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LLC and Unemployment

Discussion in 'Unemployment Insurance & Benefits' started by nyhitmen, Aug 1, 2019.

  1. nyhitmen

    nyhitmen Law Topic Starter New Member

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    Jurisdiction:
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    I will try and make this as short as possible

    I was laid off from my job two months ago and a buddy of mine said lets form our own LLC and work towards building our own business. We will not be making money anytime soon as several things are needed first like insurance, a certificate from the state, etc. Two months before we even consider money. So I thought no big deal I mean only $130 to form an LLC and we split the money. I want to see an accountant today and he told me that I need to get my name off the LLC because if I tell unemployment they will take away my unemployment funds regardless of if I am making money. He said if I do not tell them at the end of the year when they run a names check of unemployed people against the forming of businesses they will make me pay back the money I got regardless if we made money or not. He suggested I change it over to my wife name. So I called the state and they said we can do an amendment to the LLC and take me off it and put her on for a small fee. My question is this. If I do that when the state does the search will it not show my name at all like the accountant said? the LLC was just formed 5 days ago. I want to see if anyone has insight about this and my accountant is correct so I do not go through all this for nothing. Sorry I did not see a lawyer thread only a business one.
     
  2. adjusterjack

    adjusterjack Super Moderator

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    Your accountant is correct. To qualify for unemployment compensation you have to be willing to work, available for work and actively seeking work. Spending your time on the LLC is none of that.

    As for the LLC, if the state runs your name through the business records your original filing will come up with your name on the LLC along with the change to your wife's name in the same place. In other words, the docket will look like this.

    7/1/19 - LLC formed - Joe Doe and Jim Jones, members.
    8/1/19 - LLC change - Joe Doe removed, Jane Doe substituted as member.

    The documents will tell the whole story, you'll have committed fraud and you'll lose future benefits and have to pay back benefits already received.

    It won't be the state's first rodeo. They can smell fraud a mile away.

    So, unless you want to give up UC benefits, I suggest you remove yourself from the LLC ASAP, and you (and your wife) avoid being involved in it. Look for work instead.

    Or, report to the UC agency that you started the business 5 days ago and discontinue your claim.
     
  3. nyhitmen

    nyhitmen Law Topic Starter New Member

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    Actually I was thinking of removing my name from him and maybe next year I can get involved if the company is doing well . So basically I turn it over completely to other guy

    But then won’t they see anyway that I was on an LLC for a week or two then got off and question it ? Regardless if I give it up ?
     
  4. adjusterjack

    adjusterjack Super Moderator

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    Giving it up after a week or two and losing a week or two of UC benefits is a far cry better than losing several months of benefits.
     
  5. nyhitmen

    nyhitmen Law Topic Starter New Member

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    So basically at the end of the year they will check see I have an LLC attached to my name for two weeks and are you certain they will only ask for two weeks of money back and not all of it that I will be getting ? I don’t want trouble but I need unemployment or I will lose my house , car everything
     
  6. PayrollHRGuy

    PayrollHRGuy Well-Known Member

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    Well if you got benefits because you reported able, available and looking for work for those two weeks you could get in trouble because you weren't 2 of the 3 things.
     
  7. nyhitmen

    nyhitmen Law Topic Starter New Member

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    Well I was looking for work I mean it takes all of 15 minutes online to register an LLC
     
  8. cbg

    cbg Super Moderator

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    In most states, there is a specific hours limit; you may work at your own business for x hours per week without it impacting your unemployment; over that it is considered to be interfering with your job search. I do not know what x is in your state. The unemployment office will.
     
  9. PayrollHRGuy

    PayrollHRGuy Well-Known Member

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    And had you gotten a job offer would you have dropped what you were doing at the LLC and taken it? Would you swear to that under penalty of perjury?
     
  10. nyhitmen

    nyhitmen Law Topic Starter New Member

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    100% yes we only did the LLC to hold the name . The company has no chance of making money any time soon it needs insurance a contractor license all things we don’t even have
     
  11. PayrollHRGuy

    PayrollHRGuy Well-Known Member

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    Then you really shouldn't have a problem. I don't even know how diligent NJ UI is about checking LLC filings.
     

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