10 Ways to Reduce Your State Unemployment (SUTA) Rate

  • Use a payroll service. Statistically, companies that use a good payroll provider to pull taxes from their account with each payroll, and then pay the tax for them, will have their Colorado Unemployment rates reduced by an average of roughly 10%. The key here is two-fold, the forms are filed correctly and the taxes are timely. The added bonus is that most payroll companies will guarantee their forms to be correct. Double check that your payroll provider will be responsible for late fees and penalties if they make the payment untimely or incorrectly file the form. You don’t need to use a PEO to do this.
  • Make payments timely. Not only will late filed forms and payments lead to incredibly expensive penalties and interest, but problems may adversely affect your penalty surcharge rate. Creating a good payment history will ensure that you will save money on both penalties/interest and also keep your rate low.
  • Make sure forms are filed correctly. A simple math error or typo can lead to your form being rejected and sent back to you, often with the unemployment office not even cashing your check (now late). Make sure you can trust your software. We have more than one client that has experienced QuickBooks filing a report that is out of balance or improperly filled out, usually because of errors in the software setup. Again, hiring a good payroll provider will push the responsibility off on your provider.
  • Institute good hiring practices. Proactively avoid future unemployment problems by screening potential employees properly on the front end. The mistake many employers make is hiring too quickly.
  • Keep in compliance with HR laws and maintain a good HR system. Check with your payroll provider to make sure you are utilizing all of the HR resources they make available to you. You don’t need to outsource to a PEO or hire an in-house HR manager, you just need to make sure that you have someone that has got your back and makes you aware of changes that affect your business. Happy employees benefit the company in more than one way.
  • Make sure you have a compliant Employee Handbook. Most smaller businesses don’t feel they need an employee handbook. Other companies may have written their own handbook or downloaded a template from the internet but have no way of knowing whether that handbook is in compliance with state and federal laws. Your payroll provider should make you aware of the need to have a good employee handbook and be able to write a compliant manual from scratch for you or modify an existing employee handbook. This is usually a very inexpensive process and can save you many problems later on.
  • Avoid hasty terminations. If at all possible, employees should never be terminated due to no fault of their own. When firing an employee, make sure you have created a proper defense ahead of time by having a thorough employee handbook and issuing compliant write ups for insubordinate employees. ALWAYS contact your HR department or HR provider before making a hasty termination decision.
  • Always respond to unemployment claims against you. Even if you’ve done everything right, if you don’t fight an improper claim against you it won’t matter. Usually there is a small window for responding to these claims and you have to do so with the proper understanding of your and the employee’s rights. Often an HR company or payroll provider can respond to these claims for you when they occur.
  • Institute a good timekeeping system. Even when employees are paid salary or piece-work, their worked hours will come in to question when an unemployment claim is filed. Former employees may not always be honest when reporting the time they worked to the unemployment office. Having a good timekeeping system in place will provide a quick, easy, and trustworthy source for confirming employee hours worked. Check with your payroll provider to make sure you have a good system in place.
  • Avoid buying a business that has already has a poor experience rate. In some cases, an unemployment office can apply a portion of the experience rating from the prior owner of the business to your business. Always check what the rate is before buying a business and make sure you won’t be on the hook for their taxes.