After Congress passed the CARES Act in 2020 to respond to the COVID-19 crisis, eligible people received a $600 bonus to their unemployment benefits. If you qualified to apply for this resource, the federal government supplied another $600 on top of whatever you received locally.
The benefits from the CARES Act applied to all 50 states.
With unemployment claims reaching levels not seen since the Great Depression, this funding became a lifeline for people struggling to pay rent, mortgage, and grocery bills.
Business owners are sometimes eligible for these same benefits.
How to File for Unemployment as a Business Owner
You must first meet some qualifications before you are eligible to file for unemployment benefits as a self-employed individual.
- Your business must employ you as a W-2 employee.
- The company must qualify as an employer by paying taxes into the unemployment programs in your area.
- You meet the other stipulations outlined by local authorities.
Most sole proprietors, partnerships, and LLCs don’t set themselves up to be a W-2 employer, which makes them ineligible for unemployment benefits. Skipping these steps can save a lot of time and money upfront, but it also doesn’t give you a financial cushion if something like the COVID-19 pandemic happens.
The U.S. Department of Labor did change some of the rules during the CARES Act to help more small business owners qualify for unemployment. You could temporarily close instead of permanently stopping the business, file for benefits if ordered to quarantine, or you left a job because of exposure risks.
If you recently started a business and it didn’t work out because of COVID, your work history determines your potential benefit. That means you might still qualify for assistance based on your activities from your previous employment.