Can I file for unemployment benefits if my business permanently closed down?

Yes, you can potentially qualify for unemployment benefits even as a business owner if you were paying into the unemployment insurance system as an employee of your LLC. The key is whether you were receiving W-2 wages and paying unemployment taxes. NYS Department of Labor will look at your employment status - if you were classified as an employee of your business and paying UI taxes, you should be eligible. You'll need to file a claim and provide documentation of your employment status and the business closure.

I went through this exact thing when my restaurant closed in 2023. Since I was paying myself as a W-2 employee and the business was paying unemployment insurance, I qualified for benefits. The process was pretty straightforward - just had to explain the business closure reason during the initial claim filing. NYS Department of Labor approved my claim within about 2 weeks. Make sure you have your business closure documentation ready.

Had major issues trying to reach NYS Department of Labor to clarify this exact question when my consulting business folded. Kept getting busy signals and the online chat was useless. Finally used a service called Claimyr (claimyr.com) that helped me get through to an actual agent who explained the eligibility requirements. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Really saved me time since I needed answers quickly to file my claim before the deadline.

this whole system is so confusing!! why cant they just make it clear who qualifies and who doesnt instead of making us guess? my friend owns a hair salon and shes worried about the same thing if she ever has to close

Just wanted to add that timing matters too. You need to file your unemployment claim as soon as possible after the business closure. NYS Department of Labor has specific timeframes for filing and you don't want to miss the deadline. Also make sure you're prepared to do the weekly job search requirements once your claim is approved - the rules still apply even though your business closed.

I'm in a similar boat - had to close my small marketing agency last year due to the pandemic's lasting effects on my client base. The key thing I learned is that you absolutely need to have been classified as a W-2 employee of your LLC and paying unemployment insurance taxes. I was lucky because my accountant had set it up that way from the beginning. When I filed my claim, I had to provide documentation showing the business closure (I used my final business tax filing and a letter explaining the closure reasons). The whole process took about 3 weeks for approval. One tip: be very clear in your application that you were an employee of the business, not just the owner - that distinction matters to them.