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Unemployment and a potential small business (NYC)

Aurora BorealisAurora Borealis Registered User regular
edited January 2011 in Help / Advice Forum
Hello fellow H/A forumites!

So yesterday my job laid me off for 3 weeks while they remodel. Supposedly they plan to hire all of us poor minions back again, but we have not received official confirmation of the date, and frankly I don't trust the company to do right by us and let us know in a timely fashion whether or not we'll all have jobs come February. I'm hopeful but I still want to prepare for the worst.

With that in mind, I have filed for unemployment, and intend to look for other work within this time. I'm already perusing job sites and updating my resume. This part is all good, I feel okay with this. If I find a better job in this three weeks, so much the better. If not, I will go back to my old job, assuming they wil have me. Again, hopeful but a little pessimistic.

My problem is this. I have for a long time wanted to start up an etsy site and sell some of my paintings for extra cash. This won't be a living wage by a long shot, it'll probably only net me a few hundred dollars at most. And, well, I'll have some time on my hands in the next few weeks and the new year seems like a good time to start something like this.
I've got some outstanding debts and my finances are uncomfortably tight right now, I could really really use the money, particularly since the unemployment money is unlikely to kick in for at least a week or so and I don't have any other income.

The unemployment handbook, however, is pretty clear that 'starting a small business' will count against me in an unemployment claim. Even if I do it on evenings and weekends and don't actually make any money, (they say that specifically).

They have a program for people to start businesses and continue to collect, but I looked into it and I can't even apply for it unless I am "at high-risk for continued unemployment." Which, seeing as how I could very well be working again in 3 weeks, does not describe me.

So- my question. At what point does selling your shit on the internet become "starting a small business?" Does selling things I already own on craigslist, ebay or etsy count? Or does it only matter if I say, register as a sole proprietor for tax purposes (which I could maybe see myself doing if I start making real money, but not in the next 3 weeks..)? If I sell or attempt to sell a few paintings but still collect, am I actually committing fraud? Does anyone out there have any idea at all?

I live and work in New York State, since it probably matters.

Thanks, H/A!

Aurora Borealis on


  • ceresceres When the last moon is cast over the last star of morning And the future has past without even a last desperate warningRegistered User, Moderator mod
    edited January 2011
    They laid you off "for three weeks"? I don't think I understand. I understand upaid leave while they remodel, but I don't think I've heard of being laid off for such a short period. In my experience that's pretty permanent, or at least much longer term.

    ceres on
    And it seems like all is dying, and would leave the world to mourn
  • HevachHevach Registered User regular
    edited January 2011
    Delphi/Nexteer does a lot of short layoffs like that, I've heard of as short as 4-6 weeks. Apparently a lot of the old GM plants in Michigan used to for some reason.

    In Michigan, selling stuff you own only becomes a business if your local government has some ordinance limiting that thing. In my city it's open-to-the-public sale for over 4 consecutive days, more than 8 days in any month, or more than four sales in one year.

    I don't know if the fact that you're selling paintings you made and not your grandmother's crap from the basement makes a difference in that, though.

    Hevach on
  • Aurora BorealisAurora Borealis Registered User regular
    edited January 2011
    Yeah, I know it's weird. My guess is that they are hedging their bets in case the remodel takes longer than it's supposed to. But who knows, it could mean that they intend on hiring new people, or will only bring us back at a lower salary. I don't know, my boss doesn't know, nobody knows.

    This company is not particularly well organized at the upper levels- since I've worked there (4 years) we've gone through 3 entirely different management teams and 4 different payroll companies. So I really have no idea what to expect.

    Aurora Borealis on
  • MushroomStickMushroomStick Registered User regular
    edited January 2011
    ceres wrote: »
    They laid you off "for three weeks"? I don't think I understand. I understand upaid leave while they remodel, but I don't think I've heard of being laid off for such a short period. In my experience that's pretty permanent, or at least much longer term.

    A friend of mine does warehouse work and sometimes they lay him off for as little as a day at a time. I think they're just doing some kind of micro-rotation with the employees during slow seasons to avoid paying out unemployment or something.

    MushroomStick on
  • AiouaAioua Ora Occidens Ora OptimaRegistered User regular
    edited January 2011
    It might also be that your local laws require them to lay you off if they're planning on giving you no hours for an extended period of time.
    Save UI having to deal with companies trying to game the system.

    Aioua on
    life's a game that you're bound to lose / like using a hammer to pound in screws
    fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
    that's right we're on a fucked up cruise / God is dead but at least we have booze
    bad things happen, no one knows why / the sun burns out and everyone dies
  • EggyToastEggyToast Registered User regular
    edited January 2011
    Sounds like it could be union stuff, too. If your employees aren't technically your employees for 3 weeks any unions would be hard-pressed to step in.

    As for the Etsy stuff, they have a website set up for the tax stuff with a lot of good links:

    If you are creating and selling new goods for a profit, you are earning income and above a certain amount you will have to file taxes. For net income, mind.

    So for your painting, keep track of how much money you're spending on supplies (those are costs for your business) and if you start selling, apply for a tax ID number to become self employed. You will probably make so little starting out that you won't actually owe taxes, but you should still file (because if the IRS finds out that you should have been paying taxes they'll audit you and then you'll wish you had kept track of your expenses).

    The IRS website points out that you don't need to file as self-employed if you're making a net income of under $400 a year. However, a lot of what you have to do for claiming the income may depend on whether the sources you're using for income file with the IRS. For example, Google AdSense notifies the IRS for any money they pay you, even if it's $20. My wife had to deal with "Hobby Income" for a couple years when she had a website set up for some projects of hers, because she made about $300 a year and since Google told the IRS, she had to make sure it was accounted for.

    It's not hard, but it is paperwork. If you keep on top of it, you'll find it's not that big of a deal.

    EggyToast on
    || Flickr — || PSN: EggyToast
  • adytumadytum Registered User regular
    edited January 2011
    Please not that what you do may be considered a hobby by the IRS, which means you may not deduct expenses.

    It really depends on the specifics and if you expect to make a profit long-term.

    Talk to a tax professional.

    adytum on
  • Aurora BorealisAurora Borealis Registered User regular
    edited January 2011
    Thanks EggyToast! That link is super helpful. I can't believe I couldn't find it myself.

    I am well aware that if I make enough money I will have to file taxes. I don't expect to make that much in these 3 weeks. Over the course of the year, perhaps, but not right away.

    And yes, I'll be keeping records of everything. I've been audited for 1099 screwuppery before, it is no fun.

    At the red hot moment I'm mostly interested in whether or not I'm going to screw up my unemployment benefits, cuz I really can't afford to do that.

    Aurora Borealis on
  • DisrupterDisrupter Registered User regular
    edited January 2011
    Usually with unemployment you have to keep them updated on any money youve made that period. I "freelanced" during my unemployed period last year for about 2 months. I filed for unemployment right away but never made a low enough amount to get any. But I am sure if I had made a limited amount I would have gotten unemployment. And a freelance contractor is really not too different then a small business of his or her own.

    Id be suprised if you couldnt collect unemployment during this period. However, youd likely need to report any earnings at all, even if your pouring more then that back into the business. Then again, I am no expert. Just going by my own experiences.

    Disrupter on
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