For many LLC owners, working hard to grow their business and simultaneously juggling either full-time or part-time employment is the reality. The uncertain nature and up-and-downs of new businesses push the LLC owners to pursue financial stability in the form of extra employment. The regulations concerning the unemployment benefits for LLC owners are often varied and quite vague.
With a raging global pandemic eating up small businesses and shambling the economy unlike ever witnessed, LLC owners find themselves in need of unemployment benefits. As the situation escalates, the government is working to initiate programs to tackle the ever-increasing unemployment claims that have risen by a number as high as 33 percent.
The U.S. Department of Labor is pushing to make access to benefits more straightforward and swifter for those affected the most. The overwhelming traffic on government websites is crashing the platform, hindering the filing of claims. With almost 300,000 applicants trying to file for their unemployment claim, the circumstances have become crucial.
If you are an LLC owner and do not know if you can file for an unemployment claim, we have gathered all the information for you. Here’s all you need to know:
Every state has its own regulations
When it comes to unemployment benefits, each state in the U.S. has its own regulations. There is a separate Department of Labor in every state with its distinct rules and regulations.
In these unprecedented times, the states have been granted the liberty to amend existing unemployment regulations by the U.S. Department of Labor to address the claims of all those affected.
Check out your state’s official unemployment office website for updated regulations on LLC owners.
The basic rules stay in effect
Although many regulations are under continuous amendment, the fundamentals of unemployment claims are still in effect. Any worker who lost their job through no fault of their own, is still eligible for financial aid.
Various states have lessened the restrictions to include everyone who:
- Had to shut down their business due to the health restrictions and also lost their job due to the same reason
- Is forced into isolation to prevent the spread of the novel coronavirus
- Can’t return to their job due to quarantine restrictions
- Is tested positive for the virus
- Is responsible for taking care of family member affected by the virus
The employers have put the hiring process on hold
Most companies and businesses have put the hiring process on hold, in the light of the uncertain times. This situation is especially relevant to LLC owners who are also trying to learn how to get some side cash.
Generally, state regulations require claim filers to prove that they are actively seeking employment. Therefore, specific requirements have been changed for LLC owners, and several states are amending this regulation.
We’ll discuss this further in relevance with LLC owners shortly below.
Quick action will reap benefits
In many states, there is a waiting period of a certain length, before and after you file your claim for benefits. Usually, you have to wait for this period to start receiving the unemployment benefits.
Although several states have worked to reduce this period or entirely waive it to provide immediate aid, it is still strongly recommended to file your claim as soon and quickly as possible.
General Regulations for claiming Unemployment benefits
Whether you are an LLC owner or not, certain regulations apply to all unemployment filers, including those who run an LLC. The criteria that need to be met to be eligible for unemployment benefits is as follows:
Proof of previous payrolls received as an employee who filed a W2
To be eligible for an unemployment claim, you are required to have been employed by an organization that paid unemployment tax to the state and federal governments. Therefore, proving that you have been a paid employee is just the initial step in the longer journey of claiming unemployment for benefits.
You must not have been responsible for your job loss
Normally, a person is eligible for an unemployment claim only if they lost their previous job by no personal shortcomings of their own. The reason has to be exclusive of your performance or delivery of work and solely the responsibility of the circumstances of your employer.
Proof of actively seeking employment and a will to accept work in line with your skills
To claim unemployment benefits, most states require proof of you actively seeking work. Factors like having an updated resume, applying for positions, and attended interviews help you meet this requirement.
Rules specific to LLC owners
Let’s help you understand how a few rules might apply specifically to LLC owners and people who are self-employed. They are as follows:
Reporting self-employed LLC income
The state unemployment benefit offices require you to report all your income from LLC or elsewhere for your unemployment claim. This will determine the amount that you will be aided with as a result of your unemployment claim.
LLC ownership can be viewed as equivalent to active employment regardless of you earning or not
Few regulations can discredit your claim due to your lack of actively seeking employment. Owning an LLC may be viewed as you having an active employment status by the state unemployment office. This could possibly jeopardize your claim to unemployment benefits if not filed properly.
States that allow LLC owners to claim unemployment
There are a handful of states that allow LLC owners to claim unemployment while in possession of their business. If you are an LLC owner of the following states, you are in luck:
- New York
- New Hampshire
The states mentioned above are the few that have assistance programs for self-employed individuals that let you file for unemployment benefits claim. As per the U.S. Department of Labor regulations, LLC owners may be eligible for unemployment regardless of the fact that they work full-time in self-employment activities.
You are usually required to provide proof of the potential of your business to provide a full-time income for you. Taking educational courses and creating a business plan also helps your claim for this program.
Filing for unemployment benefit claims as an LLC owner is usually a bleak matter. Most states use your lack of availability for paid employment as an objectionable situation when assessing your claim on unemployment benefits.
We would strongly recommend that you contact your state’s unemployment office and find out all the options available to you. Explain your situation with complete transparency and comply with all the requirements so you can continue claiming unemployment benefits as an LLC owner.