It’s a tough time for many folks in America, with a lot of us finding ourselves out of work. But hey, maybe this could be a silver lining. Ever thought about using that unemployment check to start your own business? We need fresh ideas now more than ever.
Unemployment rates shot up in the U.S. in April, the biggest jump since 1948. So, I reached out to Mike Nunez, the Chief Communications Officer at Incfile, to get some advice on how to kickstart a business with your unemployment money.
Mike says that with unemployment rates soaring, more Americans are turning to government assistance. The job market’s pretty tight, and new job opportunities are hard to come by. This has led some folks to stop the job hunt and start their own Limited Liability Company (LLC). And here’s the kicker – you can start an LLC while still collecting unemployment. This is actually encouraged by the Department of Labor and several states.
Mike’s been in the game for 21 years, including a four-year stint at Google, so he knows what he’s talking about. He suggests starting where you’re already at – with your unemployment insurance (UI). If you’re one of the millions applying for UI each week, your first stop should be your state’s labor department website. Check if they offer the Self-Employment Assistance Program (SEAP) and see if you’re eligible.
SEAP lets you work on setting up your business while still collecting your weekly unemployment checks. You don’t even need to actively look for work while you’re on the program. If your state doesn’t offer SEAP, don’t sweat it. You can still use your unemployment insurance payments to start your LLC. Just remember, any money you make from your business needs to be reported and deducted when you make your weekly UI claims. This is the same rule as if you took a part-time job.
There’s more you need to know. If you start making some money from your new business, that cash won’t be deducted from your unemployment payments while you’re on SEAP. Mike also mentions there are online videos for support and training, and you can get additional training with a business counselor.
Starting your own business means you’re the boss. You get to create your dream job! Whether you’re into marketing, food, retail, consulting, or anything else, you can use your passion to build your business. It’s a great way to channel your energy positively, especially when you’re stuck at home. Plus, you get to build something from scratch and enjoy the fruits of your labor.
But remember, you need to tread carefully. Protecting yourself legally is crucial. Creating an LLC can provide you with limited liability coverage and help protect your personal assets if someone sues your company. But remember, the first "L" in LLC stands for limited, so having additional business insurance might be a good idea.
Mike also advises against making big purchases at the start. If you don’t need it right away, start slow and evaluate everything you want to buy early on. Before you start a new business, you want to make sure it’s going to be right for you and for the market. Don’t just dive in headfirst – research everything you need to do before you open your doors. Look into key areas for your industry – from market data and customer needs to taxes and setting up your business. Understand the rules, regulations, and laws, and choose the correct business entity.
Starting a business with unemployment money can be a great option for aspiring entrepreneurs, especially during tough economic times. But it’s not all sunshine and rainbows. There are both benefits and challenges to this approach.
Benefits include financial support, time and focus, the availability of SEAP, the opportunity to pursue your passion, flexibility and autonomy, networking and personal development opportunities, and the potential for financial independence.
Challenges include reporting earnings, legal and financial risks, ensuring market viability, balancing business and unemployment requirements, dealing with uncertainty and stress, limited funds, and the time and commitment required to run a business.
Starting a business with unemployment money can be a viable option for those seeking self-employment opportunities during uncertain economic times. It provides a financial safety net and an opportunity to pursue your passions. But aspiring entrepreneurs must be aware of the challenges and risks involved and approach their ventures with careful planning, research, and commitment. With the right mindset, dedication, and strategic approach, entrepreneurs can turn their business dreams into reality, even in challenging economic times.
