Understanding the SUTA “Bonus”
Every staffing company knows that margins are tight and every dollar counts. But there’s a hidden “bonus” that shows up every year when your employees hit their SUTA (State Unemployment Tax Act) limits. It’s one of those behind-the-scenes moments that quietly boosts your bottom line. Once employees reach their annual wage cap for SUTA, the employer’s tax liability for those workers stops. In other words, the staffing company keeps paying the same bill rates, but payroll costs go down.
Why It Matters to Your Bottom Line
Think of it as an end-of-year dividend for staffing companies that have kept their people working. The longer your contract employees stay on assignment, the faster they reach those limits and the sooner your costs drop. That’s real money back into your business. Professional placement firms tend to hit these limits early because of their higher pay rates, but even entry-level and mid-range employees can reach them with steady hours and consistent assignments.
Turning Savings into Employee Loyalty
This is where smart staffing operators can take it a step further. Use it as an opportunity to reward loyalty. When your contract employees stay, you win financially. So, consider sharing that success. A small year-end bonus, an extra PTO day, or even a simple thank-you can go a long way. Not only does it help you keep good people, but it reinforces that staying with your agency has value. It’s a win-win! Employees feel appreciated, and your bottom line improves.
Check Your EOR or PEO Costs
If you’re using an EOR (Employer of Record) or PEO (Professional Employer Organization), it’s worth asking a key question: Do your administrative costs go down once your employees hit their SUTA limits? Many providers don’t automatically adjust these costs, which means you could be missing out on savings that should rightfully be yours.
How Madison Resources Helps You Leverage SUTA Limits
That’s where Madison Resources steps in with real value. Our clients have access to detailed reporting that highlight which employees are approaching or have already hit their SUTA limits. That kind of visibility is powerful. You can forecast your year-end savings, plan better for upcoming payrolls, and even make smarter placement decisions.
Strategic Staffing for Maximum Savings
For example, if a worker was employed through your staffing company earlier in the year and is now close to the limit, it makes sense to put them back out on assignment first. Until the end of the year, they’re effectively a lower-cost employee. Same bill rate, less employer tax. That strategic awareness gives you a competitive edge and helps stretch your margin further without raising rates or cutting pay.
Small Efficiencies, Big Impact
In staffing, it’s a penny business. Small efficiencies make a big difference. Understanding and leveraging SUTA limits is one of those subtle, often overlooked ways to boost profitability while rewarding the people who help make it happen. Madison Resources gives you the data and insight to make that process easy – and to keep your business one step ahead.
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