Unemployment Benefits for Self-Employed: There Is a Way

Unemployment Benefits

From NerdWallet, Advisor Voices offers a way for self-employed workers to be able to collect unemployment insurance if business tapers off.  Unemployment insurance is one of the benefits that is often cited as unavailable to freelancers and independent contractors. Of course, to be eligible for benefits, you may have to pay unemployment taxes, which some independent contractors do not want to do. If you want to be able to collect unemployment insurance as a freelancer, it may be worthwhile to look into this process more:

“A primary fear many people have about self-employment is what happens if business goes poorly and they can’t make ends meet. W-2 employees who get laid off have the protection of unemployment benefits, which provide at least some income while they look for another job. Ideally, you won’t ever need to fall back on unemployment, but it would be nice to know you had the option. Is there any way the self-employed can benefit from the unemployment insurance system like their W-2 counterparts?

If you’re operating as a sole proprietor, the answer is no. However, if you structure your business as an S corporation and put yourself on the payroll as a salaried employee, you’ll be eligible for unemployment in most states, though not all. Depending on where you live, then, you may be able to hedge some of the risk you take on as a entrepreneur.

The U.S. unemployment benefits system is a federal-state hybrid. The federal government sets the basic requirements of the system, but each state sets its own specific rules on who is eligible for coverage, how much they can receive in benefits and so on. The system is funded by federal and state unemployment taxes paid by employers….”

Read the full story at Unemployment Benefits for Self-Employed: There Is a Way.

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