Can self-employed LLC owners qualify for EDD benefits after losing major client?

Unfortunately, if you've been taking owner's draws instead of setting up a formal payroll where you're paying into UI as an employee, you generally won't qualify for regular unemployment benefits in California. EDD unemployment is funded through payroll taxes that employers pay on behalf of their employees, and as a single-member LLC taking draws, you likely haven't been contributing to this system. Your options might include: 1. Check if you have any W-2 employment in your base period (typically the 12-15 months before filing) 2. Consider changing your structure going forward to pay yourself as an employee if you want this protection 3. Look into Disability Insurance Elective Coverage (DIEC) for future protection, though it won't help for this current situation Sorry to be the bearer of bad news, but traditional UI benefits probably aren't available in your situation.

this is why self employment is so risky!!!! the EDD system is basically USELESS for actual business owners. been there, got screwed by the system. i had to liquidate my retirement account when my business collapsed in 2023 becuz I wasnt eligible for ANY help. the whole system is designed for traditional employees and screws over entrepreneurs. I'd call EDD anyway just to double check but dont get ur hopes up

I was in a similar situation with my graphic design LLC last year! I had mostly been doing owner's draws too, but I did have 1 project where I worked as a W-2 contractor for about 3 months. When I applied for unemployment, they actually approved me for a small benefit amount based just on that W-2 work, even though it wasn't my main income. So definitely check if you have ANY W-2 income in the base period - even a small side gig could qualify you for something. Also, did you pay yourself any official salary through payroll during these 3 years? Or was it 100% owner's draws?

check if ur LLC is registered as an S-corp. some LLCs are, some aren't. if u elected S-corp status and paid yourself a salary (not just distributions) AND paid into SDI/UI, then you might qualify. but based on ur post sounds like u didn't do this.

Try calling EDD directly to confirm your status. I know it's nearly impossible to get through to them, but I recently used a service called Claimyr that got me connected to an EDD agent in about 20 minutes when I had a similar question about my eligibility. Their website is claimyr.com and they have a video showing how it works: https://youtu.be/JmuwXR7HA10?si=TSwYbu_GOwYzt9km Even if you don't qualify for regular UI, there might be other programs you're eligible for, and an EDD rep can tell you for sure. Worth checking rather than just assuming you're out of luck.

One other thing to check - what state were you in before starting your LLC? If you had W-2 employment in another state within the last 18 months, you might be able to file an interstate claim. The base period rules can sometimes give you a bit more runway than you'd expect.

For the future, you might want to consider the following structure: 1. Elect S-Corporation status for your LLC (you can do this for future tax years) 2. Put yourself on payroll and pay a "reasonable salary" that includes UI and SDI contributions 3. You can still take distributions beyond your salary, which won't be subject to self-employment tax This creates more paperwork and higher administrative costs (payroll service, more complex tax filings), but provides the safety net of unemployment insurance if needed. For your current situation, definitely check on that W-2 work from last summer. California looks at your highest-earning quarter during the base period to determine your weekly benefit amount, so even a short period of W-2 employment might help.

Sorta related but did u pay into CA SDI (state disability insurance)? That's different from unemployment but at least provides some protection if you get sick or injured.

The good news is that if you did have any W-2 income in the last 18 months, even just that 2-month contract, you'll likely at least get a minimum benefit. When you file your claim, make sure to report ALL employment, including your self-employment. EDD will calculate your benefit based on the W-2 wages. It might not be much, but something is better than nothing while you rebuild your client base!