What is business owner unemployment?
Business owner unemployment refers to the financial assistance available to small business owners who lose their source of income due to the closure or significant decline of their business. Unlike employees, who have clearly defined pathways to unemployment benefits, small business owners may be unsure where to turn when they lose their source of income. However, there are ways for business owners to access assistance. One such way is Centrelink’s Jobseeker Payment. This payment is available to individuals who are unemployed and actively looking for work. Small business owners who demonstrate their business is no longer viable may qualify for this payment.
To be eligible for Jobseeker Payment, business owners need to meet specific requirements, which include proving that their business has ceased or experienced a significant dip, passing an income and asset test and actively looking for alternative employment or participating in activities designed to help them re-enter the workforce, such as taking courses. With the rise of unemployment rates, being aware of these options is worthwhile in case your business is affected.
Related: Understanding the Unfair Dismissal of Employees
Who qualifies for unemployment payments as a business owner?
To qualify for the Jobseeker Payment as a business owner, you need to show that your business can no longer sustain itself financially. Centrelink will require you to demonstrate that your net income has significantly decreased or that your business activities have been scaled back or stopped altogether.
The key eligibility criteria for business owners are:
- Closure or reduction in business activities: You need to provide evidence that your business has either closed altogether or scaled back to the point where it can no longer generate enough income. This might involve sharing financial records, such as profit and loss or BAS statements, to prove the decline.
- Income and asset test: Just like other Jobseeker applicants, you will need to undergo an income and asset test. This means Centrelink will review your personal and business assets, and any other income sources, to determine your eligibility for unemployment benefits. For example, if your company still has significant assets like property, this could affect your ability to qualify for payments.
- Actively seeking employment: To qualify for Jobseeker Payment, you need to be actively looking for work. This means applying for jobs, attending interviews or participating in activities that will help you transition back into employment like obtaining a relevant certificate. Centrelink may request evidence of your job-seeking efforts, such as records of job applications and interviews you have attended.
- Financial commitments: If your business still has outstanding debts like loans, Centrelink will consider these when assessing your financial situation. Although your business liabilities may not automatically disqualify you from receiving payments, they are considered.
When you meet these criteria, you may be eligible to receive the Jobseeker Payment to provide you with temporary financial relief while you explore new employment opportunities or work on improving your financial situation.
Related: End of Financial Year Checklist for Employers and Small Business Owners
Other financial support for business owners
In addition to applying for Jobseeker Payment, small business owners may be eligible for other financial support, depending on their circumstances.
Some of the available options include government grants and financial assistance programs. The Australian government offers grants to help small business owners affected by natural disasters or economic downturns. Depending on your industry and location, there may be specific grants available to support you through the transition.
Job retraining programs can also offer valuable skills and education for those looking to embark on a new career path. These programs often target high-demand industries, such as healthcare, technology and renewable energy. Centrelink or your state’s employment services may provide access to retraining programs designed to help you learn new skills – especially with pre-employment skills testing in mind – and find a new job in a growing sector.
If your business is still operating, but your income has been drastically reduced, you may qualify for income support payments through Centrelink. These payments can help cover your basic living expenses while you work to get your business back on track.
Finally, you may be eligible for disaster relief payments if your business has been affected by a natural disaster, such as bushfires or floods. These payments help to cover financial losses incurred due to the disaster and are intended to support businesses as they recover.
Alongside unemployment benefits, these programs can provide a safety net for business owners who are financially struggling or want to explore new career opportunities.
Related: Short Wage Subsidy Guide for Employers
Why financial planning is important for business owners?
Even though unemployment benefits can provide temporary relief, it is advisable for business owners to engage in proactive financial planning long even while their business is doing well. After all, by developing a strong financial safety net, you can protect yourself from the uncertainties of owning a business.
Building an emergency fund is one of the most important steps you can take. By setting aside a portion of your profits during good times, you can create a buffer that will help cover your personal and business expenses if your business encounters a downturn or needs to close. Additionally, having multiple income streams can also provide a safety net. Consider diversifying your business or investing in side projects that generate revenue outside your main venture.
Working with a financial planner can also help ensure your financial strategies are sound. A professional can assist you in managing debt, planning for retirement and protecting your business’s long-term viability.
Rebuilding phase
Closing your business can be challenging, but it is also an opportunity for a fresh start. Reflect on what went well and what did not. Use these insights to rebuild your business or explore new ventures.
After closing your business, consider exploring industries or roles that are a good fit for your skills and experience. Many growing sectors in Australia, such as technology, healthcare and renewable energy, may offer new opportunities for former business owners. Networking and seeking advice from other entrepreneurs or mentors can be helpful during this stage. You may also want to browse our hiring resources for employers.
Furthermore, do not hesitate to draw on the support of your local business community and online resources. Many organisations, such as the Small Business Mentoring Service and the Business Council of Australia, provide advice, guidance and support for business owners looking to rebuild their businesses.
Related: Tomorrow’s world: Your global guide to the future of work
Although certain criteria need to be met by business owners to claim unemployment benefits in Australia, it is possible to access financial support through the Jobseeker Payment and other government assistance programs. Understanding the options available, such as grants, retraining programs and income support, can help newly unemployed business owners move forward.
