannot be found.
What is even more devastating to our economy, is the effect all of this extended unemployment has on companies. In December, a notice was sent out to employers and payroll processors. SUTA raised its base rate from 7000 to 9500, and most clients saw their SUI rate double.
Now IN DWD needed to borrow money from FUTA to pay unemployment two years ago. In the details of that arrangement was that it needed to be paid back by November of the second year of the loan. Indiana hasn't and now FUTA is reducing the credit given to Indiana businesses for paying into SUTA. Therefore, instead of paying .8%, they have to pay 1.1%. Every year after, the rate would keep going up .3% until the loan was paid off and SUTA becomes "stable" once again.
The notice sent out about this was very confusing to many. It sounded the rate of 1.1% would begin in Jan 2011. However, the .3% "credit reduction" applies to the 940 due in Jan 2011...for the year 2010.
This means an extra $21 per person that was paid 7000 or more last year for FUTA. If a company's rate was 2.7 last year and it doubled, that means that company is paying and extra $324 per person that makes 9500 or more this year. If IN DWD fails to pay the FUTA loan off by the end of this year, that company would be paying an extra $366 per person over last year.
$366 may not sound like a lot, but that would be one person's weekly pay at 9.15 an hour. Most small businesses cannot afford this with the struggling economy. With 10 employees, this means 3600.00, or a part time employee they cannot hirer or must fire.
Larger businesses (whose SUTA rate is probably even higher) of 1200 employees, means 36,600.00. That means they are not able to hirer a new person, or they half to let go of one or two employees.
I wish good luck to all businesses out there. We may not be able to save a small company of 10 $3660 dollars a year, but we might be able to help you reduce your payroll expense. We guarantee to save you at least 25% from your total yearly cost from your current payroll processing company. For more information and payroll processing quote, give us a call at 765-288-PAID or visit us online at www.tpspayoll.com.
