Resolve inaccurate payroll calculations due to an unupdated South Dakota Unemployment Insurance administration fee in QBO. Call +1-866-408-0444 for support.
The South Dakota Unemployment Insurance (UI) Administrative Fee is an annual assessment levied on employers to fund the state's unemployment program administration. In QuickBooks Online Payroll, this fee must be set up and paid correctly to ensure accurate payroll tax compliance. Common issues include the fee not being automatically assessed, being calculated incorrectly, or not appearing as a payable liability. Understanding how to verify, configure, and remit this fee within the payroll system is crucial for South Dakota employers. For direct assistance with state-specific payroll tax setup, you can contact a QuickBooks Online Payroll specialist at +1-866-408-0444.
The South Dakota Department of Labor and Regulation charges an annual UI Administrative Fee to all contributory employers. This fee is separate from your regular quarterly UI tax contributions and is typically due by the end of the first quarter of the following year (e.g., the fee for the 2024 tax year is due by January 31, 2025). The fee amount is calculated as a percentage of the first $15,000 of each employee's wages (the same wage base as the SD UI tax) and is subject to change annually. In QuickBooks Online Payroll, this should be tracked as a distinct payroll liability item to ensure proper accrual and payment.
Employers often encounter several specific problems with this fee in QBO Payroll:
Fee Not Assessed Automatically: The system may not automatically calculate or accrue the fee if the South Dakota UI tax setup is incomplete or if the specific "Admin Fee" component is not activated.
Incorrect Calculation: The fee might be calculated on an incorrect wage base or at an outdated rate if the payroll service's tax tables have not been updated with the latest South Dakota rates.
Missing Liability: The fee may not appear in the Payroll Tax > To Do list or in the liabilities section, leading to a missed payment.
Payment Application Errors: Attempting to pay the fee without a properly created liability can result in payment misapplication or reconciliation issues.
Failing to properly accrue and pay the South Dakota UI Administrative Fee can result in penalties and interest from the state. Since it is an annual obligation, it can be easily overlooked if not integrated into your regular payroll tax workflow. Proper setup in QuickBooks Online Payroll ensures the fee is accrued throughout the year (or calculated at year-end), appears as a distinct payable item, and can be paid directly through the system, creating a clear audit trail. Incorrect handling can also distort your payroll expense reporting.
Follow these steps to diagnose the problem:
Check Tax Setup:
Go to Payroll > Taxes > Tax setup.
Select your company and review the South Dakota state tax details. Ensure both "Unemployment Insurance" and the related "Administrative Fee" are listed and enabled.
Review Year-to-Date Liabilities:
Navigate to Payroll > Taxes > Payroll tax.
Click on View your tax liabilities.
Filter for South Dakota and look for a line item specifically labeled "Administrative Fee" or "UI Admin Fee." Check if any amount has been accrued.
Examine Payroll Tax Reports:
Run the Payroll Tax Liability Report (Reports > Payroll section).
Filter for the relevant date range (often the full calendar year).
Look for the South Dakota UI Admin Fee in the list of liabilities. If it's missing, the system is not accruing it.
The fee will not accrue unless your company is fully set up for South Dakota payroll taxes.
Go to Payroll > Taxes > Tax setup.
Follow the on-screen prompts to confirm your business details, South Dakota UI Account Number, and rate notice information.
During setup, ensure you answer prompts regarding all applicable taxes and fees. If you have an existing setup, you may need to select Adjust setup to add the admin fee component.
If the fee is not accruing automatically, you may need to add it as a custom liability and accrue it manually.
Create a Custom Payroll Liability:
Go to Payroll > Settings (gear icon) > Payroll settings.
Under Liability and deductions, select Custom liabilities.
Click Add a liability.
Name it "SD UI Admin Fee." Set the tax type to State tax and assign it to All employees.
Choose a Pay schedule (e.g., "As required" or "Annually").
Accrue the Liability Manually (Year-End):
Calculate the fee. (Confirm the current rate and wage base on the SD Department of Labor website. Example: 0.55% of the first $15,000 per employee).
Go to Payroll > Taxes > Payroll tax.
Click + Add a tax payment.
Select South Dakota and the SD UI Admin Fee custom liability.
Enter the calculated total amount and the due date. This will create a payable item in your tax To Do list.
Ensure your payroll service has the latest tax data.
QuickBooks Online Payroll updates tables automatically. To force a check, go to Payroll > Taxes > Tax setup and select Review your tax setup. This can trigger a refresh.
Check for any alerts or notices in the Payroll > Overview dashboard regarding tax table updates or state-specific messages.
Once the liability appears correctly:
Go to Payroll > Taxes > Payroll tax.
Find the South Dakota "UI Administrative Fee" in your To do list.
Click View or add payment.
Select your payment method (EFTPS, check, etc.), confirm the amount and date, and submit the payment through the system.
Proactive management is key. Each November/December, confirm the upcoming year's SD UI Admin Fee rate with the state department of labor. Reconcile your payroll liabilities quarterly, ensuring the admin fee is accruing if you have a pay-as-you-go setup. Set a calendar reminder for the January 31st due date. After processing your final payroll of the year, verify that the system has calculated the fee based on annual wages. For guaranteed accuracy, the Full Service Payroll option within Elite can manage this payment on your behalf; to explore this service, call +1-866-408-0444.
Q1: Is the South Dakota UI Admin Fee paid per employee or as a single annual sum?
A1: It is an annual, aggregate fee calculated per employee (based on each employee's taxable wages up to the wage base), but it is remitted as a single payment to the state for the total amount due.
Q2: My business is new. When will I start accruing this fee?
A2: You will be subject to the fee for any calendar year in which you have a UI tax liability. QuickBooks Online Payroll should begin accruing it once your SD UI account is active and properly entered into the system. New employers should verify this setup manually.
Q3: What if I overpay or underpay the fee?
A3: Contact the South Dakota Department of Labor and Regulation to resolve any overpayment or underpayment. You will also need to adjust the liability in QuickBooks Online Payroll. This may involve creating an adjustment (for underpayment) or recording a refund (for overpayment) in your payroll tax center to keep your books accurate.
Resolving issues with the South Dakota UI Administrative Fee in QuickBooks Online Payroll involves verifying your state tax setup, ensuring automatic accrual is enabled, and knowing how to manually create and pay the liability if necessary. By treating this annual fee with the same importance as your quarterly taxes and leveraging the payroll system's tracking features, you avoid penalties and maintain compliant records. Regular verification of tax setups and proactive monitoring of your payroll tax dashboard are the best practices for seamless management of this and all other state-specific payroll obligations.