At the end of November or beginning of December, state agencies send their tax rate notices to employers. The notice tells you how much your Unemployment Insurance, State Disability Insurance rates, etc., will be for the following year. Make sure you have these tax rates updated in Gusto.
Why should I do this?
When you have employees (such as yourself), you must pay federal and state unemployment taxes. These taxes fund unemployment programs and pay benefits in the event employees lose their jobs.
As an employer, it's your responsibility to ensure you update your state tax rates on your payroll software every year. Gusto will then withhold the correct amount of payroll taxes. An underpayment of taxes would result in penalties.
What does the form look like?
Here is an example notice in California:
How should I update my contribution rates?
Go to Gusto
Click on Taxes & compliance on the left side navigation
Click on Tax setup
Click on Manage Taxes
Update the rates as shown on the notice
Here is an example for California:
Why did the rates not change?
There are two reasons why your rates did not change. Either the states did not change the rate for that year or Gusto has already updated the new rates in their system.
What if the rates shown on the notice does not appear in Gusto?
You don't have to update those as Gusto will update them. If you have questions and would like to confirm if you have all the correct rates inputted, you can email [email protected]
Questions? Reach out to your Collective team in Slack 😄