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Question added to topic Legal Basics For StartupsJune 4, 2009

I got laid off from my full time job, can I collect unemployment if I have income from a small business?

I was working as a civil engineer and was laid off last week. I filed for unemployment and the benefits will start soon. I also have a small construction estimating business incorporated as an LLC. If I make money through my LLC can I still draw unemployment from my former employer until I find another job?
Generally, if you have worked steadily for at least a year and lose your job, you may be eligible for unemployment. However, it should be clear that you lost your job for no grievous fault of your own, like poor work behavior, chronic absenteeism or repeated lateness. In those situations, employers may contest your right to benefits.

In addition, it's not clear whether you were entitled to take on outside projects (through your LLC) as part of your engineering work. If moonlighting was not permitted, that could present an obstacle to collecting benefits. As you can't collect unemployment when you're self-employed, it's possible that your state may consider your income through the LLC as having found another job.

Bear in mind, too, that unemployment benefits are only provided for a limited period of time, not until you find your next job. As eligibility may vary from state to state, it's best to check with your state unemployment department or a local attorney who knows this area so that you can get confirmation on whether you'll ultimately be entitled to benefits and if so, for how long.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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