ABOUT LLCs

FORMING AN LLC

LLC RELATED

Employment Benefits

by brandy
(oregon)

If you are an LLC and pay into unemployment benefits, can you lay yourself off and collect employment benefits?

Answer

If an LLC pays an employee, and thereby pays unemployment insurance, then a laid-off employee can collect unemployment benefits (provided all the other requirements are met).

Your question seems to be, can a member of an LLC pay him/her self a W-2 wage and then lay themself off for unemployment benefits? No. The unemployment statutes usually prohibit the owner of the business from laying him/her self off and collecting unemployment.

Comments for
Employment Benefits

Average Rating starstarstarstarstar

Click here to add your own comments

Nov 15, 2010
Rating
starstarstarstarstar 		loss
by: Anonymous

what if your LLC makes no money? can you still collect?

or can you elect to be taxed as a corporation, and give no payments to yourself?

thanks.
Response

If the LLC elected to be taxed as a corporation, and you paid yourself a wage for a time, and then stopped paying yourself, your eligibility for unemployment depends on your state. Some states, for example, prevent corporate officers who own more than X% of the company stock from claiming unemployment (in Washington, for example, it's 10%).

There is a pilot program operating in a few states that might permit the self-employed to collect a form of unemployment compensation:

Self-Employment Assistance.

Here's how the program is described:

"Self-Employment Assistance offers dislocated workers the opportunity for early re-employment. The program is designed to encourage and enable unemployed workers to create their own jobs by starting their own small businesses. Under these programs, States can pay a self-employed allowance, instead of regular unemployment insurance benefits, to help unemployed workers while they are establishing businesses and becoming self-employed. Participants receive weekly allowances while they are getting their businesses off the ground.

This is a voluntary program for States and, to date, Delaware, Maine, Maryland, New Jersey, New York, Oregon and Pennsylvania have Self-Employment Assistance programs. The State Workforce Agency web sites for these states can be accessed at: http://www.servicelocator.org/OWSLinks.asp."

Click here to add your own comments

Return to LLC Made Easy Home