I am currently a sole proprietor in RI, thinking about incorporating. I sell health insurance to businesses and I'm wondering if we move to universal health insurance and I lose my clients, could I set up the corporation with my husband as the owner and me as the employee so when I don't make enough to live on, could he lay me off so I could collect unemployment while I find a new job? He would not actually be working in the business, just the owner.
Find out from the RI State insurance Commissioner whether your husband can own an insurance business without being licensed in the State. If there is an economic reason to establish a corporation, a laid off employee can collect unemployment, because the corporation pays for her/his unemployment insurance to the IRS (FUTA) and State (SUTA, SUE, Etc). Federal unemployment is consolidated and paid through each State. The comments contained herein are for general informational purposes only and may not be construed as rendering legal, tax or accounting advices. For specific advice, always consult your adviser. Good luck. Zaher Fallahi, Tax Attorney, CPA, MBA, MS.
I agree with my colleague that you need to find out if your husband must be licensed in order to be the shareholder of a company that sells insurance. In order for you to collect unemployment, you would have to pay into the state and federal unemployment systems. There are usually qualifications for drawing unemployment. You need to consult a RI attorney before doing any of this.
this service is not a substitute for an in office interview and paperwork review. it does create an attorney client relationship.
It is good that you are planning ahead.
The RI Department of Labor and Training has rules to try to prevent people from gaming the unemployment system. For example, if you own a company you generally cannot collect unemployment for yourself if anyone else is still working for the company. That is not what you are doing but you should check the rules before deciding what to do.
The state may have rules regarding who can own insurance agencies.
I am giving you general information about the law. To give you legal advice I would first have to learn more about the facts and circumstances of your particular situation. I am not your attorney and I am not giving legal advice. The Rhode Island Supreme Court licenses all lawyers in the general practice of law. The court does not license or certify any lawyer as an expert or specialist in any particular field of practice.
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