by lawed
8 replies
Is anyone else on Disability, SSI, earning from IM or know anything about starting up an IM biz without losing benefits?

PM Me if you wish

#disability #usa
  • Profile picture of the author dsmpublishing
    Hi guys

    at the end of the day there are a lot of things that are tax deductable with a online business but what i imagine is if you say that you are disabled they may refuse your disability of the grounds that you are working.

    You might be better changing to a out of work benefit instead and then declaring yourself self employed and then every week you tell them how much you have earned etc and keep records of it all.

    kind regards

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    • Profile picture of the author valerieSONORA
      Originally Posted by dsmpublishing View Post

      but what i imagine is if you say that you are disabled they may refuse your disability of the grounds that you are working.
      Not so. Ppl on disability are encouraged to get back to work. You can work very part time and still keep your benefits.

      There is a maximum amount you are allowed to make before you lose your benefits. I don't know what that amount is or the details.

      If in doubt you can call up your social security office and ask a worker there who knows all the rules and figures.

      siggy taking a break...

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  • Profile picture of the author seasoned
    You are supposed to declare at least 90% of your taxable income within the year. If you fail to do so, there are penalties and interest. You MAY be able to escape that the first year, but the second year they expect you to know. Unfortunately, that means you will usually get reduced benefits, after a certain amount is earned.

    You MAY be able to get away with expensing it all.

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  • Profile picture of the author Mr. Enthusiastic
    The challenge here is to let your business make money, without increasing your own personal income. You should check with an attorney and/or accountant in your own area, because I'm not a financial or legal professional and you're not my client. Here is a strategy I suggest you ask about at your local Small Business Administration/SCORE office:

    First, create a self-directed retirement account, such as an IRA or Roth IRA. I have no affiliation with Pensco and I like their information materials, so I'd start there.

    Copyright everything you write, videotape, develop, etc. using the proper Library of Congress forms and fees.

    Transfer the copyright of your materials to your retirement plan by selling the copyright to the plan for $1. As an individual who created the work, you're the seller. As an official representative of the retirement plan, you're the buyer.

    At this point the rights to your materials are legally out of your hands. However, remember this is a self-directed plan. So this doesn't mean you have no more say in what happens to your materials.

    Now, in your role as retirement fund owner, you have to invest the fund's assets in a way that benefits the fund beneficiary - that's you. Your investment will be to license the copyrights to a business that can use them for marketing and sales.

    Next, team up with someone else (NOT a family member) to create a corporation, or an LLC taxed like a corporation. This means that legally, the business is its own separate person. (A person that can't do anything for itself, but that's another story.) The business makes money, the business has expenses, the business pays taxes on any profits left. Then, at management's discretion, the business pays dividends to its owners.

    Business expenses might include buying computers and software, leasing cars for business use, renting office space, paying consulting fees, paying seminar fees, subscriptions to professional publications, etc.

    The business has multiple, unrelated owners. Therefore, if you personally owe someone money, they can't just reach into the business and take it out... that would hurt your co-owner, who never signed for your own debts. Instead, your creditor only can attach your dividends, if the business ever gets around to paying you.

    If there's a lawsuit, the business will simply stop paying dividends for a while. The juicy part is that the person sueing may have to pay income taxes on their takeover of the dividends you would have got paid, if you'd got paid, even though they weren't paid.

    However, that whole area of asset protection is just a side effect of the main point, which is to maximize your financial results from your copyrights while honoring the disability laws. The one exception is that if the business doesn't pay its taxes, the government will just take what it should have been paid in the first place.

    Let the other person be the manager of the business, with you and the other person having equal ownership shares. The business will pay the other person a salary for their job as business manager. A board meeting will determine the manager's allowable salaries and expenses. Keep the documented minutes of this meeting.

    You will get your money out as dividends, which management will set at a low enough level to be compatible with your disability benefits. However, dividends come from profits, and there won't be very much profit.

    One expense the business has is to pay royalties for any copyrighted material used by the business. The materials used by the business are licensed from your retirement fund. The business writes a royalty check to the retirement plan. Since it's a business expense, the business doesn't pay taxes on it. The money then goes increases the retirement plan and as long as it stays in the plan, you don't pay taxes on it.

    Between the manager's salary and the royalties for the copyrighted materials used under license, the business will have small profits left over. Some of those profits will be paid to you as dividends.

    Now you can't take money out of a retirement fund without tax penalties. However, a retirement fund may make a loan of some of the money in the account to the account owner. With a self-directed plan that complies with the law, you might be able to get a loan of up to $50,000 or half of the money in the account, whichever is less.

    ou will have to repay this loan, of course, at a reasonable interest rate within something like five years. The repayments come from your dividend checks, which are within the threshold of your disability coverage. Once the loan is repaid, you can take out another one. The interest costs simply add to the amount of money in the retirement fund.

    The loan principle is not income, so it's not taxed. The dividends are taxable income and have to be reported. File the appropriate paperwork at every step and make sure all I's are dotted and all T's crossed. This is about working within the provisions of the law, not escaping from it.

    Retirement plans may not directly get involved with business. But they can own copyrights and offer an annual master license to some business, for a fixed fee plus a percentage of the sales.

    At age 70 you can get the rest of the money out of the retirement account just as any retiree can, subject to the limits in the laws.

    If your business does extremely well, then you might be better off just taking the profits as immediate, taxable dividends, even if that means you lose the disability benefits. For example, if you got $20,000 in disability, but the business consistently makes ten million dollars, take the bigger amount of money!

    I hope this gives you some directions to explore. You'll need to get local experts to make sure it fits in with your own situation and the laws in your city and state.


    P.S. Just noticed you're in L.A. I'd check with the business school at UCLA to see if they can suggest someone who can help you with this process. It might be an interesting class project for a class of finance MBA's.
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  • Profile picture of the author lawed
    Warriors- I am overwhelmed at the help and encouragement contained in these replies. They far outweigh my expectations.

    The guidelines and details from Mr. Enthusiast are brilliant.

    I will make some calls as suggested to Business Schools.

    I just had a sense that more might be possible than I already knew about. I have been full of fear and procrastination for lack of knowledge. But, now I see that there is hope to persist in this quest of starting an IM business without harm or penalty to myself.

    Futhermore, I will report ongoing progress on this thread. I deally, this information will be able to help others who may feel stuck or fearful of trying to start online businesses.

    Thanks again for the posts up to now. I look forward to more discussion in this thread.

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  • Profile picture of the author lawed
    I have 2 natural speeds- SLOW and SLOWER. That's why I like computers- they can make up for my natural slowness...

    Anyway in making progress in "baby Steps," I have 2 steps to make at the starting gate.

    1) Copyrighting what I create

    2) Where/How to post my business plan proposal to a an MBA School

    example- if I create a video/slide show and publish it to YouTube et al...I have relinquished copyright haven't I?

    I do have a website and blog- dormant as of right now.

    Would publishing to my own site secure copyright to me even if published elswhere on the Internet afterwards?

    Thanks for any input

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  • Profile picture of the author Mr. Enthusiastic
    Lawrence, in the U.S., the Constitution says everything having to do with copyright is at the federal level. The Library of Congress handles all copyright administration - U.S. Copyright Office.

    When you create an information product (book, video, song, etc.), you own the copyright. You don't have to register the copyright. But if you do register, you'll have more legal options to go after anyone who steals your work or uses it without your permission. Registration involves simple forms and a small fee and sending copies to the Library of Congress so they can archive it. It's all spelled out very well from the page I just mentioned.

    YouTube and several other social media sites are private companies, with their own terms of service. These are private contracts between the sites and users who upload their content, so that the site can show their content to other users. If you upload your content, that shows you agree to the terms. Here's the relevant part of YouTube's terms:

    ...you retain all of your ownership rights in your User Submissions. However, by submitting User Submissions to YouTube, you hereby grant YouTube a worldwide, non-exclusive, royalty-free, sublicenseable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the User Submissions in connection with the YouTube Website and YouTube's (and its successors' and affiliates') business, including without limitation for promoting and redistributing part or all of the YouTube Website (and derivative works thereof) in any media formats and through any media channels...
    In other words, they can make any use of your material - including if they decide some time to sell YouTube DVD's, or YouTube coffee table books, or a YouTube cable TV channel, or YouTube mugs or posters with screen shots from your videos, or a YouTube theatrical movie, or whatever else they might dream up... all without owing you a penny.

    It's up to you to decide if the publicity you get from YouTube makes this worthwhile for you. For most small businesses, the publicity for your promotional videos is worth it. Instead of worrying about the lack of royalties and control, it's actually pretty cool that they will play your video for any of millions of people who want to see it, and not charge you for the servers or bandwidth. If you don't like their terms, don't use their service. Since you own the copyright to your work, you get to decide if Youtube has the right to distribute copies of your work. To create an account on Youtube, you have to agree to their terms.

    If someone else puts your videos up on Youtube without your consent, you can have Youtube take down the video. Since you own the copyright by creating the work, nobody else can give away your right to decide who can make copies.

    If you need to discuss this further I recommend you start a new topic called something like "Help me learn about copyright and YouTube." Same thing with your other question about the business plan.

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