Is it Necessary for Every Company to Pay for Unemployment Insurance?

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There are multiple payroll taxes that need to be paid by both employees and employers. One of those fees is unemployment insurance, which is a fund that helps people who are unemployed.RandR1(2)

Why is Unemployment Insurance Needed?

This insurance coverage is funded by payroll taxes, built into the system to help people make ends meet if they are unemployed. The insurance plan is jointly run by both the state and federal governments. The states are responsible for running the program, and the federal government oversees the activities that are happening on a state level.

This payroll tax is a requirement so that every person is covered by unemployment insurance, and all employers should have an understanding of how it works. The FUTA tax is the federal tax requirement paid only by the employer, and the SUTA tax is the state tax which is predominantly paid by the employer as well.

Who Qualifies for Unemployment Benefits?

Just because someone is unemployed, doesn’t mean that they will automatically qualify for benefits. In fact, most unemployed workers are not eligible to receive unemployment payouts.

These monetary benefits are only available to unemployed workers who meet specific requirements. The unemployment needed to occur at no fault of their own, such as in the situation of layoffs.

Payouts are based on the wage the employee was earning when they were working. These calculations don’t cover the full amount of the wage, just a percentage of the total paycheck. Since the states run the programs, the payouts vary depending on the location where the person is living.

Calculating Unemployment Tax for Payroll

When payroll is processed, it is important that you are using the right state and federal rates for these taxes. The rates might change each year, so your accountant or payroll processing service can ensure that you are staying current with the taxes that are due.

Do you need help with payroll processing? The best solution is to outsource your payroll so that you don’t have to worry about keeping track of these various payroll taxes. Contact our team at R&R Payroll & Bookkeeping Services to learn more about the services that are offered: (951) 296-0412.