In WI can you receive unemployment if you open an LLC?

by Barb

(Wisconsin)

I currently receive unemployment from Wisconsin and have not been able to find a job. I’m thinking of starting an LLC with my husband who is also out of work. If we can pull something together on a shoestring budget(literally) do I have to indicate “self employed” when I file a claim each week – when we file our applications for the business with the sate; before we even sell a product?
OR; do I wait to state that I am self employed if we make a sale. We have no product/samples or anything ready but I want to file all my paperwork so I can get approval to buy wholesale goods. I don’t want to lose my benefits because that is what we live on right now. I’m scared to do the wrong thing and get my benefits stopped but I would like to at least attempt to get something going here for my family with an LLC. One person stated that if you are in an LLC you are not “self employed” and any money received belongs to the LLC and not you the individual? Since we will file the LLC as a corporation with it’s own federal return what should I do? HELP!!!!!!

Hi Barb,

Do they ask that question on the WI continuing claim questionnaire?

You ask a good question and depending upon the state and their rules, people do need to be concerned enough to check into this.

Mainly, because in many states, without a provable history of running a business concurrently while employed full time, forming an LLC while unemployed, may raise a question about your availability for full time suitable work, much the same way starting school raises the issue.

This is only one of several reasons .. I didn’t try to make any money from this site for such a long time. Making sure that I was seen as available for work was a concern for me .. but I just kept waiting to make myself a business for some scaredy cat reasons. (I was unemployed more than once in the last several years.)

Some state rules about self employment while collecting benefits are tough .. NY and PA always come immediately to mind.

But here’s the Wisconsin Unemployment Precedent Digest .. It’s the only rules that you need to concern yourself with.
(Make sure to click the button to the right, there’s a lot more decisions to read) Your primary unemployment issue to investigate is Able and Available.

Clearly .. if you read the couple decisions listed .. it is your availability for work and the amount of time you devote to the efforts of being self employed that matter.

Filing LLC papers with the state is not what makes a person not able and available .. it is the pursuit and active engagement required to run a business and then earning money that can really mess things up because you are, in effect withdrawing yourself from the labor market.

While you’re there .. you should also find out exactly what WI defines as “suitable work”.

It could be relative to your hours and days of availability for work.

Barb, I really can’t tell you what to do or whether your plans would cause the state to stop benefits. I can only point out the concerns.

How you handle this, is your decision.

To become a business or not to .. that is the question.

One, even I did not feel comfortable making until I was no longer able to collect benefits because something entirely out of the blue and out of my control, made me not available for work and I had to stop collecting .. because I stopped completing the work search every week. That’s when I became a business entity.

Although I knew, at any given moment I could have chosen to start a business in my husbands name only, it would not have felt .. well, it just wouldn’t of felt right.

This was my baby then .. it’s mine now and .. I do all the work.

Frankly, although I missed the benefits greatly at first, I felt this huge sense of relief that I didn’t have to worry about what I was going to do with the site.

Relief was followed by a sense of freedom and that is in fact what changed everything and allowed me to pursue goals I had ignored for a long time. Growing a small business without this black cloud of fear of not making a wrong move .. hanging over my head.

Funny how roadblocks are often in our own minds and even funnier when we realize we often work to keep them there out of fear .. until we let them go and the clouds part.

I know .. more than you wanted from me ..

Good Luck .. to you and your husband.

I do believe future employment .. will be self employment for many of us. How could it be anything else .. or are we all going to wait for things to go back to the way we were?

I can barely remember that movie now.

Chris

Chris