Everything employers need to know about paying Minnesota unemployment insurance taxes.
If your small company employs people in Minnesota, you must pay the Minnesota unemployment insurance (UI) tax. The UI tax pays for unemployment insurance programs for qualifying workers. In Minnesota, the state unemployment insurance levy is simply one of numerous taxes that companies must pay.
Varied states have different UI tax policies and rates. The fundamental regulations for Minnesota’s UI tax are as follows.
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Register with the Revenue Department and the Employment and Economic Development Department.
As a Minnesota employer, your small company must apply for a taxpayer ID number with the Minnesota Department of Revenue (DOR). This is a required initial step before registering with the state for UI tax reasons. You may register with the DOR online, in person, or over the phone. To register online, go to the DOR website’s e-Services area. To register on paper, use Form ABR, Application for Business Registration, which may be downloaded along with instructions from the DOR website’s businesses area. Form ABR may be sent through standard mail or fax. Check the DOR website for the most up-to-date phone registration information. There is no cost to register your company with DOR.
Once you have received your DOR tax ID number, your small company must open a Minnesota UI tax account with the Minnesota Department of Employment and Economic Development (DEED). You must expressly register with the Minnesota Unemployment Insurance Program, which is managed by DEED and is often referred to as “Unemployment Insurance Minnesota” (UIMN). You should register as soon as your small firm pays salaries for UI-covered personnel and, in any event, before the due date of your first necessary quarterly wage report. However, do not register until you have received your covered salary.
You may open an account with UIMN either online or over the phone. You will be issued a Minnesota UI employer account number after you have enrolled. To register online, go to:
Go to UIMN.org, click “Employers & Agents,” and then click “Employer” under “I Need To….Register for an Account.”
Check the UIMN website for the most up-to-date phone registration information. There is no cost to register your company with UIMN.
You will need a federal employment identification number to set up your Minnesota 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.
Unemployment Insurance Tax Liability Regulations
Most for-profit firms in Minnesota are subject to state unemployment insurance taxes. Unlike most other states and the federal government, Minnesota does not have a threshold condition before requiring UI taxes, such as paying a certain amount of wages in a calendar year or having at least one employee for a minimum number of weeks during a calendar year. However, as with other states and the federal government, other restrictions apply to agricultural (farm) workers, domestic (in-home) workers, and employees of certain (but not all) non-profit organizations, which are not addressed here.
One piece of good news is that state unemployment tax payments are often deductible from federal unemployment taxes.
Wage Structure and Tax Rates
Each employee’s salaries are subject to UI tax up to a certain yearly limit. In Minnesota, the taxable salary base has grown by $1,000 every one or two years over the previous decade. It has recently risen to about $30,000. Because the rate fluctuates, you should visit the UIMN website for the most up-to-date information.
The state UI tax rate for new employers, commonly called as the standard commencing tax rate, might vary from year to year. It has consistently been about 1.75% in recent years. New employers in so-called high experience rating sectors face a substantially higher beginning rate, which has lately been approximately 9%. Businesses with a high experience rating have traditionally had a high level of unemployment, such as those involved in residential, commercial, or industrial building. 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.
File UI Tax Reports and Payments on Time
In Minnesota, unemployment insurance tax reports and payments are due one month following the end of each calendar quarter. In other words, reports and payments are required by the dates listed below:
Returns and payments for the first quarter are due on or before April 30.
Returns and payments for the second quarter are due on or before July 31.
Third-quarter returns and payments are due by October 31, and fourth-quarter returns and payments are due by January 31.
If any of the later dates occurs on a weekend or a state government holiday, the deadline is the next state government business day.
Wage Detail Reports may be filed online or by an automated phone system. To submit online, go to UIMN.org and go to My Home Page, then click Submit Wage Detail.
Payments must be made online by large firms (50 or more workers). Smaller businesses may pay online or with a physical check. To make electronic payments, go to UIMN.org and log in to the Minnesota Employer Self-Service System. If you are qualified and choose to pay by check, you must print a payment voucher to include with your check. A coupon may be downloaded from your UIMN.org account.
Quarterly wage detail reports must be filed until your UI tax account is terminated, which includes the conclusion of the calendar quarter in which your account is to be discontinued. If you have an active employer account and a quarter with no covered wages paid, you must file a Zero Wage Report. If you do not file, you will face a penalty.
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 that they have the right to apply for UI benefits and offers basic contact information for UIMN. You may obtain a notice that satisfies all legal standards from the Workplace Posters area of the UIMN website.
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.