Small businesses are considered the major engine of the economy. Now that manufacturing jobs have mostly moved overseas, small businesses play a significant role in employment. Based on the functioning of small businesses, economists can actually predict how our economy is placed.
Small businesses and unemployment are something that we will discuss in this article. Small businesses help in dealing with unemployment by hiring individuals. Also, small business owners should consider hiring locals who have the right expertise and give them adequate compensation so that they get an opportunity to empower their community.
As lack of appropriate skills stands as the major reason for unemployment, small business owners can also support educational programs. Though one small business may not seem to do much about unemployment, all of them put together can indeed make a big difference.
Can Business Owners File for Unemployment – Coronavirus?
The current scenario of the pandemic has hit the small businesses and the question revolves around small business unemployment claims. With the economy fully functioning, the answer would depend on various factors. However, COVID has triggered a new normal in the arena of unemployment for the time being through the CARES act.
Through this, self-employed business owners can claim unemployment benefits. The new guidelines do have a few more factors that need to be addressed in order to collect the unemployment benefits. Eligibility depends on factors like:
- If small business owners worked as earning employees of the company
- If federal & state unemployment taxes are paid
- If their employment status is lost
- If they are seeking alternative employment.
So do small businesses have to pay unemployment? Unemployment responsibilities begin from the moment business owners make a hire. When someone is hired, the same is reported to the state and the headcount will be added to your unemployment tax obligation. When an ex-employee files for unemployment, then the money that will be paid out to them is actually the money the business owners have been paying for the taxes.
Unemployment taxes comprise of Federal unemployment tax act (FUTA) tax & State unemployment tax act (SUTA) tax; it is the tax which your business is paying for the benefit of employees.
I sold my business can I collect unemployment– If you decide to close your business due to COVID, you also tend to lose the employee status. Loss of employment is considered a major element in an unemployment claim. You are eligible for employment if you fall under the following reasons:
- If you were laid off
- If you are fired due to any misconduct
- If you quit voluntarily due to some good cause
- If you are fired due to any labor dispute
- If you lost your job due to external factors like COVID
Can I Collect Unemployment While Starting My Own Business?
Well, many experts say yes! There are a new initiative from the U.S department of labor, self-employment assistance programs that allows people to receive unemployment while they launch their new business.
How to Get Unemployment Insurance for My Business?
In order to apply for unemployment insurance benefits, you should file a claim with the unemployment insurance program in your state. Follow the steps to get unemployment insurance:
- Contact your State’s unemployment insurance program after becoming unemployed
- You should file the claim with the state where you actually worked. If you are now living in a different state then contact the State unemployment insurance agency to get information on how to file the claim with other states.
- While filing a claim, you will be asked to provide information like the address & dates of your former employment. Provide correct & complete information so that your claim is not delayed.
- Have your personal details like address, phone number, social security number, and also your bank account details to which you would like to receive your benefits.
- Prepare your income information. You may be asked for details about your financial information like what was your total income for the year. Your unemployment office may ask for additional information; make sure you have 1099s, an annual tax return, or any other proof of income on hand.
- It will take two to three weeks to receive your first benefit check after your file your claim.
You are not eligible for unemployment benefits if:
- You can run your business remotely
- Your business is closed due to some other reason other than COVID
- You find new employment
We have thoroughly discussed how unemployment benefits work for small business owners. So it is clear that though unemployment benefits are for employees and not business owners, one can claim unemployment benefits if you are an employee in your own business.
1. Does unemployment hurt small businesses?
Unemployment can affect small businesses in ways like low sales, cash flow shortages, higher unemployment tax rates, etc.
2. Does everyone get an unemployment amount?
You should be an employee in your own business to claim unemployment benefits.