Can You Collect Unemployment Benefits If You Have A Side Business?

Unemployment insurance is intended to reimburse persons who have lost their jobs and are seeking new ones. Having your own firm complicates issues, whether it’s a sole proprietorship, a corporation, or anything in between. But there are a few options worth considering.

Whether you run a side company in addition to your day job or work for yourself full-time, your side hustle may be both a benefit and a nightmare. Many firms may be compelled to shut down during a crisis, natural catastrophe, or epidemic because they are unimportant or face slowdowns and diminished profitability. 

You may be curious about your eligibility to apply for unemployment insurance if you own a company that you are forced to shut down or believe you might have to do so in the future. If you have any workers, they are allowed to file, but as self-employed company owners, your regulations are a little bit different.


How Do Benefits for Unemployed Work

  • When you lose your work, unemployment benefits, a kind of unemployment insurance, are intended to provide short-term financial support. The goal of this safety net, a cooperative initiative run by the federal administration and the states, is to provide unemployed Americans with money.
  • Unemployment insurance serves as just that—insurance—to safeguard you in the event that you unexpectedly lose your source of income from work.

Although each state sets its own unique requirements for qualifying for benefits, generally speaking, these requirements include:

  • You were fired or lost your job through no fault of yours
  • meeting the requirements for work history and earnings, which often entail meeting state standards for the duration of your job before losing it as well as the compensation you received during that period.
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Different laws may apply in your state.

Can I Get Unemployment Benefits If I Have A Side Business?

For those running a side company, the answer to this issue during the epidemic was a little simpler. For instance, as part of the Mixed Earner Unemployment Compensation program, employees who qualified for various kinds of unemployment benefits and had made $5,000 in self-employment in a calendar year were entitled to receive a $100 weekly payment in addition to standard unemployment insurance. 

The nationwide pandemic-related jobless assistance programs, however, came to an end in September 2021. The answer to whether you may get unemployment benefits while running a side company under conventional unemployment insurance systems varies case by case.

Even if you operate a side company or have a part-time job, you could be eligible to receive unemployment benefits. Your past earnings and state legislation will determine how much money you may make each week from a side business and still be eligible for benefits.

Depending on the specific rules in your area, the amount may be as high as a dollar-for-dollar cut of your side business earnings. However, some states don’t affect or reduce the benefits you get if you earn up to a certain proportion of your weekly total in additional income from a side job or other work. 

However, if you make too much money from a side job, it can disqualify you from receiving unemployment compensation at all. If you don’t qualify for benefits but don’t have enough money to pay rent, you may have to take out rent loans and get into deeper debt. But after paying the rent, you can safely try to submit all the necessary documents.

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You’ll also want to be sure to completely disclose your income from side jobs since failing to do so may be considered unemployment insurance fraud, which has a variety of consequences from having to pay back benefits with interest to facing legal action.

As a Business Owner, How Do I Apply for Unemployment?

To apply, you must prove your eligibility to work and that you are actively seeking a job. The US Department of Labor website will direct you to the official website of your state, where you may apply online. You will create an account and give your contact details.

  • Have your employer’s information (EIN if available), as well as your most recent address, and at least a year’s worth of pay stubs.
  • Keep a copy of your prior tax returns available for quick reference.
  • Fill out the form with the needed information; the request is then forwarded to the employer for verification. Because you are the employer, you must answer to and complete that section of the application as well.

You can also do it yourself:

  • Find the unemployment office in your state. The United States Department of Labor maintains a useful unemployment benefits locator map.
  • Get your personal information ready. If you want to get your benefits by direct deposit, you’ll need to provide information such as your location, mobile number, and Social Security number, as well as your bank account information.
  • Gather your earnings information. You may be asked for financial details, such as your entire annual income. If your unemployment office demands more documents, you should be prepared with 1099s, your yearly tax return, or other proof of income.

What Should You Do If You Are Unable To Get Unemployment Benefits?

If your claim for unemployment benefits as a side company owner was refused, you may still have choices to assist you to remain afloat.

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Consider Filing an Appeal

If you were refused unemployment benefits, you have the opportunity to submit an appeal. To file an official appeal, go to your state’s unemployment compensation website. The criteria for filing an appeal may differ across states. If unemployment benefits are awarded as a result of an appeal decision, the benefit is usually released on the night the decision is mailed to the parties.

If your appeal is still refused, in certain jurisdictions you may be entitled to submit a second-level appeal. California employees, for example, have 30 days from the day the original appeal was refused to submit a second-level appeal. 

Make Contact With Your Creditors

While you’re navigating a prospective appeal, it’s useful to obtain relief for urgent costs that come due while you wait for the appeal’s conclusion. Communicate with your creditors on a regular basis to explain your current financial condition. Learn about the repayment choices available to persons experiencing temporary financial difficulties from the lender or creditor. Some lenders may grant temporary deferral or forbearance.

Similarly, some people may be prepared to work out a more affordable payment schedule. This method, for example, may be handy for medical bills or phone bills. Losing a portion of your side company profits might be devastating to your financial security. However, there may be tools and solutions available to assist you to get through financially difficult times.

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