Can Small Business Owners File For Unemployment?

‘Unemployment’ the word itself has the rage of not being able to utilize the skills to generate revenue or earn for livelihood. The whole discussion about unemployment revolves around the employees who have lost their jobs, but what about those small business owners who himself are the employer lost their businesses, and are now unemployed? Can small business owners file for unemployment the same way? Go through the article and get all your queries resolved.

There are certain guidelines to avail the unemployment benefits, in normal circumstances it has its own structure to follow up, but the pandemic coronavirus changed the world so the guidelines have also been amended. Let’s go through them and try to understand the process, as well as the eligibility criteria and how to apply.

Unemployment Eligibility Criteria for Business Owners

As per the other rules of government, there are also unemployment guidelines. so, you must go on through them: 

The unemployment benefits are reserved for employees who registered, not for the unincorporated business. But if you run a business and work as an employee earning wages with a W-2 and not 1099, and paid the state and center the unemployment taxes, you lost your job and still seeking a job, and thinking of Can Small Business Owners File For Unemployment? then you might be eligible for unemployment benefits.

As you know covid-19 changed the scenario in every aspect, and field so in the case of unemployment benefits, here is the relaxation for small business owners who have lost their income or are unable to work due to Covid-19. If you have no current source of income through your business and lost it, then you may go for it. Although there are some restrictions, so you may not be eligible if you don’t fulfill the criteria, as such:

• your business may be run remotely.
• you got new employment.
• The reason for the closure of your business is not covid-19. 

Due to CORONAVIRUS, the federal government’s Coronavirus Aid and Economic Security Act (CARES Act) changed its terms and conditions for unemployment benefits to self-employed people. If you are the only one who is taking money from the business then you’re not eligible to file for unemployment insurance or we can say that you are not the employee. According to the U.S. Department of Labor, you are eligible if your business is temporarily not permanent or you expect to return to start their business but are being quarantined right now. 

In case, you were not eligible for getting regular unemployment benefits, you could maybe qualify for the federal Pandemic Unemployment Assistance under the CARES Act. If you are wondering about Can Small Business Owners File For Unemployment? So, if you are a small business owner you’ll get 600 dollars per week in addition (whether you are getting regular unemployment benefits or not). It totally depends upon in which state are you living if you want Unemployment benefits you just only need to find out their guidelines.

Non-Eligibility Criteria for Business Owners

You could not be getting regular unemployment benefits if you are able to get paid sick leave or family leave or you are able to operate your business or work from your home. And last if you have closed your business, not because of the coronavirus in this case you were not able to get the regular unemployment benefits. For these three reasons, you are not to come under the federal government’s Coronavirus Aid and Economic Security Act (CARES Act) terms and conditions.

How long you can get unemployment benefits

For the small business. gig workers, freelancers, and part-time workers have extended a $2 trillion coronavirus stimulus bill for unemployment benefits. Most states are giving 26 weeks for unemployment benefits and the federal government’s Coronavirus Aid pay of $600 lasts up to 4 months but for eligible workers CARES Act gives an extra 13 weeks of unemployment benefits. So, by this now the total benefits weeks are 39, which totally depends upon the state wise. 

What kind of Unemployment benefits Can I Get?

As a business owner, if you are eligible for unemployment benefits you would get the benefits of unemployment. These benefits are only given for six to seven months according to the state government rule-wise. If you have applied for unemployment benefits as a small business owner you can expect to get only $40 to $450 per week.

In case if you want to know how many claims you’ll get you should contact your state claim manager, he will tell you exactly how much money you’ll receive. As we discussed above that due to the Corona Virus you’ll receive an extra $600 per week till July 31, 2020, as per the CARES Act. And until this expires you can not file another claim for unemployment benefits.

Small-Business Owners can also get some other unemployment benefits. If you are not eligible for claiming the file of unemployment benefits and your financial situation is not good and your business is in trouble to closing off. Then you have some alternatives for the claims that will help you to raise your business and these are:

Paycheck Protection Program

In the course of Covid-19, this program was created by the Federal Government for the help of small-business owners to cover payrolls for running their small businesses. In this program, depending upon the business that is using the funds, the Federal Government gives 60% of payroll costs to their small-business owners and it is totally free money for them to run their business.

This program is not available only for small-business self-employed persons and can also take the advantage of the Paycheck Protection Program. Through this program, a small-business and self-employed person can cover their income losses or they can earn extra money.

SBA Disaster Loans

SBA Disaster Loans are given to business owners that have been affected by a major disaster like Natural disasters, coronavirus pandemics, and so on. In each disaster, there are specific terms and conditions under which the business owners will get the loan. If the business owner qualifies for all the terms and conditions then the SBA Disaster community provides them their capital into the millions and they have a very low-interest rate and favorable repayment terms.

With the exception, there is only one condition in which the business owner will get the funds directly through the SBA and that is the Express Bridge Loan program.

Some different types of SBA Disaster Loans for businesses are:

• Physical Disaster Loans
• MREIDL (Military Reservists Economic Injury Disaster Loans)
• Express Bridge Loan Pilot Program
• Home and Personal Property Disaster Loans
• EIDL (Economic Injury Disaster Loans)

How can small-business owners apply for unemployment?

First, you have to confirm whether you are eligible to apply for unemployment as a business owner or not. But if you are eligible then directly, you can apply to your state. We have already discussed that the unemployment benefits process is dependent upon the state-wise not on the federal government. You have to fill out the form that will be provided by the state and the mentioned documents will be needed when you submit the form to their state:

• Your Employer Identification Number (EIN)
• Your last year’s pay stubs.
• Your business and personal tax returns.

How unemployment benefits are affected by the CARES act?

After the pandemic, the federal government takes many decisions for the benefit of people and the unemployed people who lost their businesses and jobs. So, the federal government releases some compensation through Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which is considered unemployment compensation. This act helped many self-employed workers including sole proprietors, independent contractors, and gig workers who can now get unemployment benefits thanks to the Pandemic Unemployment Assistance clause.

The CARES Act also gives an additional $600 per week in compensation and extends unemployment benefits by 13 weeks (for a total of 39 weeks of benefits). The CARES Act gives benefits to small business owners to get unemployment benefits like other as other people get. You must, in essence, be unemployed as a result of direct COVID-19 effects, such as a necessary business shutdown. Applying for unemployment compensation through your state is an option.

If you pay in, you get paid this is the universal rule about unemployment for small business owners. If you want This is true even if each state administers its unemployment benefit programs slightly differently. Therefore, you most likely qualify for unemployment benefits if your small firm has paid unemployment taxes on your pay. But here’s why that could provide a challenge for certain business owners and entrepreneurs: Depending on your corporate structure, you might not have received a standard income.

The only prerequisite for receiving unemployment benefits is paying unemployment taxes. Unemployed entrepreneurs must fulfill the same requirements as fired workers in order to be eligible for unemployment benefits. They must be able to find no other suitable employment and be available and prepared to work. Additionally, depending on the state in which you reside, there can be other issues.

Additionally, several jurisdictions have strong laws against obtaining job benefits after self-firing. Therefore, not only can it be challenging to demonstrate that you are unable to get employment after recently closing your business, but it might also be counterproductive. Therefore, consult a knowledgeable employment law expert first before closing your business and applying for unemployment.

Conclusion

If you are thinking of filing for unemployment as a small-business owner or self-employed then the first thing is to check whether are you eligible for claiming or not. All things depend upon the state-wise, whether you are qualifying or not. Due to the Coronavirus, some of the terms and conditions have changed and you have so many other options for getting funds for your business to manage your company’s financial resources.