Can you start a business while on disability

The Social Security Administration is very strict with beneficiaries’ earnings. Even earning a small sum from a small business can impact your social security disability benefits. When considering your benefits and income, the administration will try and determine if “substantial gainful activity” is occurring.

And in many cases, this “substantial” activity is not even enough to pay rent in many cities.

Plan for Achieving Self Support (PASS)

PASS is a program that is an incentive to work for many on SSI, and the program will allow assistance with becoming independent. For example, PASS will help you reach your goals through assisting with the equipment you may need, education, and training to help you create a business.

And PASS requires a very detailed business plan when applying for the program.

The SSA will allow a person to be on a trial work period where they can, for nine months, return to work. This period allows a person to try and become independent again.

The Trial Work Period is very important because you’ll have nine months to see how much you can earn.

If you work over 80 hours or earn over $910 per month as a self-employed person, it will count towards your trial work period.

At the end of this period, the SSA will conduct its own analysis of your earnings. If a person earned $1,260 or more per month or had Substantial Gainful Activity (SGA), in each of the nine months, the administration may deem the person able to support themselves, stopping the benefits in the process.

Now, if a person doesn’t earn over $1,260, they’ll continue to receive their entire benefit amounts.

SGA and Businesses

Small businesses may not be profitable for months, years, or ever. The SSA will not be able to count SGA on income alone for this reason. A person’s number of hours that go into a business cannot also be counted properly because working 100 hours on your own small business may still net zero profit.

Some of the biggest businesses in the world operate at a loss.

And since this is the case, what will happen is that the SSA will look at:

• Amount of work done
• Type of work done

A reasonable value for the work will be determined, and by this measure, the SSA will be able to determine if the work conducted was more than the benefit amount. For example, you can’t charge $100 for one hour of work and then $0 for 10 hours to bypass your benefit limits.

Small businesses can deduct a lot of expenses, reducing their total income despite their work being worth $100 an hour under normal circumstances.

Three tests will be conducted to determine SGA:

• Comparability test
• Worth of work test
• Significant services and substantial income test

If their tests state that SGA was achieved, recipient benefits will be lost. So, yes, you can operate a business while on disability, but there are strict guidelines that must be followed before benefits are lost.

Jacob Maslow

A former senior editor of Legal Scoops, Jacob Maslow, founded several popular online newspapers including Daily Forex Report and Conservative Free Press.

Realising your dream of starting a business offers the chance to create a venture that better suits your abilities and lifestyle, and gives you control over how, where and when you work.

Starting a business, no matter your ability can be daunting. However, an extensive network of organisations, funding, and support is available for anyone with a disability to help bring their business idea to life.

Getting your idea off the ground involves several steps, from writing a business plan opens in new window and conducting market research opens in new window to securing funding opens in new window and choosing the right business structure opens in new window. Not every step will be relevant to your business.

If you have a physical or mental disability, you may want to consider where to find specialist funding, support and plan the type of business you could start that best suits your lifestyle.

Start Up Loans has also partnered with the Royal National Institute of Blind People (RNIB) to support blind and partially sighted people to participate equally in launching businesses. Find out more about the Start Up Loans partnership with the RNIB opens in new window.

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Discover more about managing people with our free Managing and managing people course opens in new window, with teaches you managerial effectiveness, the skills required and how to develop management skills.

As part of our Learn with Start Up Loans opens in new window partnership with The Open University, our online course is free to join, delivered by experts and includes a free statement of participation on completion.

Finding funding

Launching a new venture can involve some costs. There are businesses, such as freelance content creation or online tutoring, that may involve little initial expenditure, while other ventures, such as building an ecommerce shop, involve more upfront costs.

Benefits tailored to people with disabilities in work are available through schemes such as the Disabled Person’s Tax Credit opens in new window and the Access to Work scheme opens in new window. Both are available if you’re self-employed, such as working as a sole trader or freelancer.

There are other schemes available that offer a mix of grants, investments, and awards suitable for start-up owners who have a disability, such as:

• RNIB grants opens in new window – the RNIB offers grants that can help towards buying equipment such as voice recorders and Dictaphones if required for your start-up
• Fredericks Foundation opens in new window – the charity provides support and funding for disadvantaged people looking to start up or expand their business and covers the south of England
• Stelios Award for Disabled Entrepreneurs opens in new window – launching in spring 2022, this award offers prizes up to £30,000 for disabled entrepreneurs who want to launch a business or have recently launched and are looking for a funding boost
• Disabled facilities grants opens in new window – a Government grant that enables disabled entrepreneurs to adapt their homes. The amount of loan available depends on the UK country you’re based in
• Kaleidoscope Investments opens in new window – part of the Disabled Entrepreneurs opens in new window group that provides investment and advice for disabled people looking to start a business
• Prince’s Trust business support opens in new window – the scheme aims to help 18-30 year-olds start a business through available workshops
• Start Up Loans opens in new window – access a Government-backed personal loan up to £25,000 with a fixed interest rate of 6%. Includes free application support and post-loan support and mentoring.

Finding support

There are many organisations that you can turn to for support when starting a business.

Charities such as the RNIB opens in new window, Mind opens in new window and Scope opens in new window provide access to advice, inspiration and support for people who want to work for themselves and make a profit.

The RNIB, for example, has a helpful guide to becoming self-employed opens in new window if you have sight loss, including advice on developing your business plan along with the skills and abilities you should consider when identifying the type of self-employment that would suit you.

Regional support is available that can provide more localised, tailored support for your business, including:

• growth hubs opens in new window – providing local and national business support, there are 38 Growth Hubs located across the UK.
• regional support lines opens in new window – access support lines depending on the UK country your start-up is based in and speak to an advisor about any matter concerning your business.
• organisations – such as Business Disability Forum opens in new window offer advice services opens in new window for disabled entrepreneurs who may need assistance.
• Disabled Entrepreneurs Network opens in new window – access networking and information tailored to self-employed disabled people setting up a business.
• Business Disability Forum opens in new window – tailored to the 26m people in the UK who have a disability covering practical advice and networking.

Starting a business

There are many useful articles on the Start Up Loans website opens in new window that could help you get your business off the ground from inspiring business ideas, making sure you have everything you need for launch, marketing help, and lots more.

Learn with Start Up Loans and help your business get off the ground.

Thinking of starting a business? Check out our free online courses in partnership with The Open University on sustainability in the workplace.

Our free Learn with Start Up Loans courses opens in new window include:

• Effective communication in the workplace opens in new window
• Succeed in the workplace opens in new window
• Leadership and followership opens in new window

Plus free courses on climate and sustainability, teamwork, entrepreneurship, mental health and wellbeing.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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