Can I collect unemployment if I own an LLC - NYS Department of Labor eligibility question
I've been working as a freelance graphic designer for the past two years and set up an LLC for tax purposes. Business has completely dried up since January and I'm barely making any income. Can I still file for unemployment benefits with NYS Department of Labor even though I technically own this business? The LLC only has me as the sole member and I haven't paid myself a regular salary. I'm really confused about whether this disqualifies me from UI benefits.
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Clarissa Flair
This is actually a complex situation with NYS Department of Labor. Generally, if you're the sole owner of an LLC and haven't been paying unemployment taxes on wages to yourself, you might not be eligible for regular UI benefits. However, there are some exceptions depending on how your business was structured and if you had any W-2 wages from other employment. You'll need to report the LLC when you file your claim.
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Eve Freeman
•I did have a part-time W-2 job last year that I lost in December. Would that help my case? And what do you mean by reporting the LLC - do I need to list it as employment?
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Caden Turner
dude same situation here, i have a small business but its basically dead now. when i tried to file they asked a million questions about the business and whether im still operating it. super confusing
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McKenzie Shade
•The key question NYS Department of Labor will ask is whether you're still actively operating the business. If you've essentially ceased operations due to lack of work, that's different than just having slow business. You need to be very clear about your current status when filing.
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Harmony Love
I was in a similar situation last year and couldn't get through to anyone at NYS Department of Labor to get a clear answer. Spent weeks calling and getting hung up on. Finally used this service called Claimyr (claimyr.com) that helped me get connected to an actual agent who could review my specific situation. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Ended up being eligible because I had W-2 wages in my base period.
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Rudy Cenizo
•How much did that cost? I'm desperate to talk to someone but don't want to get scammed.
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Harmony Love
•It's worth checking out their site for details. For me it was way better than wasting more weeks trying to get through on my own. The agent was able to look at my work history and LLC situation and give me a definitive answer.
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Natalie Khan
The whole system is ridiculous!! I know people who collect unemployment while working under the table but someone trying to run a legitimate business gets penalized. NYS Department of Labor makes everything so complicated when people are just trying to survive.
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Clarissa Flair
•I understand the frustration, but the rules exist to prevent fraud. The distinction between being unemployed vs. being self-employed with low income is important for the integrity of the system. That said, the application process could definitely be clearer about these situations.
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Daryl Bright
You definitely need to be honest about the LLC when you file. If they find out later that you didn't disclose it, you could face overpayment issues or even fraud charges. Better to be upfront and let them determine eligibility than try to hide it.
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Mason Lopez
I went through this exact situation last year with my photography LLC. Since you mentioned having W-2 wages from your part-time job, that's actually really important - those wages likely make you eligible for benefits even with the LLC. The key is being completely transparent about your business status when you file. I had to provide documentation showing my LLC had essentially no income and wasn't actively operating. NYS Department of Labor will want to know if you're available for work and actively seeking employment, which can be tricky if you're still technically operating the business. I'd recommend gathering all your financial records for both the LLC and your W-2 job before filing, and be prepared to explain that while you own the LLC, you're not currently generating income from it and are seeking traditional employment.
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GalaxyGuardian
•This is really helpful, thank you! I'm curious about the documentation you mentioned - what specific records did you have to provide to show your LLC wasn't actively operating? I have my business bank statements showing almost no deposits since January, but I'm not sure if that's enough or if they need other paperwork. Also, when you say you had to explain you're seeking traditional employment, did they require you to show job search activities separate from any potential freelance work?
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Jamal Anderson
•@Mason Lopez That s'exactly the situation I m'in! Did you have to formally dissolve or suspend your LLC, or were you able to keep it active while collecting benefits? I m'worried that if I keep the LLC open even (with no income ,)they might consider me as still being in business rather than unemployed. Also, how long did it take for them to process your claim once you submitted all the documentation?
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Hugo Kass
•@Mason Lopez This is so helpful to hear from someone who s'been through it! I m'the original poster and I m'definitely going to gather all my financial records like you suggested. One thing I m'worried about though - when you say you had to show the LLC wasn t'actively operating, did NYS Department of Labor question you about why you didn t'just dissolve it completely? I ve'been keeping mine open hoping business might pick back up eventually, but I m'wondering if that hurts my case for being considered unemployed "rather" than just having a slow business period.
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QuantumQuest
I'm dealing with a very similar situation right now - I have an LLC that I set up for consulting work, but contracts have completely disappeared over the past few months. From what I've researched, the fact that you had W-2 wages from your part-time job is actually really good news for your eligibility. NYS Department of Labor looks at your "base period" wages to determine benefits, and W-2 income definitely counts toward that. The tricky part is proving that your LLC isn't actively operating versus just being slow. I've been told by others in similar situations that you need to be very clear that you're seeking traditional W-2 employment and not just waiting for freelance work to pick up. Document everything - bank statements showing minimal business income, any steps you've taken to wind down operations, and your active job search for regular employment. The key seems to be demonstrating that you're genuinely unemployed and available for work, not just a business owner having a rough patch.
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