Can I start a business while on unemployment in California EDD?

Okay so just to be clear - if I'm spending time building a website and setting up a business structure but have zero clients and zero income yet, I still report that as working?

The certification question is about whether you worked or were self-employed. Setting up a business where you intend to earn money would put you in that category. I'd contact EDD directly to ask how to report your specific setup situation rather than guess.

I reported my freelance stuff from day one and EDD never had an issue with it. As long as you're honest about hours and income you should be fine.

That makes sense. So theoretically I could do some business planning and even some light client work as long as I'm still actively job searching and would actually take a full-time position if something came through?

Exactly. You have to genuinely be available, not just technically claim to be. Keep records of your job search activities too.

This is the part most people miss honestly. The income reporting people get right but the availability piece they forget about.

Hours worked even with no income - that's the detail I would have gotten wrong. So EDD cares about the time you put in not just what you earned?

Based on what the agent explained about my own claim, yes - work is work whether it's paid or unpaid in that week. The income formula kicks in once you're actually earning.

I had a similar pending situation and I'm going to try that to get some answers because I've been calling for two weeks and can't get through.

How long did your adjudication take? And did you lose those weeks or just get them delayed?

Mine took about five weeks and the pending weeks eventually paid out once they decided I was maintaining genuine availability. I kept applying to full-time jobs throughout which probably helped.

adjudication sounds terrifying but it's really just EDD asking questions before they decide. not a punishment just a process

That's about qualifying in the first place - if you were only self-employed before claiming, with no employer-paid wages in your base period, you likely won't have a valid claim. But someone who was laid off from a regular job and then does some self-employment on the side while collecting is a different situation entirely. The original post here got laid off from a marketing job, so their claim is based on those wages.

ohh okay that makes more sense. so the claim is based on the job you got laid off from not what you do now

Exactly right. The base period wages from your W-2 job are what determine your weekly amount and whether your claim is valid at all.

How do you correct something like that once it's already certified? Can you do it in UI Online?

UI Online has a Report Wages section but that's for before you certify. For a week already certified wrong you have to contact EDD - either send a message through your UI Online account or call them. Easier to get it right the first time.

THIS is the thing that got me an overpayment notice. I reported freelance pay when I got the check not when I did the work. please learn from my mistake everyone

Oh wow okay. So timing of reporting is really important. I'll make sure I understand which week the work actually happened in before I certify.

I hadn't thought about the actual math this way. My weekly amount is around $410 so I should figure out what that break-even point looks like.

At $410 the formula would start taking dollars away once you earn more than about $103 in a week (25% of $410 is higher than $25 so the $103 threshold applies). Earnings above that reduce your payment dollar for dollar. So if you earn $200 in a week you'd get $410 minus ($200-$103) = around $313.

the math comment is so helpful, I never thought to actually calculate where my break even was when I was doing freelance stuff

The EDD certification questions can be confusing because they don't always spell out what 'work' means in that context. When in doubt, report more rather than less and let EDD's formula figure out the payment.

yeah i think i was going to just not mention anything until I actually got paid by a client. glad I found this thread first

The last part there isn't right - reporting isn't optional based on the amount. The certification asks if you did any work and self-employment is work regardless of income. It's the payment calculation that adjusts for small amounts, not the reporting requirement.

oh okay good correction. i didn't want anyone to skip reporting based on what i said

Always better to over-report and let EDD do the math than to under-report and end up with an overpayment situation later.

I did register in CalJOBS right after I got the notice, so at least that's done. I've been applying to jobs too because I honestly don't know if the consulting thing will take off.

That's the right approach. Keep the job search genuine while you build the business. If you get a great full-time offer you take it, and if the business takes off first you stop certifying.

doing both at once is smart. most people's freelance businesses take longer to ramp up than they expect anyway

How does EDD even find out about self-employment income? Like do they cross-reference with the IRS or something?

EDD has various ways to verify - they can get information from business registrations, 1099 forms reported to the state, and other sources. I wouldn't count on anything slipping through, especially with a formal business structure.

I got an overpayment notice two years after the fact. two years!! so yes they absolutely do find out eventually

The business structure question is one I'd take directly to EDD rather than go by what people here say. The reporting of work and income applies regardless of structure, but whether an LLC formation triggers different questions is something to verify with EDD for your specific situation.

My experience was as a sole proprietor so I can't speak to the LLC question specifically. The agent I spoke with focused on the actual hours worked and income earned, not the legal structure.

okay i'll ask EDD directly. good to know the work/income reporting is consistent at least

Filing taxes for the photography income last year is what had me calling EDD about my claim too. Nine days on a UI Online message is a long time to be in limbo - I ended up talking to an EDD agent through Claimyr about my situation when I couldn't get through by calling.

Is there a way to know what the message response time is supposed to be? I don't want to keep waiting if it's going to be weeks.

EDD's message response times vary a lot. If it's been over a week and you need an answer to avoid a certification error, the phone is the more reliable option.

This is the clearest summary of everything in this thread. Saving this.

agreed this is the tldr i needed

The setup work question is genuinely ambiguous and probably depends on the specifics. Setting up a website for a business where you plan to earn money looks different to EDD than, say, researching an industry you might enter someday. When in doubt, report the work and let EDD make the determination.

I ended up using Claimyr to get through to an agent about the setup work question since the message response didn't fully answer it. The agent pulled up my claim and said that my registration date for the business put the start of self-employment at that point regardless of when I had my first client - so I needed to be reporting the weeks from that date forward.

That is a really important detail - the business registration date matters to EDD. I haven't formally registered anything yet but I'll keep that in mind before I do.

The Etsy example is helpful actually. Product-based income and service-based income probably get treated similarly then in terms of the weekly reporting.

that was my experience yeah. EDD just wanted the gross amount for the week the sales happened, same as any other self-employment income

I've been using CalJOBS mainly just to keep my registration current and job search logged. I didn't know there were self-employment resources on there.

check out the resource sections when you log in. it's not the main thing people use it for but it's there

This is right and it also means a week where you do a lot of consulting work and earn a good amount could zero out your benefit for that specific week even if you earn nothing the following week. Week by week, not averaged.

Exactly. Some weeks I had no benefit payment because earnings were high, then the next week full benefit again because no client work. It fluctuates which is fine as long as it's all reported.

the week by week thing is confusing at first but actually kind of makes sense once you see how it plays out

Mine went to adjudication over availability questions but wasn't ultimately denied - EDD decided I was still available. I've read in this forum of people who did lose benefits when it became clear the business was full-time. It's more a gray area determination than an automatic rule.

The key seems to be whether you're genuinely available for and would accept a full-time traditional job. If your business is 50 hours a week and you'd turn down a job offer to keep running it, that's where EDD could say you're not actually available.

that makes sense. i guess as long as you're genuinely still in the job market it's hard for EDD to say you're not available

After reading everything here I feel way more confident about how to handle this. I'm going to start the consulting work carefully, report every week accurately, keep job searching, and reach out to EDD directly if I hit anything specific I'm unsure about.

That's the right approach. The reporting is honestly the main thing. EDD isn't trying to prevent people from becoming entrepreneurs, they just need accurate information each certification period.

Good luck with the consulting. And if EDD ever puts a week in Pending because of a self-employment question, don't panic - it usually resolves once they have the information they need.