I have Self Employed (S-Corp in California) in which I am the only employee and run my own payroll. My all income source is coming from one specific company and that company has decided to shutdown their business due to COVAD epidemic. I am not sure if they are going to open door for business in future or not, but I have lost my all income revenue. Now I have the following questions:
1. Is it ok to terminate my employment so I don't have to run my payroll and pay payroll taxes? 2. Can I file for unemployment? 3. Is it ok to keep S-Corp status but no need to run payroll as I don't have any employee in the company. 4. I was paying my Health Insurance from my company but as now I don't have any income revenue, can I apply for Covered California.
Any other suggestion or what can be done to taken care of this situation will really be helpful.
1.yes you can lay yourself off due to no income. The comparable wage requirement goes out the window with loss of income.
2. Yes you can sign up for unemployment since you should have been paying into the fund all along.
3. Yes see 1 above. You are not required to go in the red and borrow money just to pay yourself although with federal and state funds at zero zero % and generous payback terms it is something to consider.
4. You would have to lay yourself off to get help with insurance but see 3 above - you might be able to borrow to pay health insurance while also collecting unemployment
If you are under a stay at home or need to tl take care of children with closed schools or are sick you might qualify to pay yourself sick pay and get reimbursed by the government for up to 80 hours.
John-Pero, thanks for your time to answer my all concerns. So I have the following options:
1. Terminate my self employment (Layoff) and apply for unemployment. 2. Keep my company status as S-Corp but no need to file any Corporate/Payroll Taxes (already paid CA minimum $800 tax for this year) or Quarterly Reports except for 1st Quarter (Jan - Mar).
3. Once employment is terminated then only apply for Heath Insurance through Covered California.