If your small business has employees working in Florida, you'll need to pay Florida unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In Florida, state UI tax is one of the primary taxes that employers must pay. Unlike most other states, Florida does not have state withholding taxes. However, other important employer taxes, not covered here, include federal UI and withholding taxes.
Different states have different rules and rates for UI taxes. Here are the basic rules for Florida's UI tax.
Note: Florida formerly used the term “unemployment tax,” which is commonly used in other states. However, Florida now officially uses the term “reemployment tax.”
As a Florida employer subject to UI (reemployment) tax, your small business must establish a Florida reemployment tax account with the Florida Department of Revenue (DOR). You must report your business's initial employment in the month following the calendar quarter in which employment begins. You can register for an account with the DOR either online or on paper. Once registered, you'll be issued a reemployment tax (RT) account number.
To register online, use the DOR's online registration website. To register on paper, use Form DR-1, Florida Business Tax Application. The paper form contains sections to register your business for a variety of state taxes. Blank forms are available for download from the Forms and Publications section of the DOR website. There is no fee to register your business for reemployment tax purposes.
Note: To establish your Florida UI tax account, you'll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.
As a Florida for-profit employer, you generally are liable for state UI taxes if you meet any of the following conditions:
The first three listed items are essentially the same rules that apply for liability under FUTA. Therefore, if you're liable under FUTA, you're likely liable for Florida reemployment taxes, and vice versa. Different rules, not covered here, apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.
One piece of good news is that Florida reemployment tax payments generally can be credited against your FUTA taxes.
UI tax is paid on each employee's wages up to a maximum annual amount. That amount, known as the taxable wage base, is subject to change. In contrast to other states, the wage base actually decreased in Florida in the last few years. Currently, the amount is stable at $7,000. However, it's always possible the rate will change again in the future.
The state UI tax rate for new employers also can change from one year to the next. However, in recent years it has been stable at 2.7%. That remains the rate until an employer has reported for approximately 10 quarters (two-and-a-half years). Established employers are subject to a lower or higher rate than new employers depending on an “experience rating.” This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.
In Florida, reemployment tax reports and payments must be submitted by the end of the month following the calendar quarter for which the report is due. In other words, reports and payments are due by the following dates:
Payments made by Electronic Funds Transfer (EFT) or on the Internet must be initiated by 5:00 p.m. ET on the business day prior to the payment due date to be considered timely. If a tax due date falls on a Saturday, Sunday, or legal holiday, the deposit by EFT is required on or before the first banking day thereafter.
Larger employers (10 or more employees) are required to file reports and payments electronically (online). Other employers can file reports and payments online or on paper. (There also are options to develop your own reporting software or to upload files; those options are not covered here.)
To file online, use the DOR's e-Services File and Pay website. You can pay online using Automated Clearing House (ACH) debit or credit. To file on paper, use Form RT-6, Employer's Quarterly Report. Every quarter a preprinted Form RT-6 is mailed to each liable employer who does not file and pay electronically. You can also download blank forms from the Forms and Publications section of the DOR website. Failure to receive the reporting form does not relieve you of your filing responsibility. Form RT-6 includes a payment voucher that you should include with your payment check.
You must file a report every quarter regardless of employment activity. If you had no employees for a particular quarter or all wages for a particular quarter were beyond the wage base (excess wages), you still must file a report. You will be subject to a penalty if you fail to file.
You are required to post a notice (poster) regarding state unemployment claims in a place where all employees can see it. The poster provides basic information on who is eligible for unemployment compensation benefits and how to file an unemployment claim. You can download a notice that meets all legal requirements (Form RT-83, To Employees) from the DOR website.
Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it's important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.
You may decide that it's easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.
This article touches on only the most basic elements of Florida UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and DOR websites for the latest information. The DOR also has two helpful publications, Employer Guide to Reemployment Tax (Form RT-800002) and What Employers Need to Know about Reemployment Tax (Form RT-800058), that you can download from the Forms and Publications section of the DOR website. In addition to state reemployment tax, employers have other responsibilities not covered in this article such as federal UI and withholding taxes, and required reporting of new hires, and required retention of employee records. You can get more information about other small business tax issues in other articles here on Nolo.