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Connor Byrne

Can you get Washington ESD unemployment if your business closes?

My small retail shop had to close permanently last month due to rising rent costs and I'm wondering if I qualify for unemployment benefits through Washington ESD. I was the sole owner/operator for the past 6 years. I've been paying into the unemployment system as an employee of my own LLC but I'm not sure if that makes me eligible when the business shuts down. Has anyone been in this situation before? I tried looking on the Washington ESD website but the information about business owners is confusing.

This depends on how your business was structured and whether you were paying unemployment taxes on your own wages. If you had an LLC and were paying yourself as a W-2 employee with UI taxes deducted, you might qualify. But if you were just taking owner draws without payroll taxes, probably not.

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I was definitely paying myself through payroll with all the taxes including UI. Does that mean I should be eligible?

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That's a good sign but Washington ESD will still need to verify your work history and the reason for separation. Business closure due to economic reasons is usually considered involuntary separation.

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I went through this exact thing when my restaurant closed in 2023. It took forever to get anyone at Washington ESD on the phone to explain my situation. Spent weeks calling that 800 number and either getting busy signals or hung up on after waiting on hold.

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That's what I'm worried about! How did you finally get through to someone?

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Eventually found this service called Claimyr that helped me get connected to an actual Washington ESD agent. They have a video demo at https://youtu.be/7DieNd3C7zQ showing how it works. Basically they handle the calling and waiting for you.

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Never heard of that before but honestly anything beats trying to call Washington ESD yourself these days

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Yes, business owners can qualify for unemployment if they've been paying into the system properly. The key factors Washington ESD looks at are: 1) Were you classified as an employee of your business with proper payroll taxes? 2) Do you have sufficient wage credits in your base period? 3) Was the business closure involuntary (economic reasons vs. voluntary retirement)? Since you mentioned rising rent forced the closure, that should qualify as involuntary.

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This is really helpful, thank you! I definitely have the wage credits since I've been paying in for 6 years. Do I need any special documentation when I file?

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Keep your final payroll records, business closure documentation, and any lease termination notices. Washington ESD may request these during the adjudication process to verify the involuntary nature of your separation.

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omg this is so confusing!! I thought business owners couldn't get unemployment at all. My hair salon is struggling and I might have to close soon too. Do I need to change how I pay myself now to qualify later?

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If you're currently taking owner draws instead of payroll, you'd need to start paying yourself as a W-2 employee with unemployment taxes to build up eligibility. But there are timing requirements for benefit qualification.

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ugh this is so complicated. why can't they just make this stuff easier to understand

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The Washington ESD system is such a joke when it comes to helping small business owners. They make it nearly impossible to get clear answers about eligibility. I spent months trying to figure this out when my consulting firm folded.

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Did you end up qualifying for benefits?

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Eventually yes, but only after multiple appeals and providing tons of documentation. The initial determination was wrong because they didn't understand my business structure.

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I had a similar situation with my photography business last year. Filed my claim online but it got stuck in adjudication for weeks because they needed to review whether I was truly an employee vs independent contractor of my own business.

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How long did the adjudication take? I'm worried about how I'll pay bills while waiting.

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About 6 weeks total. I couldn't get anyone at Washington ESD to explain what was happening until I used claimyr.com to get through to an actual adjudicator who walked me through what documentation they needed.

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Claimyr really is a lifesaver for dealing with Washington ESD phone issues. Wish I'd known about it sooner.

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Just want to add that even if you qualify, your benefit amount will be based on the wages you paid yourself, not your business profits. So if you were paying yourself minimum wage to save on payroll taxes, your UI benefits will reflect that lower amount.

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Good point. I was paying myself a reasonable salary though, not trying to minimize payroll taxes.

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That's smart. Washington ESD calculates benefits based on your highest quarter earnings in the base period, so paying yourself fairly helps maximize potential benefits.

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Does anyone know if you can still look for work in the same industry while collecting? Like if I want to start another business eventually?

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Yes, you can look for work in your field including eventual self-employment. You just need to meet the weekly job search requirements and report any income from new business activities.

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Thanks! The job search requirements are still 3 activities per week right?

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Correct, 3 job search activities per week and you need to log them in your WorkSourceWA account.

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Be prepared for extra scrutiny during the application process. Washington ESD tends to flag business owner claims for additional review to make sure you weren't just trying to get benefits while winding down operations voluntarily.

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That makes sense. I have all my documentation showing the rent increase notices and financial struggles, so hopefully that proves it wasn't voluntary.

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Filing online was pretty straightforward for me, but make sure you select the right reason for separation. There should be an option for business closure/lack of work that fits your situation better than just 'laid off'.

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Good tip! I'll look for that specific option when I file.

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The exact wording matters for how they process your claim, so definitely choose the most accurate separation reason.

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Similar thing happened to my brother's auto repair shop. He qualified but had to go through an appeal because the initial reviewer didn't understand that he was a legitimate employee of his own corporation, not just self-employed.

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The appeals process isn't too bad if you have good documentation. Just takes time.

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Yeah the hearing was actually pretty straightforward once he could explain the business structure to someone who understood corporate employment law.

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Don't forget you might also qualify for other programs if your business closure was due to economic hardship. Check with your local WorkSource office about retraining programs or small business assistance.

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That's a great suggestion. I hadn't thought about retraining programs.

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Make sure to file as soon as possible after your business closes. There's no waiting period to start the process and benefits can only be backdated so far.

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I'll file this week then. Thanks for all the helpful advice everyone!

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Good luck with your claim! The process can be frustrating but business owners do qualify when they've been paying in properly.

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Just went through this myself. The hardest part was actually getting someone at Washington ESD to review my case properly. The automated system kept flagging it as suspicious.

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How did you get it resolved?

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Had to use that Claimyr service someone mentioned earlier. Worth every penny to actually talk to a real person who could fix the issue instead of waiting months for a callback.

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The key thing is having clean payroll records. If you've been sloppy about separating business and personal expenses or irregular with payroll, expect extra questions from Washington ESD.

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My accountant has been handling all that so I think I'm good there.

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One more thing - if you have any employees, make sure you handle their final paperwork properly too. Washington ESD might ask about that during your adjudication.

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It was just me, no other employees to worry about.

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Hope it works out for you! Business closures are tough enough without having to worry about navigating the unemployment system on top of everything else.

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Thanks, I really appreciate all the help from everyone here. Makes the process seem less intimidating.

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