(Mistake #5 in a Series of 7) Tax rates can change — make sure you’re using the right rates for your company.
Why is this important?
Use the wrong tax rate, and you may pay more in the long run, with penalties and interest piling up.
How to avoid this mistake:
State Unemployment (SUTA):
Your SUTA rate generally depends on your experience, industry classification code, and state rules.
- Do your homework. Depending on your industry, you may pay a higher or lower starting rate than another employer. If you’re a new employer, find out your state’s starting rates for SUTA.
- Watch the mail. If your employees file for unemployment, your SUTA rate may increase. Watch for notifications regarding SUTA rate changes.
Federal and State Rates:
- Choose a payroll processing method that automatically updates universal rate changes.
- Use current tax tables if you are figuring payroll by hand, and regularly check your payroll software for tax rate changes if updates aren’t automatic.
- Keep up with news on tax law changes that affect your payroll.
If you make this mistake:
When you realize you’ve paid a wrong tax rate, contact the tax agency immediately, and they can tell you how to proceed.