Entrepreneurship and Disability: Scaling from Self-Employment to Small Business Ownership

Article by Ed Carter

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People with disabilities are nearly twice as likely to be self-employed than the non-disabled population. The motivations for self-employment are varied and complex: Most self-employed people with a disability cite increased income as the primary motive for starting a business according to a recent review published in Disability & Society. The ability to control one’s work environment, hours, and type of work also plays a significant role in the decision to become self-employed. Other self-employment motives include personal development, combining work and childcare, and avoiding negative work environments related to one’s disability.

Does self-employment improve economic self-sufficiency for people with disabilities?

$64,686 was the median income for Massachusetts business owners in 2018, according to the SBA Office of Advocacy’s Small Business Profiles. Self-employed individuals running their own unincorporated business earned a median income of $31,723.

Meanwhile, the median earnings of full-time employed people with disabilities is just over $40,000 nationwide. This suggests that while it’s possible for adults with disabilities to increase their earning potential through self-employment, it’s not a sure thing. Business owners who take a formal approach to business ownership, including forming a Massachusetts LLC and hiring employees, are more likely to find success than sole proprietors, freelancers, and gig economy workers.

Small business ownership versus self-employment

Incorporating a small business offers benefits including professional credibility, personal liability protection, access to capital, and qualified business deductions. Incorporated employer firms are also more likely to operate at a profit: 31% of employer firms are profitable compared to only 8% of nonemployers.

Despite these advantages, 10.3% of workers with a disability are self-employed workers operating unincorporated businesses. How can these individuals transition from a “solopreneur” lifestyle into small business ownership and reap the full benefits of entrepreneurship?

Overcoming barriers to small business ownership

Autonomy, flexibility, and the ability to work from home are major drivers of self-employment over small business ownership. Yet as scalable small business technology becomes widely available, it’s possible for disabled entrepreneurs to have both.

The internet provides a wealth of information and tools for new business owners including:

• Free online education for small business owners from the Small Business Administration, SCORE, and online learning platforms like Coursera and Udemy.
• Online business incorporation services like Zen Business that allow business owners to form an LLC and create governing documents without a lawyer or CPA. Because a limited liability company is taxed as a sole proprietorship or partnership by default, LLCs avoid double taxation and Massachusetts’ corporate excise tax.
• elaws Advisors, a set of interactive compliance assistance tools from the U.S. Department of Labor. The DOL also sponsors the CareerOneStop Business Center, which provides tools and information on hiring, training, and retention.
• Recruiting tools including online job boards, social media, and free and low-cost applicant tracking software. Thanks to modern tools, it’s not uncommon for businesses to hire remote employees using an entirely digital process.
• Software-as-a-service applications that move business operations to an integrated cloud environment. In addition to saving money by outsourcing software infrastructure and maintenance, SaaS applications like Slack improve small business efficiency and enable fully-remote companies.
• Marketing tools from free listings on Google My Business, Facebook, and Yelp to robust digital marketing platforms. Many of the leading digital marketing applications include free or low-cost plans allowing even the smallest brands to market efficiently.
• Online banking and nontraditional financing platforms that broaden access to startup capital. Peer-to-peer lending, crowdfunding platforms, microfinance, and business incubators for people with disabilities provide alternatives to traditional business lending.

For disabled workers seeking supplemental income, becoming a self-employed freelancer or independent contractor is a viable choice. However, while self-employment offers autonomy, it may not meet the financial needs of disabled households. Scaling a self-employed business venture into an incorporated small business expands a disabled entrepreneur’s earning potential without requiring people with disabilities to lose the advantages that initially drew them to self-employment.

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