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  • Taxes are a fundamental part of running a business, and understanding employer tax obligations is critical to remaining compliant with federal and state regulations. Two employment-related taxes that often cause confusion are FUTA (Federal Unemployment Tax Act) and SUTA (State Unemployment Tax Act) taxes. These taxes are essential for funding unemployment benefits for workers who lose their jobs through no fault of their own. 

    Although these taxes both fund unemployment compensation, they differ in their calculation methods, who is responsible for paying them, and their impact on businesses. Understanding these taxes can help employers avoid penalties, manage tax costs, and stay compliant with federal and state regulations. 

    What Is FUTA Tax? 

    The Federal Unemployment Tax Act (FUTA) is a federal payroll tax that employers pay to fund unemployment benefits at the national level. This tax helps support state unemployment programs and covers administrative costs for running unemployment systems nationwide. 

    FUTA ensures that state unemployment agencies have the resources to provide temporary financial assistance to unemployed workers. It also funds extended unemployment benefits during economic downturns when states may run out of money. 

    Key details of FUTA tax: 

    • Who pays it? Only employers pay FUTA tax. Employees are not responsible for contributing. 
    • 2025 FUTA tax rate: The standard rate remains 6.0% on the first $7,000 of each employee’s annual wages. 
    • Potential FUTA tax credit: Employers who fully pay their SUTA taxes on time can receive a tax credit of up to 5.4%, reducing their effective FUTA rate to 0.6%. 
    • Purpose of FUTA: These funds go toward unemployment insurance (UI) programs and help states during high unemployment periods when state funds are depleted. 

    What Is SUTA Tax? 

    The State Unemployment Tax Act (SUTA) is a state-mandated payroll tax that funds unemployment benefits for eligible workers within that specific state. Unlike FUTA, SUTA tax rates, rules, and wage bases vary by state. 

    SUTA taxes directly fund state unemployment benefits for workers who lose their jobs through no fault of their own. These programs ensure financial stability for workers while they search for new employment. 

    Key details of SUTA tax: 

    • Who pays it? Employers are responsible for SUTA taxes, though in some states (like Pennsylvania, New Jersey, and Alaska), employees also contribute. 
    • Tax rates vary by state: SUTA rates depend on state laws, employer industry, and individual employer experience ratings (how often they’ve had former employees claim unemployment). 
    • State-specific wage base limits: Unlike FUTA, which has a fixed wage base of $7,000, each state sets its own wage base for SUTA tax. In 2025, these limits range from $7,000 to over $50,000, depending on the state. 
    • Purpose of SUTA: These funds are used to provide unemployment benefits to workers in that specific state. 

    Key Differences Between FUTA And SUTA 

    Why Employers Must Stay Compliant 

    Employers must accurately calculate, report, and pay FUTA and SUTA taxes to avoid penalties, interest, and increased tax liabilities. FUTA credit reductions can occur if a state fails to repay federal loans for unemployment benefits, leading to higher FUTA tax liabilities for employers. Frequent layoffs can increase an employer’s SUTA tax rate due to a higher “experience rating,” resulting in higher state unemployment taxes. 

    Late payments, incorrect filings, or misclassifying employees can lead to severe penalties from the IRS and state agencies, including fines, interest, and even criminal charges. States with outstanding federal loans may face FUTA credit reductions, causing employers to owe more in FUTA taxes until the loan is repaid. Ensuring compliance with FUTA and SUTA tax requirements is essential to avoid these costly consequences. 

    How to Ensure Compliance 

    • Stay updated on state tax rates: Because SUTA rates and wage bases change annually, employers should monitor state updates. 
    • File reports on time: FUTA taxes are reported quarterly using IRS Form 940, while SUTA filings vary by state. 
    • Work with a payroll partner: Outsourcing payroll tax management to a professional employer organization (PEO) ensures compliance and reduces the risk of penalties. 

    How GMS Can Help 

    Managing unemployment taxes can be challenging, especially for multi-state employers navigating different SUTA rates and regulations. Group Management Services (GMS) helps businesses: 

    • Accurately calculate and file FUTA and SUTA taxes 
    • Stay compliant with state and federal tax laws 
    • Reduce their SUTA tax burden through proper claims management and best practices 

    GMS can provide expert guidance and comprehensive payroll services if you’re unsure about your company’s FUTA or SUTA tax obligations. Contact us today to learn how we can simplify payroll tax management for your business. 

  • A new year comes with new laws and regulations. If you live in Indiana, you may want to listen up. On January 1st, 2023, the Indiana Department of Revenue issued a revised Departmental Notice No. 1, How To Compute Withholding for State and County Income Tax. Three counties in Indiana, including Greene, Montgomery, and Perry, have experienced tax rate changes. The following are the new rates for each county:

    • Greene: Increased to 2.15%
    • Montgomery: Increased 2.65%
    • Perry: Decreased to 1.4%

    In addition, the state withholding rate decreased to 3.15%, which also decreases the state supplemental wage and tax rate to 3.15%.

    Where GMS Comes Into Play

    While laws and regulations are constantly changing, it’s essential for all business owners to ensure they remain compliant. Running your business and ensuring your employees are also complying adds a whole new layer of responsibility to your daily job functions. When you partner with GMS, our experts keep up with all rules and regulations you must stay on top of. Let us handle the administrative burdens you don’t have the time to handle. Contact us today to learn more.

  • On January 1st, 2023, the Internal Revenue Service (IRS) increased the standard mileage rate for paid transportation expenses. The new mileage rate will be 65.5 cents per mile which is up three cents from the second half of 2022. All miles driven for medical or moving purposes will remain at 22 cents per mile, and mileage for charitable purposes will remain at 14 cents per mile. For additional information regarding the updated business standard mileage rate, click here.

    Understanding Mileage Reimbursement

    In most businesses, employers would provide company cars to salespeople and executives who traveled often for business purposes. The employer would also pay for the car’s expenses, including gas, insurance, and maintenance. Nowadays, if a company doesn’t provide vehicles for their employees, they should reimburse employees’ car expenses with mileage reimbursement. With mileage reimbursement, employees receive a set dollar amount for every mile they drive for business purposes. While reimbursing your employees for using their personal vehicles is not a federal requirement, it’s essential that you adopt such practices to keep your employees from using their savings to fund business expenses.

    The following are considered qualified mileage reimbursement costs:

    • Business trips
    • Off-site meetings with clients and prospective clients
    • Running errands for business supplies
    • Deliveries

    Fortunately, the IRS makes it easy for business owners to determine how much they should be reimbursing their employees. The IRS sets a mileage rate for these costs, which are not taxable to your employees and are a deductible for your business. Should you choose a higher rate, you and your employees pay payroll taxes on the extra amount.

    Utilize GMS To Help With These Decisions

    While providing your employees with mileage reimbursement isn’t necessary, it’s a way to attract employees and let them know you care about them. When you partner with GMS, you gain access to our fleet management program. This allows business owners to organize and coordinate work vehicles to improve efficiency, reduce costs, and monitor unsafe driving habits. If you’re a small business owner and don’t have a fleet of cars, our HR experts work with you to set up a program so you can reimburse your employees for qualified mileage reimbursement costs. Contact us today to learn more.

  • The tax rates used on Arizona’s withholding certificates are decreasing for 2023. The Arizona Department of Revenue (DOR) updated Form A-4 to reflect lower personal income tax rates. To view and download the updated form, click here.

    All employers in Arizona are required to make the 2023 version of Form A-4 available to their employees by January 31st, 2023. The DOR requires all employees to complete and submit a new Form A-4 for 2023. For any employee who fails to fill out the new form by February 15th, 2023, the default withholding rate will now be 2% instead of 2.7%. Federal Form W-4 is not an acceptable substitute for state withholding purposes.

    Stay Compliant, Partner With GMS

    Changing rules and regulations make it challenging to focus on growing your business. When you partner with GMS, you gain experts in all fields of your business, including HR, payroll, risk management, and benefits. We ensure you remain compliant and stay up to date on all new rules and regulations. Contact us today to learn more.

  • The Internal Revenue Service (IRS) announced the annual adjustments to the standard deduction and tax brackets for the 2023 tax year. The IRS defines the standard deduction as a precise dollar amount that reduces the amount of income on which you’re taxed. A standard deduction consists of the sum of the basic standard deduction and any additional standard deduction amounts for age and blindness. The tax adjustments for 2023 are increased from 2022 in response to ongoing inflation. Continue reading to understand how the adjustments impact you and your employees.

    The Annual Adjustments For 2023

    The 2023 standard deductions for personal income taxes apply to the following:

    • Individuals: $13,850 in 2023, representing a $900 increase
    • Head of household: $20,800, a $1,400 increase
    • Married filing jointly: $27,700, a $1,800 increase

    In addition, the new tax brackets for personal income taxes apply as follows:

    • 10%: all income below $11,000 individual / $22,000 married
    • 12%: $11,000 individual / $22,000 married
    • 22%: $44,725 individual / $89,450 married
    • 24%: $95,375 individual / $190,750 married
    • 32%: $182,100 individual / $364,200 married
    • 35%: $231,250 individual / $462,500 married 
    • 37%: all income above $578,125 individual / $693,750 married

    Capital gains taxes have been adjusted as well. Capital gains are the profits you make when you sell a stock, real estate, or other taxable assets that increase in value while you own it. It’s based on profit and depends on the tax bracket. The capital gains brackets for 2023 are:

    • 0%: All earning below $44,625 individual / $89,250 married
    • 15%: $44,625 individual / $89,250 married
    • 20%: $492,300 individual / $553,850 married

    For in-depth details regarding the 2023 adjustments, click here. 

    What Your Employees Should Know

    The new tax brackets apply to all earnings starting January 1st, 2023. As an employee, you must be provided with the resources necessary to make the right decisions. The IRS provides a tax withholding estimator that assists individuals in determining if they have too much federal income tax withheld, which could reduce their take-home pay. Alternatively, it can help employees with additional income sources to decide whether to withhold more or make an estimated tax payment to avoid a tax bill. Employees can also submit the IRS Form W-4 to their HR or payroll department to ensure the correct federal income tax is being withheld.

    What This Means For Business Owners

    If you’re a business owner, it’s essential to understand the tax bracket adjustments and standard deductions. Paycheck withholding amounts and quarterly estimated tax payments can affect an employee’s income level subject to a higher tax bracket. In addition, the following could impact your employees’ decisions:

    • Determining how much salary to defer into a traditional 401(k) plan or a health savings account
    • Choosing if they want to participate in a nonqualified deferred income plan (if applicable)

    Utilize GMS’ Payroll Tax Management Services

    Tax planning can be complicated, and you shouldn’t do it alone. Payroll tax filing requirements are complex and ever-changing. Filing incorrectly can result in costly penalties. When outsourcing your payroll tax management to a company like GMS, your business will benefit in various ways. Do what’s best for you and your employees as we approach the new year. Contact us today to learn more.

  • Various cities and states have begun announcing the implementation of pay transparency. As of November 1st, New York City employers are required to disclose the salary range on job advertisements. Pay transparency must be placed on job advertisements rather than being placed only in offer letters or upon request of applicants or employees.

    The city’s law correlates with what has been picked up by other jurisdictions such as:

    • California
    • Colorado
    • Washington

    Start With Your Job Listings

    According to the Society for Human Resource Management (SHRM), employers with at least four employees must include the following in any advertisement for a job, promotion, or transfer opportunity:

    • Minimum annual salary
    • Maximum annual salary
    • Hourly range of compensation

    When it’s a commission-only position, employers are not required to post the exact salary. Instead, the posting can be satisfied by general statements. Employers are covered by stating the commission ranges. When writing job descriptions for your open positions, ensure they are direct and specific. It’s essential to provide the candidate with an understanding of the job by including the basic job functions.

    Rely On GMS

    As a business owner, it’s challenging to remain compliant when regulations constantly change. However, when you partner with GMS, our HR professionals have you covered. Our HR specialists are aware of changes as they occur within your state. In addition, our recruiting team can build competitive job descriptions that meet regulations to protect your business. GMS will also conduct market analyses to provide you with a pay range that aligns with your open positions. Learn more today!

  • The Temporary Worker’s Bill of Rights or, Senate Bill 511, is now being considered with revisions made by New Jersey Governor Phil Murphy. After originally vetoing this bill, he claimed to “wholeheartedly support the overarching objectives,” and proposed additional revisions. If the legislature accepts his revisions, Gov. Phil Murphy said he will sign it into law.

    The Temporary Worker’s Bill Of Rights

    Senate Bill 511 would require businesses to provide temporary workers with:

    • At least minimum wage
    • Equal benefits that are offered to their full-time employees

    In addition, the bill aims to address discriminatory workplace practices and promote gender and racial pay equity. Pay equity is the idea of compensating employees with similar job functions with comparably equal pay, regardless of gender, race, or ethnicity. This means that if two different jobs contribute equal value to their employer’s operations, then employees in those positions should be receiving equal pay.

    Temporary agencies would also be required to keep written records of pertinent employment information, including:

    • Location of the worksite
    • Number of hours worked
    • Rate of pay for each employee
    • A copy of any contract pursuant to which the temporary worker is performing work
    • Any deduction from the worker’s pay

    Should this bill pass, it would allow temporary employees to sue the temporary labor agency and the third-party company for violations of the bill. Any business or temporary agency that violates the bill will be subject to civil penalties, such as financial penalties, with each day of not complying constituting a separate offense.

    Additionally, Gov. Murphy proposed that this bill only applies to occupations that are most vulnerable to exploitation which include the following:

    • Construction labor
    • Security services
    • Cleaning
    • Landscaping
    • Food service
    • And more

    He also calls for one million dollars to be appropriated for the Department of Labor and Workforce Development which ensures vigorous enforcement of the new protections.

    GMS Is Here To Help!

    Managing payroll and tax filings can be a strenuous task for small business owners. When you partner with GMS, you can take full advantage of online payroll software to simplify your business and save you valuable time. GMS provides a comprehensive web-based payroll solution to ensure compliance, accuracy, and peace of mind. Our online payroll software allows you to complete payroll in minutes and manage and access payroll information anywhere there’s an internet connection. Contact us today if you’re ready to focus your time and energy on growing your business instead of spending hours on payroll processing.

  • At 2:00 a.m. on November 6th, 2022, daylight savings time ends. Daylight saving time (DST) is the practice of setting clocks forward one hour from standard time during the spring and summer months. In the fall, you set the clocks back an hour to use natural daylight more effectively. Continue reading to learn its effects on business owners.

    The Purpose Of Daylight Saving Time

    This practice became federal law in the United States when President Lyndon Johnson signed the Uniform Time Act in 1966. The idea behind daylight savings is to maximize sunlight in the Northern Hemisphere as days get longer in the spring. Individuals gain an extra hour of sunlight by springing forward their clocks and falling back. However, the benefits of this practice tend to be controversial, and the shift can have measurable impacts on health. As an employer, it’s essential that you understand the following considerations as we prepare to set our clock back on November 6th.

    The period from 1:00 a.m. to 2 a.m. 

    If you have employees working on November 6th at 2:00 a.m., you may be required to pay those employees for one additional hour of work. It’s only required if the time change extends the number of hours worked. The Fair Labor Standards Act (FLSA) states that all hourly employees must be paid for all hours worked. On this specific day, your employees will have worked the hour from 1:00 a.m. to 2:00 a.m. twice. As the employer, you could modify these employees’ start and end times to avoid this conflict.

    Overtime obligations to consider

    It might also count towards overtime compensation if you choose to pay your nonexempt employees for that additional hour of work between 1:00 a.m. and 2:00 a.m. This could result in a workweek of over 40 hours or a workday of over eight hours. Prior to November 6th, you must determine your employees’ overtime compensation for the day and week to ensure you comply accordingly.

    GMS Is Here To Help

    While you have probably tackled daylight saving time before, it’s essential that you comply with all rules and regulations. At GMS, we understand you don’t have the time to sit down and read a rule book of everything you must comply with. In addition, payroll management is a long and tiring process. Stop spending time worrying about payroll and start spending time growing your business. Partner with GMS so you can have that extra hour on November 6th. Contact us today.

  • The California minimum wage is increasing to $15.50 an hour for all employers beginning January 1st, 2023. This new rate reflects an adjustment to the large employer minimum wage, which is currently $15 an hour. Joe Stephenshaw, California’s Director of Finance, determined the increase based on inflation. For small business owners, it’s essential to know that your employee’s minimum wage will also be increased to $15.50 an hour instead of its current rate of $14.00 an hour.

    Since there has been an 8.3 percent increase in inflation over the past year, multiple states have implemented higher minimum wages. The cost of food, shelter, and medical services has increased significantly over the past few months. The price of basic staples, including eggs and bread, has spiked, straining household budgets. Raising minimum wage rates would improve the overall standard of living with a more feasible income level to survive these unprecedented times.

    The California Labor Code 

    The California Labor Code is a collection of civil law statutes for the State of California. It’s made up of statutes that govern the general obligations and rights of individuals within the jurisdiction of the State of California. Workers are entitled to various rights and protections under California labor law. As inflation has impacted many individuals, the California Labor Code established the schedule for minimum wage increases. This includes an annual adjustment based on inflation taking effect with the 2023 large employer minimum wage.

    Every year, there will be adjustments to the state minimum wage based on inflation, with the announcements made on August 1st. In addition, the California Labor Code requires all small employer minimum wage rates in 2023 to match the large employer minimum wage rate if inflation has exceeded 7%.

    What Small Business Owners Need To Know

    As a small business owner during these challenging times, you must ensure you stay on top of the ever-changing rules and regulations. In addition, your employees are your biggest asset. When you partner with GMS, we ensure you are paying your employees the correct amount each year. As inflation and the COVID-19 pandemic have affected many individuals and companies, numerous businesses have looked to increase their minimum wage prior. Our team ensures you offer the best possible wage to your employees, allowing you to attract and retain your top talent. Contact us today to learn more.

  • The Michigan Court of Claims ruled earlier this year that the legislature violated the Michigan Constitution in 2018 by enacting, and within the same session amending, two ballot initiatives:

    • One requiring higher minimum wages
    • One requiring paid sick leave

    The 2018 ballot initiative was originally designed to raise the state’s minimum wage between 60 and 75 cents yearly until it reached $12.00 in 2022. The initiative was then intended to tack the minimum wage to inflation. Since employers and the relevant state agencies may not be able to implement the changes required by its decision immediately, the court has extended its stay until February 20th, 2023.

    What Employers Should Know 

    Starting February 2023, the standard minimum wage in Michigan will increase from its current $9.87 per hour to at least $12.00 per hour. Because the original 2018 ballot initiative would have increased the standard minimum wage to $12.00 effective on January 1st, 2022, the amount could increase in February 2023. In addition, the minimum wage for tipped employees will increase from its current $3.75 per hour to at least $9.60 or even higher.

    Paid Sick Leave

    Under the Earned Sick Time Act, Michigan employers must provide their employees 72 hours of sick leave annually. For employers with at least 10 employees, all 72 hours of leave must be paid. Small employers are to provide at least 40 hours of paid sick leave annually, while the balance of the 72 hours of leave may be unpaid.

    Partnering With GMS For Payroll Administration 

    Payroll is costly in both money and time. You probably know how your payroll responsibilities impact your operational efficiencies and bottom line. Between tax calculations, payroll, compliance, and all other payroll functions, there’s an insufficient amount of time to manage it properly. Stay up to date with regulatory changes and ensure your employees are being paid correctly by partnering with GMS. Contact us today.