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If you’re pursuing long-term disability (LTD) or Social Security Disability Insurance (SSDI) benefits, you may think that starting your own business is harmless—as long as it doesn’t make money. After all, you’re not back to full-time work, and your condition still limits what you can do. But insurers and the Social Security Administration (SSA) see things differently. Opening a business—even one that isn’t profitable—can raise serious red flags and potentially derail your claim.
The Mistaken Belief: “It Doesn’t Count If I Don’t Make Money”
Many claimants assume that they can’t be penalized for running a business that doesn’t turn a profit. They may say:
- “It’s just something to stay busy.”
- “I haven’t made any sales yet.”
- “I’m doing it on my own time, when I feel up to it.”
But whether you’re dealing with an insurance company or the SSA, the amount of income you earn is often less important than what you’re actually doing. Decision-makers don’t just look at your bank account—they assess your functional capacity. If your business activities involve concentration, communication, physical labor, or other work-like tasks, they may decide that you’re not disabled.
How Insurers and SSA View Self-Employment
Most LTD policies define disability as the inability to perform the duties of your own occupation (initially) or any occupation you’re reasonably suited for (after the policy’s definition shifts). Similarly, the SSA defines disability as the inability to engage in substantial gainful activity (SGA) due to a medically determinable physical or mental impairment.
In 2025, earning more than $1,620 per month (or $2,700 if blind) generally disqualifies you from SSDI benefits. But even if you earn less than the SGA limit, SSA can still deny your claim if they believe your work activity shows you’re capable of working on a regular basis.
Both SSA and insurers look at:
- Whether you’re performing physical or mental job duties
- The number of hours you’re working
- Your role in managing or operating the business
- Whether the work would be considered valuable in a competitive labor market
In short: Starting a business may show that you are able to work, even if it doesn’t bring in significant income.
Let’s say Daniel, a former marketing executive, applies for LTD and SSDI benefits after developing debilitating anxiety and panic attacks. While waiting on a decision, he sets up an LLC and starts a small print-on-demand T-shirt business from home. He only makes a few sales and rarely works more than an hour or two at a time.
When the insurance company and SSA discover his website and business registration, they both question whether he meets their respective definitions of disability. Even though the income is minimal, his ability to plan, promote, and manage a business becomes the focus. Both claims are denied, based on the conclusion that Daniel is capable of work-like activity.
It’s Harder to Prove You Can “Only” Do a Little
Claimants often believe that limited business activity shows they’re trying to stay afloat without overexerting themselves. But in reality, it’s much harder to prove that you can only work occasionally or part-time than to prove you can’t work at all.
Insurers and SSA may suspect that:
- You’re intentionally limiting your hours to maintain eligibility
- You’re more capable than you claim
- You’re preparing to return to work or already doing so on the side
They may request business records, tax filings, online listings, and bank statements to investigate further.
Starting a Business Can Also Trigger Surveillance
Once you’re flagged for business activity, insurers and SSA may begin to watch you more closely. This can include:
- Online monitoring of websites and social media
- Public records searches (LLC registrations, permits)
- Requests for tax documentation
- Surveillance and field visits
If they observe you engaging in physical activity, interacting with customers, or attending business-related events, they may argue that your condition doesn’t prevent you from working.
RELATED POST: Surveillance By The Social Security Administration
Talk to Your Doctor Before You Start Anything
If you’re considering starting a business while receiving or applying for LTD or SSDI, your first conversation should be with your treating physician. Only your doctor can determine what activities are medically appropriate for your condition. Even if you feel capable of managing a small side business, your doctor may see it differently—and their opinion will carry weight with both your insurer and the SSA.
Your attorney can then help you evaluate the legal risks and guide you in documenting your limitations. But keep in mind: your attorney cannot tell you how much you’re able to work—that’s a medical determination between you and your doctor.
Protect Your Benefits by Avoiding Conflicting Activities
If you’re seeking disability benefits, your daily activities must align with the limitations you’re reporting. Even unpaid or low-income business activity can create inconsistencies in your claim.
Ask yourself:
- Does this activity look like work?
- Am I using the same skills I used in my prior occupation?
- Would this suggest I’m preparing for future employment?
If the answer to any of these questions is yes—or you’re unsure—don’t take the risk without getting legal and medical advice first.
RELATED POST: Hobbies vs. Work: When Activities Start to Look Like Employment
