Can you get California EDD unemployment if you own your own business?

Thank you this is really helpful. So they mainly care about the W2 income for calculating my benefit amount? My part time hardware store job was about $18/hr and I worked roughly 25-30 hours a week there so I'm hoping that's enough to qualify.

yeah the base period calculation only uses wages that were reported to EDD through payroll taxes, so your 1099 self employment stuff from the landscaping wouldn't count toward your benefit amount anyway

This is correct. Your weekly benefit amount will be calculated solely from your W2 wages. Self-employment income is not included in the base period calculation for regular UI benefits in California.

Oh wow that's a really important thing to know. So even if I'm just doing admin stuff or updating my business license I need to report that?

Basically yes. Any time you spend doing anything related to operating your business, even unpaid, technically should be reported. EDD can be really strict about this. Better to report it and let them calculate any reduction than to not report and get flagged for a false statement.

this is the kind of stuff they don't tell you when you file and then people get hit with overpayments later, the EDD website is so confusing about what counts as work

I've been trying to call EDD for days and cannot get through at all. Going to check out that Claimyr link, thank you!

claimyr worked for me too when my claim went to adjudication, got through way faster than I ever could on my own

does it actually work? seems too good to be true when EDD phone lines are basically impossible

This breakdown is super helpful. I have invoices showing my last paid job was about 6 weeks ago and nothing since. Should I proactively send EDD any documentation or wait to see if they ask?

Wait until they ask. Sending unsolicited documents can sometimes create more questions than it answers. If your claim goes to adjudication, then you'll have a clear opportunity to provide supporting documentation through the proper process.

good advice, i made the mistake of sending a ton of documents nobody asked for and it made my claim take longer

This is partially right but I want to clarify - the reason for separation on a California EDD claim from a W2 employer is separate from your self-employment history. OP's claim is based on their hardware store job, so the reason for separation should be whatever happened there - were they laid off, did hours get cut, etc.

Oh right! I forgot to mention - the hardware store actually laid me off as part of a round of cuts. So my separation reason is legit employer layoff, the business stuff is kind of a separate thing.

oh okay yeah that totally changes things, if you were laid off from a W2 job you're in way better shape than i thought, disregard most of my comment lol

My business license renewal actually came up last month and I just didn't renew it because I couldn't afford the fee anyway. Does that basically count as dissolved?

For a sole prop? Pretty much yeah. There's no formal dissolution process required the way there is for an LLC or corporation. Not renewing your license is essentially the same as ceasing operations as far as the IRS and state are concerned.

wait is this true? i always thought you had to file something to officially close a business

For a sole proprietorship in California there's no formal state filing required to close. You just stop operating. LLCs and corporations are different - they need to file a dissolution with the Secretary of State.

Your LLC membership could complicate things. EDD will look at whether you have the ability to control your hours and availability through the LLC. Even if you're not taking draws, if you're listed as an owner/member of an active LLC, they may ask questions during adjudication about your availability for work. I'd strongly recommend calling EDD to explain your specific situation before it becomes an issue.

I've been trying to call for literally 2 weeks and cannot get a human on the line. How do people actually reach EDD?

Seriously try Claimyr - claimyr.com - this is exactly the kind of situation where you need to actually talk to an agent to get it sorted out before your claim gets flagged. I used it when I had a complicated business ownership question and it was the only way I could actually reach someone at EDD. They also have a video showing how it works at https://youtu.be/JmuwXR7HA10

UI Online messages are basically a black hole. I sent one asking about my job search requirements and never got a response. Eventually just found the answer on the EDD website FAQ section.

yeah that's where i am now just reading every single page of the EDD website trying to figure out my situation myself

same. the website has gotten better but there are still so many gaps especially for unusual situations like owning a business

This is a really clear summary, thank you. I feel a lot better reading this. I check all four boxes honestly - the business is completely inactive, I was laid off, I'm applying for jobs every week, and I have the W2 history.

Then you should be fine. Just make sure your weekly certifications accurately reflect what's going on with the business week to week. If anything changes - like you suddenly get a landscaping client - report it.

Yes, significantly. Sole proprietors are treated as self-employed individuals - their business income doesn't flow through payroll so it generally doesn't count for UI purposes. S-corp owners who pay themselves W2 wages through their own company are in a more complicated situation because they could potentially qualify based on those wages, but EDD looks closely at whether someone controls their own employment and laid themselves off.

so if someone paid themselves a w2 salary through their s-corp and then the business closed they might be able to claim UI based on those wages?

Potentially yes, but EDD will scrutinize whether the unemployment was truly 'involuntary' when you have control over your own employment situation. These cases often go to adjudication and may require a hearing. It's a gray area that EDD evaluates case by case.

this happened to my brother in law, he had an s corp and paid himself w2 wages, business went under and he filed for UI. went through like 6 weeks of adjudication but eventually got approved

Yeah I was planning to be 100% honest about everything. The last thing I want is an overpayment situation on top of everything else.

overpayment notices are the worst, a friend of mine got one for like $4,200 and is still fighting it two years later

This is so reassuring to hear from someone who actually went through adjudication over business ownership. How long did the process take from filing to approval?

About 5 weeks total from filing to first payment. 3 weeks in adjudication then maybe a week and a half for the payment to process. I know that sounds long but honestly not as bad as some horror stories I've heard.

5 weeks is actually pretty typical for adjudication cases these days. People freaking out if it's been 2 weeks are usually still within normal timeframes.

This isn't accurate. The rule is that self-employment INCOME doesn't count toward your base period wages for UI purposes. But nothing prevents a business owner from collecting UI based on W2 wages from a separate employer. OP's situation - laid off from a W2 job while also owning an inactive business - is a completely legitimate UI claim.

Agreed, this is a common misconception. Business ownership alone does not disqualify you. The disqualification rules relate to whether you're currently employed, available for work, and whether your separation was involuntary. Many small business owners have successfully collected California UI based on W2 employment history.

okay i stand corrected, i was thinking of the rule about self employed people not being able to ESTABLISH a claim based on self employment income, i see now that's different from what OP is asking

Based on everything in this thread you should be fine as long as you're not actively operating the LLC and it's not generating income.

yeah it's completely dormant, hasn't had any activity in over a year. just didn't bother to formally dissolve it

Unfortunately this is a harder situation. Voluntarily quitting to start a business is generally a disqualifying reason for UI in California. There are some exceptions - if you can show you quit for 'good cause' - but the bar is high and starting a business that failed doesn't typically meet that standard. You'd essentially be asking EDD to approve benefits despite a voluntary quit, which requires proving the quit was due to compelling circumstances beyond just wanting to be your own boss.

ugh that's what I was afraid of. so there's basically no hope?

I wouldn't say no hope but I would say your claim would almost certainly go to adjudication and you'd likely need a hearing. It would be worth consulting with an employment attorney before filing, or at minimum calling EDD to discuss your specific circumstances. This is actually a situation where reaching EDD by phone really matters.

For something this complicated where you really need to talk to an actual EDD rep, Claimyr is worth trying - claimyr.com - it got me through to a live agent when I had a complicated eligibility question. Way better than trying the main phone line over and over.

Good to know, I've been keeping a spreadsheet of every application I submit. Is there a specific format EDD wants or just as long as you have the basic info?

No specific format required, they just need: employer name, date of contact, type of contact (application, phone call, email, etc.) and position applied for. Your spreadsheet sounds perfect.

Also make sure you have at least one employer contact per week for each week you're certifying. The minimum is one but more looks better if you ever get audited.

Agreed 100%. I spent like 4 hours reading the EDD website and couldn't find a direct answer to my question. Forums like this are honestly more helpful than the official resources.

the EDD website is written for people who already understand how unemployment works, it's terrible at explaining things for first time filers

So glad to hear this! Thanks for coming back to update - it really helps other people searching for the same answer to see a real resolution.

Congrats! 4 weeks including adjudication is honestly a pretty reasonable timeline. Hope everything goes smoothly with your weekly certifications going forward.

This is great news! My experience was similar - being honest and upfront really does make adjudication go smoother. Glad it worked out for you.

Awesome outcome! And good reminder for anyone still trying to navigate EDD questions - if you can't get through by phone to ask pre-claim questions, claimyr.com really does help you reach a live agent. Saved me so much time when I had my own complicated eligibility situation.