Income from your business is called Net Earnings from Self-Employment. This is what you report to Social Security, and this is what is used to calculate your SSI check. For SSI, Social Security wants to know your annual Net Earnings from Self-Employment. They’ll average your earnings to find your monthly payment.
You need to know 2 things to find your Net Earnings from Self-Employment:
Let’s say your business brings in $6,500 in one year, and you spend $1,100 on supplies and marketing materials for your business. We can use these numbers to find your Net Earnings from Self-Employment. There are 2 steps to do this.
Step 1. Business revenue - business expenses = net profit
In our example: 6500 - 1100 = 5400. The business has $5,400 in net profit.
Step 2. Net profit x .9235 = Net Earnings from Self Employment
In our example: 5400 x .9235 = $4,986.90. The business owner has $4,986.90 in Net Earnings from Self-Empoyment
Remember, this is an annual number and Social Security will average it to find monthly income. You can divide your annual Net Earnings from Self Employment by 12 to find the monthly average.
Once you have your monthly average, use the information in the next section (How Work Impacts SSI) to calculate your SSI payment.
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To Do: If you’re making money from your business, calculate your Net Earnings from Self-Employment.
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Tip: Keep clear records of your business revenue and expenses every month. You can use a notebook, a spreadsheet, accounting software, or hire a bookkeeper.
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