To self-employed people, unemployment benefits may seem like a mirage in the desert—something distant, blurry, and probably just a delusion. Traditionally, the concept of unemployment for self-employed people did not exist. It just wasn’t something the government planned diligently. Thanks to recent programs, such as the CARES Act, and many relief efforts, that mirage is within reach.
Whether one is a freelancer or the owner of a small business, the world of unemployment benefits can be pretty confusing.
No worries- this guide shall unlock doors for benefits you never knew existed.
Can Self-Employed People File for Unemployment?
Yes!
With the government’s efforts to provide relief during the pandemic, independent workers can now apply for unemployment. Under regular circumstances, those who are self-employed or work for themselves will automatically be disqualified from receiving traditional UI. However, as of COVID-19, rules broke, and the CARES Act was one game changer.
Other vital programs in the CARES Act included financial relief. Some such key programs include Pandemic Unemployment Assistance, which brings extended unemployment benefits for freelancers, independent contractors, and gig workers. You might have asked yourself in the past, “Can self-employed file for unemployment?” The answer is yes, but it depends on your situation too.
What is the form of help that is available to the Self-Employed?
After COVID-19, there is more choice than there was before for the self-employed folk but it is still not easy. It is hard!! and many people require assistance to find their way out of this maze of benefits.
Here are some of the programs that can help navigate this :
1. The Pandemic Unemployment Assistance (PUA)
This one is a lifesaver program. PUA, part of the CARES Act, was designed in particular to cover people who traditionally would not qualify for regular unemployment. Freelancers, gig workers, and contractors were eligible to file for unemployment under this program.
At the height of the pandemic, when work was hard to find, this was launched as a lifeboat for the ones who were drowning. These were mostly self-employed workers with minimal benefits.
2. Paycheck Protection Program (PPP)
Although we can’t exactly term it unemployment insurance, it is quite similar in function. It was providing loans to small businesses and the self-employed. The forgiveness applied if the borrowed amount was used on payroll and other qualifying expenses- which became an incredible life support for freelancers during really hard times.
If your income falls and you have people that you are working for, then that is something you would use to keep your head above water.
3. Freelancers’ Relief Fund (FRF)
Another crucial resource was the Freelancers’ Relief Fund (FRF), helping those freelancers who experienced a loss of income suddenly during the pandemic. Though DUA does not fall under the unemployment system, this fund did get short-term relief for it.
Such an example shows that one needs to be aware of all the possible avenues, from government programs to specifically those who can help in industries.
4. Disaster Unemployment Assistance (DUA)
You may qualify for DUA if a disaster is responsible for losses of wages and income. This program offered by the federal government pays people who lost work because of disaster, but this loss does not qualify them under regular programs in the state and the federal government.
It is one of the significant resource sources for self-employment-related losses in situations of hurricanes, floods, or— you guessed it—pandemics!!
5. Self-Employment Assistance Program (SEAP)
A Self-Employment Assistance Program (SEAP) is for the unemployed who are yet to exhaust their unemployment benefits but have a desire to start a business. Instead of waiting for some other form of job, one can receive the SEAP benefit while preparing to set up a business for an easy take-off.
It is nearly like that distant cousin who does unemployment-related work on entrepreneurial pursuits.
How to Apply for Unemployment as a Self-Employed Worker
Now that we have at last determined that there is unemployment for self-employed workers, how do you start an application?
Application procedures vary by state, but these are general instructions on what you will need:
Obtain the Correct Documents
Before filing an unemployment claim, it is a good practice to get all the necessary papers ready. These may include:
- Your income proof: tax return, bank statements, 1099 forms
- Your business expenditures records
- Any documents that depict the fact that the COVID-19 pandemic caused damage to your business due to the forced shutdown
Having these will help you make the application process smoother and ensure that you are approved as soon as possible.
File an Unemployment Benefits Application
Filing an unemployment benefits application for programs like PUA or DUA usually happens through your state’s unemployment office. Visit their website, navigate to the self-employed benefits section, and follow the steps.
Pro tip: Be prepared for a bit of a wait—it’s not exactly a fast process.
Benefit Payments: When to Expect Them
One of the biggest questions freelancers have is, “How soon will I start seeing those benefit payments?”
The answer depends on the state and program. Under PUA, once you are approved, you can expect backdated payments to cover the time you have been out of work. Just don’t expect the money to rain down immediately. Think of it more as a drizzle that turns into a steady stream over time.
Avoiding Pitfalls: Common Mistakes Self-Employed Workers Make
For a self-employed individual, unemployment may easily become a quagmire, and from these mistakes, here are some most made and how they can be avoided.
Underreporting Income
Freelancers and independent contractors’ income is up and down. It might seem they can underreport their income to receive many benefits. Bad idea! Always be transparent. Underreporting can make your benefits denied, but it can also come back to haunt you when the government audit comes. Ouch!’
Not Keeping Records
Without pay stubs, freelancers need to rely on invoices, bank statements, and tax returns as proof of income. Not keeping good records can slow down or derail your application altogether.
So, file everything meticulously— your past self will thank you.
Not Knowing All Available Options
Sure, PUA and the Paycheck Protection Program have been the big names, but don’t forget about options like the Self-Employment Assistance Program or Freelancers’ Relief Fund.
Explore every possibility.
Missing out on an extra avenue of relief just because it’s less talked about? That’s like skipping dessert at a buffet— tragic!!
Looking Forward: What’s Next for Unemployment Assistance?
While many of the pandemic-specific programs like PUA have ended, they set a precedent for future relief efforts. Legislative discussions continue around how to provide better unemployment coverage for self-employed workers in the long term. While it may take time to see significant changes, the success of programs like the CARES Act and PPP demonstrates that self-employed people deserve a safety net.
In the meantime, continue to stay informed and make sure you are aware of any temporary relief programs that may pop up in response to future crises or disasters. Flexibility is key here— just like your hustle.
Unemployment for the Self-Employed Doesn’t Have to Be a Dream
For the self-employed, unemployment benefits were a pipedream. Nowadays, however, with PUA, DUA, and the Paycheck Protection Program- all such programs available today, in a way, putting finances into one’s pocket-now more than ever, it has all sorts of programs to tap into.
It is imperative to inform and organize various documents needed while exploring all programs available to unlock support.
So whether you are an experienced freelancer or still probing into self-employment, do not hesitate to file for the benefits you qualify for. The process might be a little clumsy, but financial relief can come in handy during tough times.
After all, why shouldn’t a safety net accrue to the self-employed? If anyone is juggling enough hats to deserve it, it’s you.
