Thursday, August 4, 2011

Do Not Incorporate a Company If You Are On Unemployment in Pennsylvania

WHAT HAPPENS IF I FORM A CORPORATION WHILE ON PENNSYLVANIA UNEMPLOYMENT?

It does not seem to make much sense, and it is a little known fact, but if you form a corporation while receiving unemployment compensation you will be disqualified from receiving benefits - even if you never take any steps to operate the business.

From time to time, people receiving unemployment benefits, frustrated with an inability to find work, consider starting their own business.  In order to move towards that goal, sometimes people incorporate a business, with the idea of potentially marketing and operating it in the future.

IF I INCORPORATE A COMPANY, AM I CONSIDERED SELF-EMPLOYED UNDER PA UNEMPLOYMENT LAW?

If you incorporate a company in Pennsylvania, Unemployment will consider you to be self-employed from the date of incorporation, and will disqualify you from receiving future benefits.

What is maybe worse is this: if you do not report to Unemployment that you have incorporated, and it finds out later that you did so, you will be liable for an overpayment of all benefits in between the date of your incorporation and the date Unemployment learned about your incorporation.

Pennsylvania Unemployment is very hostile to people who attempt to make ends meet by engaging in any type of self-employment (this includes working as an independent contractor).  Moreover, if you evidence that you are considering self-employment by incorporating a business, you will be disqualified as well. 

Makes no sense, but forewarned is forearmed.

More Pennsylvania Unemployment QuestionsClick Here.

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