Everything employers need to know about paying Louisiana unemployment insurance taxes.
If your small company employs people in Louisiana, you must pay the Louisiana unemployment insurance (UI) levy. The UI tax pays for unemployment insurance programs for qualifying workers. In Louisiana, the state unemployment insurance levy is simply one of numerous taxes that companies must pay. Other major employer taxes not mentioned here include the federal unemployment insurance tax, as well as state and federal withholding taxes.
Varied states have different UI tax policies and rates. Here are the fundamentals of Louisiana’s UI tax.
Join the Louisiana Workforce Commission.
As a Louisiana employer, you must register your small company with the Louisiana Workforce Commission (LWC). LWC will decide whether you are due for UI taxes when you register. The majority of employers are accountable. If you are found to be responsible, the LWC will give you a Louisiana unemployment state identification number (SID, also known as an employer account number or EAN).
You must register online; there is no longer a paper registration alternative. To register, go to the laworks.net website and fill out the online Louisiana Unemployment Tax Account Application.
You will need a federal employer identification number to set up your Louisiana UI tax account (EIN). You may get an EIN by visiting IRS.gov. In most cases, if you apply online, you will obtain your EIN very instantly.
UI Tax Liability Regulations
As a Louisiana for-profit employer, you are typically responsible for state unemployment taxes if any of the following requirements are met:
you pay wages of $1,500 or more during any quarter of a calendar year you employ at least one individual during some portion of a day during 20 or more separate calendar weeks in a calendar year you acquire all or part of another business, or the assets of another business, which was an employer subject to the law governing state UI taxes at the time (the Louisiana Employment Security Law), or you are liable for federal UI taxes under the Federal Unemployment Tax Act
The first three items on the list are largely the same regulations that govern liability under FUTA. As a result, if you owe federal unemployment taxes, you’re probably also owed Louisiana unemployment taxes, and vice versa. Different restrictions apply to agricultural (farm) workers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not included here.
One piece of good news is that state UI tax payments are often deductible from FUTA taxes.
Wage Structure and Tax Rates
Each employee’s salaries are subject to UI tax up to a certain yearly limit. For many years, the taxable wage base in Louisiana has remained steady at $7,700. However, the quantity is always subject to change.
The state unemployment insurance tax rate for new employers is subject to vary from year to year. Your Louisiana UI tax rate as a new employer will be determined by the kind of company you’re in—or, more formally, the “industry” you’re in. The particulars are tricky. However, in layman’s terms:
The North American Business Classification System (NAICS) is used to classify industries, and the state will compute your rate based on the NAICS average UI tax rate for your industry.
The NAICS was developed by the federal government to categorize and analyze information for various types of enterprises. Louisiana, on the other hand, assigns a UI tax rate to new employers based on the average tax rate for each of these types of firms. The new employer rate is normally valid for one year.
Based on a “experience rating,” established employers are liable to a lower or higher rate than new firms. This includes, among other things, whether your company has ever had workers file claims for state unemployment benefits.
Check the LWC website for the most up-to-date pay base and tax rate information.
Submit UI Tax Reports and Payments Quarterly
In Louisiana, UI tax reports and payments must be submitted by the last day of the month after the conclusion of each quarter. To put it another way:
Reports and payments for the first quarter are due on or before April 30.
Reports and payments for the second quarter are due on or before July 31.
Third-quarter reports and payments are due by October 31, and fourth-quarter reports and payments are due by January 31.
Your reports must be submitted online. Utilize the LWC Wage Reporting System. The first time you use the system, you must establish an account with a user ID and password. You may also make payments online via the Louisiana Wage and Tax System (LAWATS). You may pay via Electronic Funds Transfer online (EFT). You may also print a payment voucher and send it in with a check using the online system.
Even if no contributions are due, you must complete quarterly reports. If you do not file, you will face a penalty. Late payments incur interest and penalty costs.
Make a Public Notice (Poster)
You must display a notification (poster) about state unemployment claims in a visible location for all workers. The poster informs workers on when they may be eligible for unemployment benefits, when they may be denied benefits, the penalty for making false claims, and how to make a new unemployment claim. A notification that satisfies all legal criteria may be downloaded from the LWC website’s Downloads section.
Employees should not be misclassified as independent contractors.
Employers that hire independent contractors rather than employees are exempt from the UI tax. It is critical, however, that you should not misclassify an employee as an independent contractor. If you misclassify an employee, you may face penalties or fines.
Using Payroll Service Providers
You may decide that it is easier to delegate payroll obligations, including UI taxes, to an outside payroll agency. If this is the case, bear in mind that your company, or even you personally, may be held directly liable for errors made by an outside payroll firm.