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How does a large company forecast payroll expenses like SUTA and FUTA?

These seem like very complex models that a company would have to build. How would a large company of many thousands of employees predict this where there are employees in almost every state and, each state has a different rate and each state has it's own cap rate. It seems like it would be possible if the payroll tax didn't cap when wages hit a certain amount. Any ideas? Looking to predict month to month. It may be easy to forecast all together over the year, but what about on a month to month basis?

Public Comments

1. there are tools such as Hyperion Planning (also Essbase) from Oracle and may be some from SAP and other company that helps to do the same.
2. Large companies use sophisticated software such as Hyperion, SAP, Oracle, Peoplesoft, etc. to manage cost accounting and budgeting. Projecting payroll tax costs is one of the easier tasks as the rates are flat. If you know your payroll, the taxes are a no-brainer for the most part. FUTA and SUTA taxes usually cap out at wage levels below all but the lowliest of part-timers' wages so that's not any challenge at all.
3. They would do it the same way as a small company but there would just be more inputs to the equation.
4. For monthly projections, use your payroll budget. The employee's monthly average wage in each state times that state's rate times the number of workers will give the answer. That monthly rate will also allow you to compute the approximate max-out date for each state. Suta and Futa expense is higher at the beginning of the year, and lowers as employees max out. That is particularly true if the company's work force has little turnover. As mentioned above, payroll tax projections are among the less complicated ones managerial accountants must make.