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In most situations, a self-employed person in Indiana cannot receive unemployment benefits. If a person was self-employed but lost work, he is not eligible unless he paid into the Indiana unemployment insurance fund. If a person receives unemployment benefits and begins some work as a self-employed person, he can still receive benefits but the Indiana Department of Workforce Development reduces his weekly benefit.
Indiana Unemployment Insurance
Every state runs an unemployment insurance fund that employers pay into. Employers contribute some money from all employees' paychecks. The Indiana Department of Workforce Development manages the fund and handles unemployment claims. Indiana workers can submit an insurance claim for unemployment benefits if they become unemployed, had payments made in their name and meet eligibility requirements.
If a person relied on income from self-employment and lost that income or his small business closed, he is not eligible for unemployment benefits unless he submitted money in his own name to the fund while still employed. The key to unemployment benefits is employer payments into the fund during employment -- self-employed people do not have an employer that does this for them.
Self-Employment During Unemployment
Indiana encourages people on unemployment benefits to take up part-time work or odd jobs while looking for a new job. Some people opt for self-employment while still collecting benefits. You can still collect benefits if self-employment work is part time but you must report any income. DWD employees will deduct any amount from your benefits that exceeds 20 percent of your weekly benefit amount. For example, if you have a weekly benefit amount of $200, and you make $100 one week, the first $40 (20 percent of 200) does not affect your benefits but the remaining $60 is deducted and you receive only $140 in benefits for that week.
Paying into the Fund
If self-employment becomes full-time self-employment, you can no longer collect benefits. Indiana law prohibits a person working full-time from collecting benefits -- even if the amount he makes from full-time work is less than his weekly unemployment benefit amount. A person supporting himself through full-time self-employment work can call the DWD employer help center and try to establish payments into the fund as his own employer, opening the door to eligibility for benefits should self-employment work dry up.