Does a business owner have to pay unemployment taxes in NY?
I'm thinking about starting my own small business next year and trying to figure out all the tax obligations. Does a business owner have to pay unemployment insurance premiums to NYS Department of Labor? I've heard conflicting information - some people say yes if you have employees, others say it depends on how much you pay them. Also wondering if I would be eligible for unemployment benefits myself as a business owner if things don't work out. Can anyone clarify the rules?
13 comments
Join the conversation
Amara Torres
Yes, if you have employees you must pay unemployment insurance taxes to NYS Department of Labor. The requirement kicks in once you pay wages of $300 or more in any calendar quarter. You'll need to register with the NYS Department of Labor and pay quarterly UI taxes. As for yourself as the business owner - if you're a sole proprietor or partner, you generally can't collect unemployment benefits since you're self-employed.
0 coins
Elijah O'Reilly
•Thanks! What about if I incorporate as an LLC or S-corp? Would that change anything for my own eligibility?
0 coins
Olivia Van-Cleve
The $300 threshold is correct but there are other triggers too. If you have one or more employees for 20 weeks during a calendar year, you're also required to pay UI taxes regardless of the wage amount. NYS Department of Labor is pretty strict about this - I learned the hard way when I didn't register right away.
0 coins
Mason Kaczka
•What happened when you didn't register right away? Did they penalize you?
0 coins
Olivia Van-Cleve
•Yeah, they hit me with penalties and interest going back to when I should have registered. Had to pay like an extra $800 on top of what I owed.
0 coins
Sophia Russo
this is so confusing... why can't they just make it simple? if you have employees you pay, if you don't you don't pay. all these thresholds and timeframes are ridiculous
0 coins
Amara Torres
For LLCs and S-corps, if you're an owner with more than 5% ownership, you typically can't collect unemployment benefits even if you pay yourself a salary and pay into the system. The NYS Department of Labor considers you to have too much control over your employment status.
0 coins
Evelyn Xu
•That doesn't seem fair. If you're paying into the system you should be able to collect if your business fails and you lose your income.
0 coins
Dominic Green
I've been dealing with NYS Department of Labor for years with my business and getting through to them when you have questions is nearly impossible. If you need to talk to someone about your specific situation, I found this service called Claimyr at claimyr.com that actually gets you connected to NYS Department of Labor agents. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Saved me hours of calling and getting busy signals.
0 coins
Elijah O'Reilly
•Is that legit? Seems too good to be true that they can actually get you through to NYS Department of Labor.
0 coins
Dominic Green
•Yeah it's real. I was skeptical too but it worked for me when I needed to resolve an issue with my quarterly filing.
0 coins
Freya Pedersen
Just wanted to add that the rules can vary slightly if you're in certain industries. For example, agricultural employers have different thresholds - they need to pay UI taxes if they pay $20,000 or more in wages in any calendar quarter, or if they employ 10 or more workers for some portion of at least one day in each of 20 different weeks. Also, domestic service employers (like if you hire a nanny or housekeeper) have their own rules too. Make sure to check the specific requirements for your type of business when you register!
0 coins
Sarah Jones
•This is really helpful to know about the industry-specific rules! I hadn't even thought about that. Since I'm still planning what type of business to start, this makes me realize I need to research the specific requirements for whatever industry I choose. Do you know where I can find a comprehensive list of all these different industry thresholds? The NYS Department of Labor website seems pretty scattered with this information.
0 coins