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How to File Unemployment Taxes for a Small Business

1.

Calculate the amounts of wages paid to each employee for the year. Usually this amount will be in your accounting software in a payroll report. If you are not using accounting software, use your records to calculate total wages paid to all employees. Enter the total amount in Box 3 of Form 940.

2.

Subtract the exempt portions of payments from the total amount of wages paid. These exempt amounts include pensions, retirements and benefits paid. Enter that amount in Box 4 of Form 940. Subtract any wages over $7,000 paid to each employee as the FUTA tax applies only to the first $7,000 of income. Add the amounts of exempt payments and enter the total into Box 6.

3.

Subtract the exempted payments in Box 6 from the total payments in Box 3; the result is the total taxable FUTA wages. Multiply this amount by .008 and enter this amount in Box 8. This is the FUTA tax due. The rest of Form 940 concerns adjustments to the amount in Box 8.

4.

Determine if quarterly payments are required. If your payroll is of substantial amount, you may have to file quarterly forms. It is the same information required above broken down by quarterly amounts.

5.

Use the EFTPS, Electronic Federal Tax Payment System (see resources). It is advisable to use the EFTPS to pay the federal taxes owed during each payroll period and to pay the FUTA taxes on a quarterly basis. You must register your business at least one week prior to needing to file in order to be provided with a PIN and account number.

6.

File SUTA taxes through your state's Department of Revenue website, if available. While each state has different requirements, most state forms are similar to federal forms. For example, in Florida the required form is called a UCT-6. Each employee's wages are totalled together in Box 2. Wages paid in excess of $7,000 are listed in Box 3. The taxable wages amount for the quarter is listed in Box 4, and the tax due is listed in Box 5. However, the percentage rate to apply to the tax due depends on how many quarters the business has been paying unemployment and which state the business is in. Check with your state's Department of Revenue if there is not an online option in your state to register, pay and file SUTA taxes and inquire about the forms needed and procedures used.



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