Claimants often get frustrated at how small their checks for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) may be. Often, you have given up the ability to work and earn an income to provide for your family, and the money you collect each month for SSDI or SSI is only a fraction of what you used to make.
Therefore, industrious claimants will often turn to starting their own business in their free time while collecting SSDI or SSI benefits. While you can do this, there are certain things you need to understand before embarking on self-employment.
First, the Social Security Administration (SSA) is paying you these benefits because they have determined that you are disabled and unable to work. By starting your own business, you are “bucking” this decision.
Generally, if you are self-employed, SSA will consider your activities and their value to the business to determine whether you have engaged in “substantial gainful activity.” SSA does not consider your income alone, but instead uses three different tests to determine whether you have engaged in substantial gainful activity. If you have not engaged in substantial gainful activity under the first test, SSA considers tests two and three.
Under the first test, if you render services that are significant to the operation of the business and receive a substantial income to the business, you have engaged in substantial gainful activity.
Under the second test, you have engaged in substantial gainful activity if your work activity in terms of hours, skills, energy output, efficiency, duties, and responsibilities, is comparable to that of unimpaired individuals in your community who are in the same or similar businesses as their means of livelihood.
Lastly, the third test states you have engaged in substantial gainful activity if your work activity is not comparable to that of unimpaired individuals, but is worth a particular amount when considered in terms of its value to the business, or when compared to the salary that an owner would pay to an employee for the work you are doing.
Above all else, it is important to remember that you have a responsibility to always report to SSA any time you start or stop work, or begin to receive any income that may impact your benefits.