Reduction in Unemployment Taxes Alleviates Recession Pain for Small Business

Hudson, MA, April 07, 2010 --(PR.com)-- Xcel HR announced today that its new “Professional Employer Organization “ or PEO service is helping small businesses in New England, the Mid Atlantic, and the Midwest reduce their payroll taxes. Through its co-employment program, Xcel HR clients can take on the SUI rate of Xcel HR’s PEO, which is often substantially lower than their own.

As the Recession has worn on, the layoffs that many employers have been forced to make, often painfully, have lead to a rapid increase in unemployment claims. Higher claims, in turn, lead to higher charges against an employer’s State-managed unemployment account. As the ratio of claims goes up, the renewal rates for SUI (or SUTA) also go up. These increased payroll taxes can adversely impact employers for up to five years.

A PEO or co-employment arrangement allows Xcel HR to bring the employees of its clients under a different FEIN number. By joining a pool of employers, that FEIN number can be higher or lower than the employer’s own FEIN. When lower, their SUI rate immediately goes down, thus saving payroll taxes up to the statutory limit (or cap) set by every state.

PEOs enjoy no “magic bullet” when it comes to unemployment. If the sum total of their clients’ unemployment experience is poor, than every one of the PEO clients can end up paying a higher SUI rate than they might on their own. However, if the PEO is well managed, and growing, especially these days as the unemployment rate appears to be headed lower, new clients can enjoy tax savings as well as relief from the administrative burden of contesting and auditing claims.

“In times like these,” said Ted Winglass, President of Xcel HR, “every penny counts. We are pleased to be able to do what we can to save our clients money.”

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