Employee Benefits

Applying an Alternate Tax Code to Save Thousands for a Nonprofit

Applying an Alternate Tax Code to Save Thousands for a Nonprofit

The Client

A Sacramento-based nonprofit agency that provides supported living services for the developmentally disabled. They have approximately 100 employees and consistently run their operations on a very tight budget.

The Challenge

The service this agency provides is extremely labor intensive: Three to four employees are allocated to each person they serve. With rising costs for workers’ compensation and employee benefits, in addition to minimum-wage increases, paid-sick-leave requirements, and new overtime regulations for home healthcare workers, they needed to find a way to reduce their ballooning operational costs.

The Solution

Because they were a 501(c)(3) organization, we knew they were eligible to opt out of the State Unemployment Tax Act (SUTA) and to enroll in an alternative program called the Bonded Service Program—a more economical alternative than the SUTA that takes the guesswork and risk out of reimbursing the State for unemployment claims. The Bonded Service Program is most effective when implemented at the beginning of the fiscal year in order to maximize the State Unemployment Insurance (SUI) tax savings. Because the application process can be somewhat lengthy, we informed them of their options well before the January deadline, which gave them time to evaluate the benefits and make the switch.

The Results

Enrolling in the Bonded Service Program resulted in an annual savings of more than $10,000—a 20 percent cost reduction. As a result, they are now able to run their organization more efficiently and provide the same level of service without the limitations of their previous budget.