Every year, Illinois collects an excess of $5,500,000 worth of unemployment insurance from companies over what they should. That excess would likely not be paid if these companies were better prepared and more diligent when contesting fraudulent or spurious unemployment benefit claims. As a result, if the benefits were paid, it also means the unemployment tax rate for the employer went up. The end result is that even more money is paid, which, if these companies had handled their paperwork correctly, would never have been owed in the first place. This is a sizable number and unfortunately happens in every state.
Can I Keep My Insurance Rate From Increasing
Keeping your unemployment insurance rate low comes down to knowing all of your state’s specific laws and keeping documentation. You should be able to answer questions like, “Who is qualified to receive benefits?”, “Who is paying the benefits?” and “How does the claim affect my taxes?”
Know Which Rules Apply to You, Because There Are Many
You must know the laws associated with your jurisdiction. For example, in Texas, students cannot quality for unemployment insurance, but they can in California. In addition, there are also state-specific approaches to traveling employees, multi-branch companies and any other business that happens in multiple states. Look carefully at each specific law to know which situations apply to your business.
Above All, Keep Lots of Detailed Documentation
When reviewing a benefits claim, your jurisdiction’s unemployment insurance office relies on your documentation and understanding of the situation to determine eligibility. Therefore, if you do not report the type of information that your state is looking for, you may be charged for benefits.
It is very important to document warning and discussions you have with every employee. Often, if the employee does not attempt to change his or her behavior before quitting, and this is documented, you will not be liable. Life changes and events can be important in determining eligibility, so it’s important to document whether or not the employee notified you of changes in their health or personal life before leaving the company. Remember, however, that many employees are protected by privacy laws, so be sure to limit your inquiries to those allowable by law.
In order to make the process simple, reliable and consistent, you should have documentation from initial employment until the final separation for each and every employee.
Lodestar Advisors is a firm focused on tax saving strategies and accounting automation techniques to facilitate business growth for their clients. They are well versed in cash flow projections and business planning. Call for a free consultation.