Tue 25 Oct, 2011 11:43 am
I understand that eligibility for unemployment benefits originally comes from working at a job that pays into unemployment funds, usually on a W-2. My question is this: If you are receiving unemployment benefits, and wish to set up the potential for a future side business by creating a partnership agreement with a few others in hopes of someday launching a lucrative company, does that void your ability to collect even if there is no income through the partnership yet? Would it be considered "Self" employment, and is that allowed as part time work if reported?
This article from the Small Business Association may provide some answers to you.
Laid Off and Looking to Start Your Own Business? Understand Your Unemployment Benefits First
Here's an excerpt from it. Read the article for the links cited in this excerpt:
Can I start a full-time business while collecting unemployment?
Starting a business while collecting unemployment falls in more of a gray area. Most state laws that regulate unemployment focus on the work schedule (full vs part time work), not the specific work that is done (starting a business vs. working for someone else). Many states determine that full-time employment is a disqualification factor for collecting unemployment benefits. This applies even if your compensation for your new full-time business is less than what you were receiving in your previous job or through your unemployment payments. Therefore, if you start a full-time business, in most states you are disqualified from collecting unemployment.
Several states have established self-employment assistance programs to give unemployed workers the encouragement and assistance necessary to start a business. In this voluntary state program, instead of unemployment benefits states pay a self-employed allowance to individuals while they are getting started as a business owner. These programs require applicants to be eligible for standard unemployment benefits and are paid under the similar criteria. Unlike those receiving unemployment benefits who must actively search for employment, these individuals work full-time starting their business
Speak to your state unemployment insurance office for guidance on the appropriate steps for starting a business while collecting unemployment.
I would also suggest calling your local unemployment office and ask them your questions. They'll be able to provide you with brochures that address the questions so you'll have them in writing directly from the government.
Yes to all that, and in NM, being self employed generally excludes you from unemployment compensation. The general theory is that you are more or less waiting for an upturn in business, rather than actually being unemployed.
A partnership is pretty much the same as being self employed in this regard.