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Thread: Small Business Owner and Long-Term Disability/SSI

  1. #1

    Small Business Owner and Long-Term Disability/SSI

    Hey there fellow CCI folks,

    Been battling the whole SSI/LTD challenge of I want to go back to work, but if I go back to work/give up all my benefits and then something bad happens to me medically, I've completely given up my safety net/chance to maintain a decent income beyond what SSI can provide.

    A little bit about me/my personal situation/circumstances. I’m a 30-year-old C5 complete electrical engineer, previous control/systems engineer for a large ski lift manufacturer that was injured in a skiing accident back in 2007. Fortunately I was enrolled in a long-term disability plan, which guarantees me 60% of my engineering wages which provides for a safe/comfortable life. Over the past few years since my injury I've been working on graduate school, volunteering, being involved in the community, etc. and fighting a major, life-threatening hardware infection that required the removal/replacement of my anterior neck hardware. My health seems to be finally settling down and I'm looking towards the next big thing, namely, purchasing a 40-year-old production business and turning into something truly special.

    I’ve sat down evaluated the business, run through all the numbers, and am fairly confident that within 5 years this business could easily be sustainable and provide me with the security I currently have with my SSI/LTD. What I'm worried about most is the timing between now and that five years and what I can do to keep myself covered in case the hardware infection comes back and I'm no longer able to work.

    Is there some way I could purchase this business, incorporate it into the proper legal entity, expand/grow/run this business while not taking any wage and exclusively use any earnings/profit to pay back the bank note. At some point over the first few years I would expect to have paid back the $300,000 loan necessary to purchase the business, at which point I would start building equity in the company until it was at the stability/size necessary that I could start receiving a wage and drop off SSI/LTD.

    Has anyone done something similar to this and have any suggestions on how I can get my financial independence back and get away from this life bogging SSI/LTD. I am a very driven/intelligent person with so much to offer society and really want to make a go at this new business I know would be hugely exciting/great from me. I want to do everything legit/above the board as far as legality with SSI/LTD, but also need to worry about tomorrow and what could happen/and if I'd be able to financially deal with it if something terrible happens to my health.

    Thanks for reading my rambling and any of your words of wisdom.
    I am the Quad in Quadomated. Come read about Life and Technology through the Eyes of a Quad
    http://www.Quadomated.com/

  2. #2
    your lucky , you have one of the fw plans that pays both ssdi/Ltd.
    i saw ssi, i think you meant ss disability insurance. Most plans of LTD will offset the ssdi so even though you paid into ssdi fir all those years, if the plan guarantees you 60% , LTD will only pay the difference. i am not sure if you have that plan or the one where you collect both.
    it is a tangled web.
    The way they are trying to throw people ogg the SSDI insurance roles. be careful until you know all the facts of ssdi current changed. The last review i had asked if i volunteered or went to school. i am glad i could truthfully put down no, as much as i want to do the above, like you i am still dealing with health issues.
    i wish i could give you some advice od help , but as you know be careful, loss of medicare, could really hurt you
    cauda equina

  3. #3

    Not quite that lucky…

    My Social Security Income is subtracted from the long-term disability 60%. So yeah, it's enough to live comfortably on, but far from the level I'd be at now without the disability. It's really not so much about the money side of things as wanting to put my stamp on society and really get involved again. Still, as much as I'd love to do that I need to worry about tomorrow and what happens if the bone/hardware infection is just sitting there simmering waiting for me to get on with life before it pops up again.

    So that's why I'm looking into a small business that would be lots of fun and allow me to make my mark and set my own schedule. Only problem is figuring out how to get this small business running on all cylinders before I say bye-bye to the SSI/LTD. Seems like there should be some way that I could structure the business and take no earnings without affecting my other stuff.
    I am the Quad in Quadomated. Come read about Life and Technology through the Eyes of a Quad
    http://www.Quadomated.com/

  4. #4
    I'm not sure what SSI/LTD folks view as an asset, but of the business is incorporated as a separate entity, pays its taxes w/o being attached to your SSN, and you hold off on drawing income from it, I'd *think* you'd be okay, but I don't know all the legal details. This is a situation that's probably worth dropping some cash on a a solid attorney for some advice.

    If all is clear, go for it, but please make sure you have a solid plan. Defaulting on a $300k loan could sink you. Is the business currently profitable?

    What kind of biz is it, by the way? Could you theoretically start something similar from the ground up & bootstrap it, especially if you're not needing income immediately?

  5. #5
    Senior Member
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    Chassman,

    Sounds like you're facing a similar situation to my own.

    The basic problem is trying to convert earned income to unearned income. As you know earned income is counted as income by many benefit organizations. However, unearned income is often without limit as to the same benefit organizations.

    Many years ago I tried to solve this problem legally and corporately. Pardon my made-up word. I think if you would start the corporation that would own your business. Then, you would need to think about how you would divide ownership. You could not use a S Corporation because that corporation income would flow through to you on your 1040 two personal income. As I have discussed above, personal income is earned income and that would negate part of your benefits.

    Now, based upon whether you own less or more than 50% of the stock of your C Corporation, you could accumulate income within a C corporation and pay yourself a dividend. Dividends are unearned income. You could also lease assets to the corporation. Such fees are also unearned income. Do you get my drift here?

    Now, a corporation must have employees. Depending on which state you live in you can have one or more employees. You of course, need to pay them a salary, was withhold FICA, etc. Such details are required by any corporation and can be handled by hiring a very competent bookkeeper.

    PM me if you wish which to discuss this further. I used to be a certified financial planner so I know from whence I discuss.

    Future Walker
    Futurewalker

  6. #6
    Quote Originally Posted by -scott- View Post
    I'm not sure what SSI/LTD folks view as an asset, but of the business is incorporated as a separate entity, pays its taxes w/o being attached to your SSN, and you hold off on drawing income from it, I'd *think* you'd be okay, but I don't know all the legal details. This is a situation that's probably worth dropping some cash on a a solid attorney for some advice.
    Also hoping/thinking something along these lines. I've had meetings with a lawyer who deals specifically with elder/disability law, and another who specializes in setting up businesses. Looks like I'll also have to get a good accountant involved as well to make sure I'm covering the bases with how the money side of things are set up to keep my disability payments safe until the business is sustainable and earning good income.

    Quote Originally Posted by -scott- View Post
    If all is clear, go for it, but please make sure you have a solid plan. Defaulting on a $300k loan could sink you. Is the business currently profitable?
    Business is definitely profitable, and has provided for a family and a few workers to live over the past 40 years. I certainly would not be taking out a $300k loan without significant evaluation of the financials both historical/projected. There's still plenty for me to look into, but I don't want to go down any route to far until I can make sure I can do it in a way that keeps me safe in case things don't pan out with my health or the business.

    Quote Originally Posted by -scott- View Post
    What kind of biz is it, by the way? Could you theoretically start something similar from the ground up & bootstrap it, especially if you're not needing income immediately?
    I won't go into too many details yet, because it's a super niche/cool business that I don't want to give too many people ideas about, but it does involve manufacturing/production. I could definitely try bootstrapping/entering an already somewhat full market, but the company I'm looking into has been doing this right for 40+ years, and along with the company name I'd get there
    15k+ active accounts, equipment, and detailed information to make what they're making. Could go either way, but as long as the financials add up it makes sense to me to hit the ground rolling.
    I am the Quad in Quadomated. Come read about Life and Technology through the Eyes of a Quad
    http://www.Quadomated.com/

  7. #7
    Future Walker, seems I've read a number of your posts in this forum. Looks like you some great insight.

    I've been thinking exactly along the lines of converting earned income to unearned income, but also wondering if there is a way to expense real items that I need such as an expensive van, computer equipment, etc. to the business.

    I would definitely like to discuss this further. Look for a PM within the next few hours.

    Thanks!
    -Chassmain
    I am the Quad in Quadomated. Come read about Life and Technology through the Eyes of a Quad
    http://www.Quadomated.com/

  8. #8
    Senior Member
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    Thanks for the props...

    Re: the disabled equipment that you might expense as a cost through the business: how to analyze this carefully through an Excel spreadsheet... might be a more effective way of doing it, I don't know. You would need to check this out.

    Also, keep in mind since you write a business plan, you can write anything you want into the plan. For example, you could have a benefit in a corporation that makes corporation pay for a van for business use. Now, after that you need to use the van for business purposes only: picking up employees, making deliveries, driving to a site to give an estimate, etc.

    Again, speak to your accountant for help in setting this up properly

    Oh, I almost forgot. There is a possibility of setting up a trust... I believe it's called a supplemental trust. This trust has as its sole purpose the care and benefits of yourself. There can be no other purpose and all of the money is spent on the items that you need while the trust is taxed separately. No income tax for you. Check with your accountant.

    You must remember this: the wealthy shelter millions each year and transfer assets among generations for years. The laws are written by the wealthy for the benefit of the wealthy. All of us must learn to use these laws to our benefit.

    Future Walker
    Futurewalker

  9. #9
    Senior Member Leo's Avatar
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    check out this guys web site http://www.benefits-training.com/

    i've been to a couple of his events, he knows this stuff
    http://justadollarplease.org/

    2010 SCINet Clinical Trial Support Squad Member

    "You kids and your cures, why back when I was injured they gave us a wheelchair and that's the way it was and we liked it!" Grumpy Old Man

    .."i used to be able to goof around so much because i knew Superman had my back. now all i've got is his example -- and that's gonna have to be enough."

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