Can I start a business while on NYS Department of Labor unemployment benefits?
I've been collecting unemployment for about 6 weeks now and I'm thinking about starting a small consulting business on the side. I'm worried this might mess up my benefits or get me in trouble with NYS Department of Labor. Has anyone done this before? Do I need to report business income on my weekly claims even if I'm not making much money yet? I don't want to lose my benefits but I also want to be proactive about my future.
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Dmitry Smirnov
Yes, you can start a business while on unemployment but you MUST report any income on your weekly claims. NYS Department of Labor has specific rules about self-employment income. If you earn more than your weekly benefit amount, you won't get paid for that week. You also need to make sure you're still available for work and actively job searching as required.
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Sofia Perez
•Thanks! Do I report the income when I actually get paid by clients or when I do the work? And what about business expenses?
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ElectricDreamer
I started freelancing while on UI last year. You report income when you earn it, not when you get paid. So if you do work on Monday, you report it for that week even if the client doesn't pay you until next month. NYS Department of Labor doesn't care about your business expenses - they only look at gross income.
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Ava Johnson
•Wait that doesn't sound right... I thought you report when you actually receive payment?
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ElectricDreamer
•Nope, it's when the work is performed. I learned this the hard way when they flagged my claim for inconsistent reporting.
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Miguel Diaz
ugh the whole system is so confusing!! i've been wanting to do some graphic design work but scared they'll think im not really looking for a 'real job' you know?
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Zainab Ahmed
Had a similar situation and couldn't get through to NYS Department of Labor to clarify the rules. Spent hours on hold just to get disconnected. Finally used Claimyr (claimyr.com) to get connected to an actual agent who explained everything clearly. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Saved me a lot of stress and confusion.
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Sofia Perez
•That's interesting, never heard of that service. Did they charge you a lot to make the call?
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Zainab Ahmed
•It was worth it for me since I couldn't waste any more time trying to get through on my own. Much easier than sitting on hold for hours.
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Connor Byrne
The NYS Department of Labor is just looking for reasons to deny claims these days. I reported some small freelance work honestly and they put me through a whole adjudication process that took 6 weeks! Now I'm paranoid about reporting anything.
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Dmitry Smirnov
•I understand the frustration but not reporting income is fraud. It's always better to be honest and deal with any issues upfront than to risk penalties later.
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Yara Abboud
Just be careful with the job search requirements too. If you're spending a lot of time on your business, you still need to show you're actively looking for employment. Keep good records of your job applications.
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Chloe Taylor
I'm in a similar situation - just started my unemployment claim last month and have been thinking about doing some freelance writing work. From what I've researched, the key is being completely transparent with NYS Department of Labor about any income. I called their hotline (took forever to get through) and they told me that even if I only make $20 one week, I need to report it. They said it's better to over-report than under-report. Also make sure you're still meeting the work search requirements - they want to see you're genuinely looking for full-time employment even if you're doing side work. Good luck with your consulting business!
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QuantumQueen
•Thanks for sharing your experience @Chloe Taylor! That's really helpful to know they told you to over-report rather than under-report. I'm curious - when you called the hotline, did they give you any specific guidance about how to categorize consulting income on the weekly claims? I'm worried about accidentally putting it in the wrong section and causing problems with my claim.
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Lydia Santiago
I went through this exact situation about 8 months ago when I started doing some part-time web development work while on unemployment. Here's what I learned: You definitely need to report ALL income, even small amounts. I made the mistake of thinking anything under $50 wasn't worth reporting and got flagged during an audit. NYS Department of Labor is very strict about this. When reporting, make sure you understand the difference between "work performed" vs "payment received" - you report based on when you actually did the work, not when you got paid for it. Also keep detailed records of everything - hours worked, payment amounts, client names. They may ask for documentation later. The good news is that as long as you're honest and keep meeting your job search requirements, having a small business shouldn't disqualify you from benefits. Just make sure your weekly earnings don't exceed your benefit amount too often or they might question whether you're truly available for full-time work.
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Connor O'Neill
•This is really valuable advice @Lydia Santiago! I'm curious about the audit process you mentioned - what triggered it and how long did it take to resolve? I'm planning to start my consulting business in the next few weeks and want to make sure I'm doing everything correctly from day one. Also, when you say "detailed records," do you mean I should keep copies of invoices, contracts, and time logs, or is there other documentation NYS Department of Labor typically looks for?
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Olivia Kay
•@Lydia Santiago Your experience is really helpful! I m'actually in the exact same boat - been on unemployment for 6 weeks and considering starting some consulting work. When you got flagged during the audit, did it affect your benefit payments while they were reviewing your case? That s'my biggest fear - that even an honest mistake could temporarily stop my benefits when I really need them. Also, did you find it better to call NYS Department of Labor proactively before starting work, or just make sure to report correctly from the first week you earn income?
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