If your small business has employees working in New Hampshire, you’ll need to pay New Hampshire unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In New Hampshire, state UI tax is one of the primary taxes that employers must pay. Unlike most other states, New Hampshire 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 New Hampshire’s UI tax.
As a New Hampshire employer, your small business must establish a UI tax account with New Hampshire Employment Security (NHES). You must register for a UI tax account within 30 days of starting business as an employer. (In general, the registration requirement also applies to a business that becomes an employer by acquiring another business that already was an employer.) Once registered, NHES will send you a UI account number and a registration code. You can use the code to set up an online account with NHES for subsequent reporting and payment of New Hampshire UI taxes.
For the required initial registration, use the Employer Status Report form. You can download blank copies of the form from the Forms and Publications section of the NHES website. There is no fee to register your business with IDES.
Note: To establish your New Hampshire 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.
If you have a for-profit business in New Hampshire, you generally become liable for state UI taxes as soon as one of the following conditions is true:
The first two items on the list are rules that also make a business liable under FUTA, so in most cases you would become liable under federal and New Hampshire UI laws simultaneously. 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 state UI 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. In recent years, that amount, known as the taxable wage base, has remained stable at $14,000 in New Hampshire. However, it’s always possible that the amount could change.
The state UI tax rate for new employers, also known as the standard beginning tax rate, also can change on a quarterly basis, largely due to fluctuating surcharges and reductions. Recently, the rate generally has been somewhere between 1.7% and 2.7%. 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 New Hampshire, UI tax reports and payments are due on the last day of the month following the end of each calendar quarter if you file on paper. In other words, reports and payments filed on paper are due by the following dates:
Employers who file online have an additional two business days to file.
To file on paper, use the Employer Quarterly Tax Report. NHES sends blank reports to every employer at the end of each quarter. You can pay with a check. To file and pay online, use New Hampshire’s WebTax system. If you file online, you have the option to pay using Electronic Funds Transfer (EFT).
You must file a report for every quarter even if you didn’t employ anyone in that quarter and no taxes were due. If you expect not to employ anyone for one or more quarters, you can make a written request for a waiver of filing requirements for the quarter involved. Waivers aside, 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 conspicuous place for all employees. The poster provides information on how and when an employee can file an unemployment claim. You can download a notice (Unemployment Notice) from the Forms and Publications section of the NHES website that meets all legal requirements.
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 New Hampshire UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and NHES websites for the latest information. NHES also publishes a detailed Employer Handbook that you can download from their website. In addition to state UI tax, employers have other responsibilities not covered in this article, such as federal UI and withholding taxes, and required reporting of new hires. You can get more information about other small business tax issues in other articles on Nolo.com.