Coronavirus Unemployment Benefits for Photographers
Updated: Apr 1, 2020
You’ve probably heard by now about the Coronavirus Aid, Relief, and Economic Security Act (CARES), but would you like the part that applies to photographers translated into human speak? Just like the rest of humanity, you really just need to know the part that applies to you, so we got you covered!
By the way, expect to hear *we are experiencing high call volumes* in a delightfully monotone voice when you call and be patient because it can take some time to get your claim processed. #unemploymentholdmusicdancechallenge We're also hearing that a lot of states just aren't set up to process claims for Sole Proprietors yet, so keep checking in with your state.
Most photographers we work with are either a Sole Proprietorship or an S Corporation. If you aren’t sure, here’s how to tell which you are. A Sole Proprietorship means you file a Schedule C as part of your 1040 Individual Tax return and your business doesn’t issue you a W-2 each year. In that case, here’s what you need to know. (*runs to check return and look for a Schedule C section – the page says Schedule C at the top in bold letters.) If your studio is an S Corporation, you filed an 1120S for your business taxes in addition to your personal 1040 tax return.
Sole Proprietors have not qualified for unemployment in the past because they don’t pay unemployment tax like companies do. The stimulus bill makes it so freelancers and self-employed people (that’s you!) now qualify.
Unemployment is for up to 39 weeks and through July there is an additional $600 a week that will be paid on top of the regular unemployment amount (the national average is $385 per week). This means that for at least four months, many people will be getting around $1,000 or so a week in unemployment benefits. This article is kind of long and technical, but it has more details.
It’s easy to calculate how much benefit employees should be getting, but it’s a lot harder with self-employed people. While we are still waiting for the details on how Unemployment Benefits for self-employed people will be calculated, we do know that having your books up to date and accurate will be crucial (we can totally help you with that!).
It’s important to note that if you do work on or for your business at all while you’re getting Unemployment Benefits, that can reduce the benefits you receive. This includes editing, blogging, social media marketing, bookkeeping, etc. That doesn’t mean you shouldn’t keep up with your social media marketing during this time—you totally should—but make sure you fairly report all your activity.
What’s different about S Corporations from Sole Proprietorships is that if your business is an S Corporation, you are legally an employee. That means your business issues you a W-2 each year, and it also means you’ve been paying Unemployment Taxes every year. While it’s not completely clear yet, it’s very likely that if you have to furlough yourself from your S Corporation because of COVID-19, you will qualify for Unemployment Benefits under the CARES Act.
By the way, if you’re wondering what being furloughed means, it’s like being laid off, but with the expectation that you’ll be brought back to work once things pick back up. Being furloughed means you can stay on your company health insurance while you get unemployment, which can be important.
Just like with Sole Proprietorships, it’s important to note that if you do work on or for your business at all while you’re getting Unemployment Benefits, that can reduce the benefits you receive. This includes editing, blogging, social media marketing, bookkeeping, etc. That doesn’t mean you shouldn’t keep up with your social media marketing during this time—I’d definitely suggest the opposite—but make sure you fairly report all your activity.
In addition to the Unemployment Benefits discussed above, both Sole Proprietors and S Corporation owners qualify for up to two weeks of paid time off for sick leave which includes caring for someone who has COVID-19 or a child whose school is closed, or a variety of other reasons. So, if you are unable to work because you’re taking care of your kids because their school is closed, you qualify for paid Sick Leave. The way this works is you front the cash then get it back from the government in the form of credits, but the details are still being worked out on exactly how this will happen. This doesn’t give you cash nearly as quickly as the Unemployment Benefits, and if your business is shut down, I would go straight to the Unemployment option, but if you’re really able to still work and just need paid time for Sick Leave, that is an option.
Let's say you do photography on the side but have a regular full-time job that you are still working at. In this case, you likely will not get any Unemployment Benefits. If your photography side venture is shut down because of COVID-19, it wouldn't hurt to check with your state about unemployment because every state can be a little bit different, but I will be surprised if any state would grant Unemployment Benefits if you are still working another job.