If you have a business in California with employees, please read on........
Your payroll service will (most likely) be charging your business a 1-time charge in the next week or two. Depends on the processing time of your payroll processor.
The same charge was (most likely) assessed and paid by your company last year at this time.
It's because California borrowed funds from the federal government during Covid for unemployment claims. And CA has not yet fully repaid those loans.
To help repay those amounts to the Feds, any state that did not repay is assessed higher payroll taxes. The assessment is used to pay down the loan. And the state passes along your company's share of that assessment to your business.
The amounts vary by company, depending on a complex formula. But in short, it's based on the number of employees in your business and unemployment benefits paid to your employees.
I've seen assessments as little as $50 and as high as $5k. If you have fewer than 5 employees, plan on a lower amount. If you have 50 or more employees, plan on a higher amount.
If you want a more precise estimate of what's coming, you can check your accounting records for the amount paid at this time last year. Or, I know that most payroll services have already sent your business a notice, advising of the upcoming charge.
I know it's not the best of news, but wanted to make you aware.
If you'd like to dig deeper, here's a link :
If you have questions, please let me know.
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