If you employ people in North Carolina, you may be legally required to pay unemployment insurance taxes. Find out if your business meets the conditions and learn how to set up an employer tax account.

What is unemployment insurance tax?

Employers pay unemployment insurance taxes based on employer payrolls. Unemployment taxes are not deducted from employees’ wages. The N.C. Division of Employment Security (DES) collects these taxes from employers. When needed, the funds are used to pay unemployment benefits to qualified workers.

As an employer, you may be responsible by law (liable) to pay taxes based on your business type, how many people you employ, and your quarterly wages.

What kinds of employers are required to pay unemployment taxes?

You are required to pay taxes if your business fits into one of the categories below and meets the conditions listed:

• General Business
  • Paid quarterly wages of at least $1,500; OR
  • Employed at least one worker in 20 different weeks during a calendar year.
• Professional Employer Organization or Temporary Agencies
  • Any employment service company that contracts to supply individuals to do employment services for clients.
• Domestic Service
  • Paid quarterly wages of $1,000 or more for services in a private home, college club, or fraternity/sorority.
• Government Agency or Department
  • Any state, local, or federal government agency or department.
• 501(c)(3) Nonprofit Organization
  • Any nonprofit that has four or more workers/employees in the United States with at least one worker in North Carolina and employed 20 different weeks in a calendar year.
• Agricultural Labor
  • Employs 10 or more workers on any day during 20 different weeks in a calendar year; OR
  • Pays quarterly gross wages of $20,000 or more.
• Indian Tribe
  • As defined in the Federal Unemployment Tax Act and IRC 3306.

You are also required to pay unemployment taxes if you:

• Acquire any or all portion(s) of a liable business in North Carolina.
• Voluntarily elect to become liable regardless of not meeting the criteria.
• Are subject to the Federal Unemployment Tax Act, 26 U.S.C § 3301 et seq.

How to Get Started

You need an Employer ID Number if you must pay unemployment taxes. There are two ways to apply for an Employer ID Number:

1. Apply online and create an NCSUITS account.
2. Download the Employer Status Report form (NCUI-604), fill it out, and return it to DES.

If you apply online, you will get your Employer ID Number and liability status at the end of the registration process.

Based on the information you provide when you apply, you will get a letter with your liability date and tax rate information. Learn more about tax rates for employers.