The Wisconsin Department of Workforce Development's Unemployment Insurance Division administers the state's unemployment fund. Qualified applicants can receive unemployment benefits if they are unemployed or working reduced hours. The state requires employers to pay unemployment taxes on their employees to fund the unemployment insurance system. A small business may be eligible to receive unemployment compensation and may be required to pay unemployment taxes.
Qualification Rules to Receive Unemployment Benefits
According to the Wisconsin Unemployment Insurance Division, an applicant who is eligible to receive benefits can begin a small business while he is unemployed without having to report income. Normally, the state requires applicants to report any wages earned while they are receiving unemployment benefits.
The general rule is that wages, unless specifically excluded, are considered employment income. The state will reduce unemployment benefits by the amount a claimant earns. However, if a claimant begins working as a sole proprietor, the state does not require him to report his self-employment income, and the division will not reduce his benefits from these earnings.
Coverage Rules for Liability to Pay Unemployment Taxes
Wisconsin law requires all employers to report their wages paid to their employees. Employers are responsible for paying unemployment taxes if they paid at least $1,500 in one quarter during a calendar year of employment. Alternatively, employers must pay unemployment taxes if they paid at least one employee for 20 or more weeks. The state law applies to both part- and full-time employees, and as long as employers paid for any part of their workday for 20 weeks annually, they must pay taxes.
A sole proprietor without any employees does not have to pay unemployment insurance taxes. Similarly, domestic employers are not liable for unemployment taxes if they paid less than $1,000 quarterly to their domestic servants. However, a small business is liable for unemployment taxes if it purchases an existing business that was previously liable for unemployment taxes.
Self Coverage
A sole proprietor or other small business without any unemployment tax responsibilities can voluntarily elect self-coverage. A small business can qualify for subsequent unemployment insurance coverage if the business is no longer economically viable, and the owner purchased voluntary self-coverage.
Limitations and Qualifications to Receive Unemployment Income
Under Wisconsin law, family employees are eligible for unemployment benefits in limited situations. The state uses a different maximum benefit calculation for related employees. Wages earned from a family business may not be more than 10 times an applicant's weekly benefit amount. Similarly, an independent real estate or insurance agent does not qualify for unemployment benefits if he does not receive wages and only receives commissions. Thus, a small business is eligible to receive unemployment compensation if it voluntarily paid unemployment taxes for self-coverage or if an employee of a small family business qualifies under the monetary eligibility rules.
Considerations
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
