Getting Unemployment While Doing a Startup

A close friend of mine just got laid off. He has a real good idea for a startup and is about to get a business license and start working on it. He wants to know if this can have any impact on receiving unemployment benefits?

My buddy lives in California, USA.

UPDATE: Thanks SO much to everyone. My friend is really happy with the information. It's helped him with peace of mind.

Very simple. In California, you can collect unemployement as long as you are actively looking for a full-time job. Nothing prevents you from advancing your startup on the side, as long as your intent is to find a full-time job.

Continue to put in resumes, so you can show that he is actively looking for a job, but in his free time he can start working on the start-up.

If he is still collecting unemployment when you start to make moiney then you will want to ensure that he is being honest about what he is making, as, it will cause many problems if he lies about what he is making, so paying under the table would be a bad idea, as the IRS may catch him, and it isn't worth the risk to your business to lie.

It does vary by state, so you need to check locally.

As a point of reference, in Texas you stop receiving unemployment only if you make more than a certain amount of money, so if he's just starting out a new business (and therefore won't get much money soon), it might work.

I think it varies from state to state but I expect that he's legally going to forfeit his right to any unemployment money. He needs to get better advice than some internets board though. Time to talk to a lawyer of the unemployment services agency.

In the UK you must be:

• actively looking for a job
• willing to take any job
• willing to travel up to 90 minutes each way
• able and willing to start a job the next day