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  1. #1
    Join Date
    Jan 2010

    Default Consulting Income While Collecting Unemployment

    I am currently receiving unemployment in IL after being laid off from a full time job in June of '09.

    Since then, in conjunction with job hunting I have also established an LLC (with myself as the sole member) for any consulting and affiliate revenue earned from online/affiliate marketing.

    I just did a consulting job for a couple hours and earned $225. According to the IDES helpline the lady said that since this is more than half of the $385 gross weekly unemployment I receive, my claim would be closed, however I can reopen it right away. However the biggest downside she said was that since this was during the first week of a two week claim period, I would essentially lose a week of unemployment (which comes out to $410 after the federal supplement), so basically because I was able to grab a couple of hours of work one day I have a net loss of $185 at a minimum, and god knows what will happen when I reopen my claim.

    So that is the here's what I'm wondering:

    1. Will the fact that I earned $225 working for three hours factor significantly in determining the amount of benefits I receive when I reopen a claim? Ie. I was receiving the maximum amount before--will this impact that?
    2. Since the consulting money went straight into a separate business account for my LLC (which has its own EIN) from which I have not drawn any wages out of, would this even be considered earnings for purposes of claiming benefits? Ie. do I even need to claim this $225 to begin with?
    3. Also, if I do need to report any earnings that go into my LLC and did not know to do so previously (since I hadn't drawn any wages from it), how should I handle that if I previously certified that I did not earn any wages but had recorded revenue for my LLC at that time? I'm terrified that I'm going to get thrown in jail because I didn't understand how the system works.

  2. #2
    Join Date
    Jun 2009

    Default Re: Consulting Income While Collecting Unemployment

    I can't speak specifically about IL laws, but in general it is not a good idea to use an LLC the way you describe for small consulting jobs if you want to draw unemployment. The money you earn this way is definitely reportable. You face a real danger that you may be considered (self) employed by the LLC and thus not eligible for unemployment benefits. It is best to take any payments as an individual and not run anything through the LLC. It does not matter that you have not drawn money from the LLC or whether the LLC shows a profit.

    Short term jobs can adversely effect unemployment. It seems unfair, but the effective penalties for taking them can exceed what you got paid. This would be where the specifics of your case and IL law would come into play.

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