Dear Danielle:

I am new to the industry. I have been laid off so many times in the past 11 years that I have just lost faith in employers. I was given this idea back in 2003 to start an administrative support business, but was too scared. I was laid off again in September 2009 and my idea came back, but this time stronger, so I decided to pursue it and start my business. I am currently on unemployment and would like some advice on how to run a business while on assistance. My state’s Department of Licensing is no help to me and I am hearing that I have to be very careful having a business while getting benefits. As you probably know, while on unemployment insurance, you must do job searches and this takes all day. Looking for a job IS a job in itself and is very time consuming. I am single and I have no other income so I need my benefits. –GA

Great question! I bet there are lots of folks in the same boat so hopefully this conversation helps them as well.

Unless they are from your state or local unemployment agency, it would be irresponsible for anyone to give you any advice regarding your unemployment benefits.

Your state’s Department of Licensing is also not any help when it comes to advising your about unemployment benefits because it’s not their place.

It’s important to direct your questions about unemployment benefits directly to your state/local unemployment agency. Only they can tell you what the rules and guidelines are when it comes to collecting unemployment benefits.

Ask them whether you are allowed to work on starting a business while collecting benefits. How does it work if you do happen to get a client and they pay you money? What are your reporting requirements? How will it affect your benefit amounts? What if you put all that money back into the business?

Many years ago, I had a friend who started a hair salon after getting laid off. She was able to collect unemployment benefits while still running the business and receiving payments from customers. This was because she was not personally collecting a paycheck and put everything back into the business. This was allowable under our state’s employment insurance rules at that time.

Your state agency might have similar allowances. But again, I want to emphasize that you MUST talk with your own unemployment office to get the facts pertinent to your particular situation. Different states have different rules, and rules and programs change all the time.

This could actually be a very opportune time for you to begin setting up your business foundations, while you are collecting unemployment and don’t have any clients. This would include going through the business planning process, determining what target market (i.e., industry/field/profession) to focus your administrative support on, thinking of a name and securing a domain, working on your website content and marketing message, getting your contracts and other client/business documents ready, etc.

You’ll always be honing, tweaking and improving things as you go along, but getting these basics in place now will give your business a greater chance of succeeding once you’re ready to start accepting clients. And once you find out how client monies paid to you are to be handled and reported while collecting unemployment, that will help you determine how to best proceed from there.

Plus, keep in mind, with today’s technology, you can also hunt for work electronically instead of wasting gas and literally spending hours beating the pavement. Find out what qualifies as job-seeking. How many contacts are you required to have each week? Does it all have to be brick-and-mortar or do phone calls to employers and emailing resumes count?

And who knows, even thought it’s not employment per se, working in your own business is still self-employment and they may, therefore, allow your business start-up work to meet some of your job-seeking obligations. They may even have some further resources and programs to help you in that effort. You never know unless you ask, and you may be pleasantly surprised.

Knowing the answers to these questions will allow you to streamline your job-search activities so you have more time to simultaneously work on your setting up the business.

One last thought… I like to always remind folks that while employer paid, unemployment insurance is a benefit you earned by working. It’s not welfare so you should never feel ashamed about collecting it.

I mention this only because I know there are lots of folks who think unemployment is a handout. Those who didn’t work for a living are not eligible for UI, which means those who collect it only get it because they were contributing members of society in the workforce.

Plus, the goal of the unemployment agency is to get people back to work. I’m sure there are some backwards agencies out there, but I know there are just as many that offer a great deal of assistance and programs to help you in your business-starting efforts, not hold you back.

You might have your work cut out for you, but keep fighting to get the info and help you need. Good luck!