Owner of Company wanting to lay off himself Missouri

[henry9]

I have a question-

I am the majority owner of a small 4 person IT company along with my business partner.

We each have had personal tragedies in the past year with deaths of people very close to us, which occurred at the same time as us trying to grow too quickly by adding more staff.

This caused us to neglect our tasks as the leaders of the business, unfortunately.

Now we have incurred a large debt that we're responsible for. We are not making a profit, and at this rate will go out of business.

I am trying many creative ways to cut costs to eventually catch up.

One idea I have is to lay off myself, and do volunteer work for the company.

Our company pays Unemployment Insurance, and I would like to know if this is legal- can the owner (with a w2) lay himself off, and draw unemployment?

This would be temporary of course, to pay off some short-term debt so we can get back on our feet, and then hire myself again. I don't plan to live on canned beans and rice for very long, you know?

Thanks for any advice and thoughts in advance.

henry

[joec]

I seriously doubt it.
JoeC

[Pattymd]

Actually, I think this depends on what type of company this is; limited partnership, sole proprietorship, S-corp?

A business consultant may be able to help you. You might try the Service Corps of Retired Executives (SCORE) for free or low-cost assistance. You can find them on the Internet.

[joec]

Originally Posted by henry9

I have a question-

I am the majority owner of a small 4 person IT company along with my business partner................................................

henry

Its obviously an S corp or C corp the problem arises in that he still receives dividends. He receives a majority of the dividends,being the majority share holder. If he lays himself off he will still receive cash in the form of dividends even if the corporation is operating in the red,and no cash distributions are made,the O.P still has controlling interests.
The O.P is not available for full time employment if he is engaged in free work in the corporation which he has a controlling interest.
I don't see how he could file a claim without giving up controlling interest,and selling his shares in the corporation,if he did that the would not work for free at the corporation in which he no longer has an interest.
It may be possible to resign,and keep his interest in the form of a certificate of limited liability in the corporation,in which he would have no say in the corporate functions,but still be eligible for a majority of the dividends.
Under that scenario he may be able to collect if he is available for full time employment. Corporate law is my weak point so it should be discussed with the partners,and the attorney that drew up the articles of incorporation.
Personally I would not give over my controlling interests,for a certificate of limited liability just to collect unemployment.
O.P you got to roll with the punches.
JoeC