Changes in Federal Unemployment (FUTA)
The new FUTA rate effective July 1
st
, 2011, will require changes to payroll for all companies. If you use an outside payroll service, the first check of July should reflect this reduced rate. For our Clients who process payroll in house, changes will need to be made prior to the first paycheck dated July to meet the new guidelines. For our Sage Master Builder customers, the calc rate, default Max, and Calc Type will need to be reviewed and adjusted (steps included below). Remember that this is an Employer cost.
Beginning with checks dated July 1
st
, 2011, the FUTA rate will change from 0.8% to 0.6%. Since this change is in the middle of the year, the total cost per person in 2011 will no longer be a flat $56 per person, but will vary depending on the hire date and at what point in the year they reach the wage maximum limit.
For Sage Master Builder customers, begin in the 5-3-1 screen. Call up the Pay Calc for the FUTA calculation. We recommend making a note in the Note Pad that includes the change in rate, the date the change is effective, and any other information such as who has updated the information – Save and return to the Pay Calc.
- The Calc Type should already show method 2- % Total Taxable Wages
- In the Default Rate, change from 0.8 to 0.6
- The Default Max field should be changed to 7,000, the maximum wages on which this calculation is determined for 2011.
- For the Max Type, many of our clients have 8-Dollars/Year which avoids the penny rounding error. However, with the mid-year change, this should be changed to 4-Wages per Year.
Next, select Options from across the top of the screen. From the Menu, select Update Employees, the Update Default Rate and Maximum, then All Employees (menu breakdowns taken from Sage Master Builder version 16). When the update has completed, a screen will show how many Employee records have been updated.
posted by
CMW