Do I Need to Sell My Business To Qualify For Disability Benefits?

Owning your own business is a very tricky topic when it comes to receiving Social Security disability benefits. The Social Security Disability Insurance (SSDI) program and the Supplemental Security Income (SSI) have different requirements regarding income.

However, they are the same in that you are not permitted to “earn income” when you are on either of these programs. To collect SSDI or SSI, you have to be unable to do more than a minimal amount of work.

What Is Substantial Gainful Activity (SGA) and how does it impact my case?

The goal of the Social Security Disability Insurance program is to offer financial assistance to those who are too ill to earn gainful employment. If you have the ability to earn income by running a business, whether or not you are directly working, it will impact your eligibility for disability benefits.

Even if you own a very small business, such as a dog-walking business or a bookkeeping service, the Social Security Administration (SSA) will carefully examine your income.

The SSA will use various “tests” to determine if the work you are doing is considered Substantial Gainful Activity (SGA). Substantial gainful activity is any work that brings in over a specific dollar amount each month.

For 2018, that dollar amount is $1,180 for general disabled applicants on SSDI. For those on SSI, the individual dollar amount is $750 and $1,125 for couples. As a general rule, if you are able to earn over that amount, you will not be considered eligible for disability benefits on either program.

What is “Countable Income” and how does it impact my benefits?

Countable income is the portion of income that you earn from your job or business based on your own work.

For SSDI recipients, this excludes any unpaid help that you get from your family or friends related to your business, impairment-related work expenses, or contributions made by others to your self-employment business, such as the donation of a computer.

Do I need to get rid of my business to qualify for disability benefits?

Three tests that the SSA uses to determine if your business is considered SGA under the SSDI program

The Social Security Administration will use three tests to determine if your work is SGA:

  • Significant services and substantial income test: If you are the sole person in your business, it is considered significant. Additionally, if you work with others, but you provide more than half of the services or manage the business for more than 45 hours a month, your work is considered significant. If you bring in more than $1,180 a month or if you earn what you earned before you became disabled, you work may still be considered SGA.
  • Comparability test:This test compares your work activity with that of an unimpaired person performing the same work. Utilizing factors such as hours, skills, energy output, efficiency, duties, and responsibilities, your work is comparing to that of a healthy person performing the same job.
  • Worth of work test: If the work that you do for your business is apparently worth more than $1,180 a month in services or if it would cost you more than $1,180 to pay someone else to perform your responsibilities, your work may be considered SGA.

Should I hire a lawyer to help me understand my rights as a business owner

The SSA wants you to return to work as soon as possible so that you may take over financial responsibility for your life. Therefore, there are programs and ways to start a business while receiving disability benefits. SSA has various work incentives to encourage you to return to work.

However, the laws around your income are very complicated and difficult to understand. In fact, if you unknowingly violate the code of federal regulations, your benefits could be terminated.

A qualified Social Security Attorney can assist you in understanding the rules and regulations around returning to work, owning a business, and SGA.

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