From Kellie Scott, KY-OVR:

I understand the difference to be whether someone has employees (besides themself) or not. However, in our policies it doesn’t matter, as long as they hold 51% of the business.

From Sue-Ellen Woodlief, Texas Department of Assistive and Rehabilitation Services – Division of Vocational Rehabilitation:

Self-employment

•means the consumer solely owns, manages, and operates a business and is not considered an employee of another person, business, or organization;
•exists when the service or product is actively marketed to other potential customers; and
•includes home-based businesses and telecommuting businesses.

Self-employment allows for

•choice and control,
•the use of natural skills and talents,
•expanded work opportunities,
•accumulation of wealth, and
•independence and creative freedom.

Small Business is one that is independently owned and operated, is organized for profit, and is not dominant in its field.

You may be interested in Texas DARS Supported Self-Employment Policy. Here is a link to access it: http://www.dars.state.tx.us/drs/providermanual/ch2.htm#2.12

If you have questions or would like to discuss, please contact me.

From Sherri Simpson, Opportunities for Ohioans with Disabilities:

In Opportunities for Ohioans with Disabilities’ self-employment policy and procedure, self-employment is defined as: an employment outcome in which the individual works for profit or fee in his or her own business, farm, shop, or office, including sharecroppers. While not defined by OOD, a small business refers to the size of the company or business rather than the individual.

From Mike Hermanson, Montana Vocational Rehabilitation and Blind Services:

Montana does not differentiate between a self-employment plan and a small business plan.

From Kathy Marchione, CT BRS:

From our policy manual :

Distinguishing the Difference Between Business Ownership and Self-Employment:

Owning and operating a small business involves the selling of a product or service in the marketplace. The owner must develop and maintain a customer base in order to both achieve success and to remain successful. It generally involves an element of competition with similar businesses within the area, or in the absence of direct competition, the possibility of competition sometime in the future. In establishing the business venture, the individual must do a market analysis and develop a marketing plan (i.e., advertising). In cases where a consumer’s goal is small business ownership, a referral to the Connecticut Small Business Development Center (CSBDC) will generally be required. For BRS purposes, self-employment refers to an individual employed in the capacity of an independent contractor where a steady flow of work is assured, without the foreseeable need to market oneself or one’s product and/or services. Independent contractors normally have a contractual relationship with one or more companies, nonprofit organizations or governmental entities to deliver a good or service. The contract specifies what is required in the finished product or service only. The independent contractor exercises behavioral and financial control over the manner in which the good or service is produced and/or delivered.

There may be occasions in which the employment goal is a mix of self-employment (i.e., independent contractor) and small business owner/operator. Typically this would occur when the consumer has contractual relationship(s) for a portion, but not all, of their planned venture. Counselors are encouraged to discuss these cases with their supervisor or district director to determine if a referral to the CSBDC is warranted. In these cases, as well as any other where the counselor is unsure of the distinction between business ownership and self-employment, the assistance of the Central Office Consultant assigned to small business services should be sought.

Self-Employment (Independent Contractor):

When it has been determined that the goal is self-employment, a referral to the CSBDC is not necessary. Rather, attention should be given to determining that the consumer possesses the necessary knowledge, skills, and stamina required for the job, as well as the personality attributes associated with success in self-employment. These include good time management skills, organizational skills, and the ability to work independently without supervision (i.e., self-supervision). Counselors should also make sure that the consumer is aware of federal and state tax requirements for independent contractors, including the federal self-employment tax, requirements for filing quarterly estimated payments, record keeping, and the various deductions available to filers to lessen their tax liability. Counselors should encourage consumers to seek advice from a qualified tax professional or from the Federal or State departments of revenue. A wealth of information is readily available online at www.irs.gov and www.drs.state.ct.us.

From Don Kay, WA-DVR General:

Washington DVR treats “Self-Employment” and “Small Business” as the same. If you would like a copy of our Self-Employment procedures, let me know.

Inge Huband, DWS-Vocational Rehabilitation:

The technical definition for small business is as follows:

SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:

• Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
• Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
• Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
• Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;
• General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
• Special Trade Construction: Annual receipts may not exceed $7 million; and
• Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.

(SBA Website: http://www.sba.gov/content/what-sbas-definition-small-business-concern)

Therefore, any self-employed individual could be technically identified as a small business owner, but would most likely fall under the “micro business” category.

1. Official Definition – Advocate groups typically define microbusinesses as an organization with less than five employees, small enough to require little capital ($35,000 or less) to get started.
2. Unofficial Definition – Microbusiness owners are the ‘…people who refer to themselves as soloists, independents, consultants, craftsmen, artists, musicians, freelancers, free agents, and self-employed people. The majority of these companies are one-person enterprises …operate out of their homes; and many …have part-time help from a family member or friends.’ (Courtesy of Lloyd Lemons in his Microbusiness Defined article).
(SBA Website: http://www.sba.gov/community/blogs/community-blogs/small-business-matters/your-small-business-microbusiness-if-so-you-m)

The difference between small business and being self-employed is simply in the numbers of employees and/or the amount of annual revenue the business is achieving within its category. (Technically speaking)

The similarities are the licensing and registration of the self-employed individual; he or she will have to follow the laws of the legal business structure he/she chooses, maintain the same paperwork trail as the “small business”, and follow the same rules.

I hope this information is useful.

From Cecelia Hockett, GA VR Agency:

Georgia VR views self employment (in a specific field/area) as an employment outcome. For example an accountant may want to set up their own accounting business or a barber may want to establish their own barber shop. Because of the limits on the financial support that VR can provide, our clients who pursue self employment have only sought to establish small businesses. In defining a small business, Georgia VR for the most part adheres to the Small Business Administration definition which indicates that a small business is one that “is independently owned and operated, is organized for profit and is not dominant in its field.” Some of our clients obtain competitive employment in a small business setting and some are assisted in establishing their own small business and become self employed. I hope this is helpful.

From Pamela Brauchli, Office of Vocational Rebabilitation:

OVR may assist a customer in establishing a small business for the purpose of self-employment, so long as it is the most viable opportunity for the individual to achieve financial independence and will enable the person to meet both ordinary living expenses and ongoing business costs. Attached is OVR’s current policy. However, we acknowledge that it’s time to update it.

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Posted in: Self-Employment