EDD requirements when starting business while on unemployment - income reporting confusion

You absolutely need to report all income when you certify, even if it's going back into your business. EDD looks at your gross earnings before expenses during the week you performed the work, not when you get paid. This is a common misunderstanding that gets people in trouble. You should talk to EDD directly about your specific situation, but the rule of thumb is: if you're working, you report the hours and income earned, regardless of business expenses.

im in the same boat started my lawn care biz while on ui last year. the way i handled it is i reported the profit after expenses not the total revenue. Like if i made $200 but spent $150 on gas equipment etc id report $50. never had any issues. EDD is mostly concerned with what ur actually putting in ur pocket not business expenses

I went through this exact situation in 2023. Per EDD guidelines, you must report all income when you certify, but there's an important distinction here. For self-employment, you report NET income (after business expenses), not gross revenue. This is different from W-2 employment where you report gross wages. When you certify, there's a question specifically asking if you were self-employed. Answer 'yes' and report your NET earnings for that week. If your business expenses exceeded revenue that week, your net income is zero, so you'd report zero income. But you still must report the hours worked. I recommend keeping meticulous records of all business transactions, expenses, and revenue. Create a simple weekly profit/loss statement to calculate your net income for certification purposes. This documentation will protect you if EDD ever audits your claim.

The whole EDD system is DESIGNED to trap people who are trying to be entrepreneurial!! I started a small online shop last year while on unemployment and got SLAMMED with an overpayment notice 8 months later claiming I didn't report properly. They wanted $7,400 back!!!! Even though I barely made enough to cover my materials and shipping costs. The system is rigged against small business owners trying to get back on their feet. It's absolutely INSANE.

I've been trying to get through to an EDD representative for a week now to ask this EXACT question. Always get the "we're experiencing high call volume" message and then it hangs up on me. So frustrating when you're actually trying to follow the rules but can't get answers!! I finally found a service called Claimyr that helped me get through to an EDD rep without the endless redial game. They have a video showing how it works here: https://youtu.be/JmuwXR7HA10?si=TSwYbu_GOwYzt9km The agent I spoke with confirmed what others have said - for self-employment, you report NET income after business expenses on your certification. But you still have to report all hours worked on your business even if you didn't make any money that week. They said keeping detailed records of all expenses and income is super important in case of an audit.

just want to add my experience - i started a photography business while on unemployment and was totally confused about how to report it too. ended up calling edd (took 3 days of trying) and they told me to report net income, not gross. but critically important: if u work more than 32 hours in a week on ur business, ur not eligible for benefits that week even if u made zero dollars!!! they consider that full time self employment. ask me how i learned that one the hard way lol

Make sure you keep track of all your business expenses and income separately from personal finances. Get a separate business bank account ASAP if you don't already have one. My cousin got audited by EDD and they wanted documentation for every single transaction to prove what was business vs personal.

I want to provide a bit more clarity here since there's been some confusion in the thread. The distinction between reporting GROSS vs NET income depends on your business structure: 1. If you're operating as a sole proprietor/self-employed: You report NET income (after business expenses) 2. If you've formed an S-Corp and pay yourself a salary: You report GROSS wages as employment income 3. Independent contractor work (gig work): This is typically reported as NET income The key is how you'll be filing your taxes. If your business income will be reported on Schedule C, then you generally report net income to EDD. But regardless of income, if you work more than 32 hours in a week on your business, you'll be considered fully employed for that week. I recommend reviewing the DE 8714U form on the EDD website which explains self-employment reporting requirements in detail.

one more thing nobody mentioned - dont forget that u need to be looking for regular employment while on ui even if ur starting a business. u still gotta do the work search requirements and be ready to take a job if offered one. thats tripped up some people i know