Unemployment small business income question

[Johnny2X2X]

My wife owns a small specialized gardening business. Her clients are mostly elderly garners who can no longer do all the work on their gardens and want a master gardener to do some of the work and design. She's shut her business down because of the Coronavirus, and in MI she's been able to collect unemployment for the first time, she's getting $800 a week.

Her issue is that she went out and did a job last week because she made an exception for a good customer, they paid her $500, she spent a couple hundred on supplies, another $100 on a helper, and some other expenses, she'll probably net $100 from this job when we do our taxes next year. Is that what she should claim as income on unemployment that week?

Also, she has some customers that might pay for a season of grooming, maybe $800 for every other week throughout the Summer, will she just divide that out over the weeks to report the income?

We're not looking to scam the system, want to do what's right. Also don't want to get accused of unemployment fraud. Also, how would they check into her finances for unemployment anyway? It's not like they have access to her business's bank records nor will she have payroll for herself.

[mr_lebowski]

1. Not an expert but I'd say keep good records of expenses ...

And report the net income. I would think it's fine to spread a monthly payment equally among weeks of the month but not sure, should probably call the UI office and ask. Or put the whole 800 into one week and just get probably nothing that week.

[ploppy]

2. Call you UI office.

Some states allow work when on unemployment. Check it out!

[RainCaster]

3. It depends upon whether you use "cash" or "inventory" accounting.

My guess is that you use "cash", so you should report the net (est. profit) in the week that you receive it. Keep in mind all the other monthly expenses you incur (utilities, rent, etc.) when you calculate that profit.

[Johnny2X2X]

4. Thanks

What she’ll probably do is use her 2019 profit/loss tax statement as a guide. For instance if she had $10,000 in revenue per $6500 of expenses we’ll claim 35% profit for all revenue.