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1099 Form or K1
If you receive a 1099 or K1, you may be considered to be self-employed.
W-2 Form
If you receive a W-2 from your organization, you are considered to be an employee (not a sole proprietor), even if you are an owner or officer of the organization.
What is my Role as a Sole Proprietor?
Step-by-Step
Decide whether to opt in
In order to opt-in as a sole proprietor or self-employed individual, you must remain in the program for a minimum of three years. After the initial three years, you will be automatically re-enrolled for at least one year at a time, unless you withdraw from the program.
HOW CT PAID LEAVE WORKS
Determine method of reporting wages: cash basis or accrual basis
Cash basis focuses on when the individual actually receives payment
If the individual performs work in March 2023 and is paid for it in June 2023, the income would be reported and the 0.5% contribution is attributed to the second quarter of 2023 under the cash basis method.
Accrual basis focuses on when the individual performs the work
If the individual performs work in March 2023 and is paid for it in June 2023, income would be reported and the 0.5% contribution is attributed to the first quarter of 2023 under the accrual basis method.
Remit contributions
Registered sole proprietors/self-employed individuals must contribute 0.5% of their self-employment earnings, as defined by the Internal Revenue Code, 26 U.S.C 1402(b), up to the Social Security Contribution and benefit base.
You may have to estimate your future income to ensure you make appropriate deductions. If you complete a Schedule C, your self-employment earnings are reported on line 31. If you complete a Schedule SE, your self-employment earnings are reported on line 6. Contributions are owed on a quarterly basis.
You will remit your contributions through the My Account portal unless you have a third-party administrator remitting on your behalf.
Regardless of the specific date on which you register, contributions will be owed for the full quarter in which you registered.
The CT Paid Leave Authority will allow self-employed individuals/sole proprietors to report income and remit their contributions in one of two ways:
Report based on estimated self-employment earnings
Report your quarterly income and remit the 0.5% using the same calculations you use to make your estimated quarterly payments toward your self-employment taxes, and reconcile the contributions when you finalize your self-employment taxes at year end.
Report based on actual year-end self-employment earnings
Report your quarterly income as $0 and remit no contributions until you calculate your self-employment taxes at year end, at which time you will report your self-employment income for the year to CT Paid Leave and remit the 0.5% contributions for the year.
Important
If you do not have any income for the relevant quarter, you must report $0 income in the quarterly report. Failure to report $0 income in the quarterly report will be treated as non-compliance and may result in fines and penalties.
Understand when you are able to apply for benefits
Registered before January 1, 2022?
You can apply at any time.
Registered after January 1, 2022?
You can apply for benefits no sooner than the first day of the month following 3 full calendar months after registration.
When you are ready to apply for benefits, visit Claims.
Verify your employment
When applying for benefits, you will need to complete the Employment Verification Form for Sole Proprietors/Self-Employed Individuals.
DOWNLOAD SOLE PROPRIETOR/SELF-EMPLOYED EMPLOYMENT VERIFICATION FORM (English) DOWNLOAD SOLE PROPRIETOR/SELF-EMPLOYED EMPLOYMENT VERIFICATION FORM (Spanish)For additional assistance, view our Sole Prop/Self Employed Employment Verification Form job aids.
Sole Prop/Self Employed Employment Verification Form Job Aid (English) Sole Prop/Self Employed Employment Verification Form Job Aid (Spanish)Other Considerations
Business Partnerships
If your business is a partnership, you are considered to be an owner of the business, not an employee. As such, each of you has the opportunity to opt-in to CT Paid Leave as a sole proprietor/self-employed individual if you wish to do so. It is not required for both partners to choose to opt-in. If you choose to opt-in your contributions and your benefits will be based on your self-employment earnings.
Planning to Grow Your Business and Add an Employee?
If you add employees during your enrollment period, you will need to update your account to register as an employer as well. You will also need to remit the contributions from your employee(s) quarterly separately from your own contributions.
Withdrawing From CT Paid Leave
To withdraw or to prevent automatic re-enrollment, you must submit a request to CT Paid Leave using the Contact Us form and selecting "Help with Registration," at least 30 days before the expiration of your registration, explaining the reason for withdrawal and date you wish to withdraw. The CT Paid Leave Authority reserves the right to impose penalties for early voluntary withdrawal from CT Paid Leave.
Going forward, if you decide to opt back into CT Paid Leave, there will be a one-year waiting period from the day you requested to opt-out before you will be able to re-enroll.
If you re-enroll in CT Paid Leave, there will also be a waiting period before you can apply for benefits. The earliest that a sole proprietor or self-employed individual may apply for paid leave benefits is the first day of the month following 3 full calendar months from the date registered as a sole proprietor.
Frequently Asked Questions
Income replacement benefits are based on your self- employment earnings and will be calculated based on your two highest earning quarters of the first 4 of the 5 most recently completed quarters.
If you meet the eligibility requirements, the CT Paid Leave Act specifies that we need to calculate your benefits by first determining your base weekly earnings. The base weekly earnings are calculated by:
(1) Looking at the first four of the five most recently completed quarters,
(2) Adding together the money earned while you resided in CT in the two highest earning quarters, and
(3) dividing that sum by 26. This number represents your base weekly earnings, and this is what your benefit will be based on.
For this calculation, the CT Paid Leave Authority will require documentation of when the applicant actually performed the work that resulted in the payment (i.e. accrual basis reporting).
Note: Benefits are capped at 60 times the current minimum wage. Sixty times the minimum wage between June 1, 2023 and December 31, 2023 was $900.00. As of January 1, 2024, sixty times the minimum wage is $941.40.
If you meet the eligibility requirements, the CT Paid Leave Act specifies that we need to calculate your benefits by first determining your base weekly earnings. The base weekly earnings are calculated by:
(1) Looking at the first four of the five most recently completed quarters,
(2) Adding together the money earned while you resided in CT in the two highest earning quarters, and
(3) dividing that sum by 26. This number represents your base weekly earnings, and this is what your benefit will be based on.
For this calculation, the CT Paid Leave Authority will require documentation of when the applicant actually performed the work that resulted in the payment (i.e. accrual basis reporting).
Note: Benefits are capped at 60 times the current minimum wage. Sixty times the minimum wage between June 1, 2023 and December 31, 2023 was $900.00. As of January 1, 2024, sixty times the minimum wage is $941.40.
If you are planning to perform some work, we will ask for information about what percentage of your average work week you will work. For example, if you plan to work 1/3 of your average work week, we will consider you to be on leave for 2/3 of the week and your benefit payment would be 2/3 of the total weekly benefit. If, while you are on leave, you receive payment for work that you performed before the leave, your CT Paid Leave benefits would not be reduced. The CT Paid Leave Authority may ask for details for those payments to verify when the work was performed, to ensure it does not inappropriately reduce the leave benefits.
