Blog
Payroll & Taxes

Understanding SUI Taxes for Business Owners

Demystifying mandatory unemployment insurance tax

Blog Author - Keertana Anandraj
Keertana Anandraj
Mar 15, 20242 minutes
Blog Author - Keertana Anandraj
Keertana Anandraj

Keertana Anandraj is a part-time freelance writer and full-time sustainability analyst. Before Justworks, she began her freelance career writing for The Financial Diet and Career Contessa. She currently resides in New York City.

42 postsAuthor's posts
GrossPayvsNetPay-What stheDifference

As a business owner, you may be responsible for paying a variety of taxes, including federal and state income taxes, sales taxes, and payroll taxes. One type of tax that often gets overlooked is the State Unemployment Insurance (SUI) tax. This tax is paid by employers to fund unemployment benefits for employees who have lost their jobs. In this article, we will discuss what SUI taxes are, how they are calculated, and how to ensure you're compliant.

What are SUI Taxes?

SUI stands for State Unemployment Insurance, which is an employer-funded program and tax required by state and federal law. Essentially, SUI acts as a safety net for employees who find themselves out of work through no fault of their own. As a business owner, you're responsible for contributing to this fund in each state in which you have an employee working. 

How are SUI Taxes Applied?

The amount of SUI tax you owe is based on your business's taxable wages (federal) and the tax rate assigned to your business by a state.  Generally, if you pay wages to employees totaling $1,500, or more, in any quarter of a calendar year, or have at least one employee during any day of a week during 20 weeks in a calendar year, regardless of whether or not the weeks were consecutive, you must pay state and Federal unemployment insurance taxes.

Ensuring Compliance with SUI Taxes

It is important to ensure that you are in compliance with paying SUI taxes to avoid any penalties or fines. Here are some steps you can take towards compliance:

Register with the State

First things first, make sure you're registered with your state's workforce agency and obtain any necessary employer identification numbers or tax forms. This is the first step in fulfilling your SUI tax obligations and can be done online or by mail. Once registered, you will receive your assigned tax rate and any necessary forms for reporting and paying SUI taxes at the state level.

Keep Accurate Records

Remember to keep meticulous records of your payroll, including each employee's wages and hours worked. Accurate record-keeping is essential for calculating and reporting your SUI taxes correctly. This will help you calculate your tax liability correctly and provide proof of compliance in case of an audit.

File and Pay on Time

When it comes time to file and pay your SUI taxes, don't procrastinate! SUI taxes are typically paid on a quarterly basis, although some states may require more frequent payments. Make sure you meet all filing deadlines and submit your payments promptly. Late filings or payments can result in penalties and fines.

Understand Tax Rates

Your SUI tax rate is determined based on how many of your former employees have filed an unemployment claim in the past. New companies are taxed at a “new employer” rate and then the rate is updated on an annual basis by the state based on unemployment claim activity. New employer rates generally range from 2-4%.

How Justworks Can Help

Paying SUI taxes is an important responsibility for employers. While it’s always best to consult with a tax professional if you need assistance with paying SUI taxes, a Professional Employer Organization (PEO) like Justworks can help small businesses streamline their payroll processing, reducing the risk of errors and omissions on tax forms. 

Justworks calculates and deducts the amount of SUI your company owes. It’s just one more thing we’ll take off your plate so you can continue running your business and caring for your team – get started today.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.
Discover more of what you like
PEOHealth InsuranceBenefits & PerksPayroll & TaxesExpenses & FinanceEmployment LawsInternational

Check out our newsletter

Monthly tips on running a business in your inbox.

Check out our newsletter

Monthly tips on running a business in your inbox.
Written By
Blog Author - Keertana Anandraj
Keertana Anandraj
Mar 15, 20242 minutes

Keertana Anandraj is a part-time freelance writer and full-time sustainability analyst. Before Justworks, she began her freelance career writing for The Financial Diet and Career Contessa. She currently resides in New York City.

Learn more with Justworks’ Resources

Scale your business and build your team — no matter which way it grows. Access the tools, perks, and resources to help you stay compliant and grow in all 50 states.