SSDI and Creating an LLC

[rmosler]

I have been on SSDI for a few years, a friend and I have written a childrens book. It was suggested to us for publishing/agent purposes to become an LLC. If I do this and the book is published and we write more books, how will this affect my SSDI and medicare? Will just having my name on the LLC, will that affect my SSDI and medicare? Thank You for the input!

[flyingron]

Suggested by who? Frankly I'm not sure what good an LLC would do you. Being a member of an LLC means nothing for SSDI or medicare. Your book royalties are income. SSDI shouldn't be affected too much. SSI and Medicaid certainly might be. Depends on how much you end up getting. Of course if you do hit it big, your consideration that you are disabled might be in jeopardy. You might want to read this http://www.socialsecurity.gov/redbook/

[rmosler]

If I make it big then I don't have to worrk about SSDI or Medicare. I can afford insurance and such. The LLC is for business purposes nothing to do with SSDI. I was just wondering if being a part of a corporation..at this time bringing in no income..would jepordize my SSDI and/or Medicare. Thank you for the link.

[KeyWestDan]

No, generally. However, an LLC is NOT a corporation. An LLC is a partnership with liability protection.
Personally, I would recommend setting up a real corporation which you would own stock in. The corporation does not have to pay a dividend, but it could receive all the income, pay for book tours and related expenses, and do lots of other things to benefit you without actually giving you income, if you didn't want it to affect government benefits. The corporation can buy property, invest money, etc.

Also, you might want to look into exactly what they consider income. For instance, UC is only concerned with people working and earning income. One can collect UC insurance and still have other income such as from royalties, bond income, rental income, etc. None of that has anything to do with working and income. Collecting welfare though is a different matter.

[flyingron]

Being an member of an LLC is going to mean NOTHING. If the LLC gets any money, it's going to be a disregarded entity. It as if the publisher just gave you the money directly.

[Bubba Jimmy]

You can be an investor in any business you like without it affecting your SSDI or Medicare. You can receive profits from your investments without concern. If you provide services to the business and recieve compensation, then that can affect your benefits. An LLC is not necessarily an disregarded entity. I can elect to be taxed as a corporation by filing form 8832. It can further be a pass-through entity by filing form 2553 to be considered a subchapter S corporation. However, keep in mind, if you provide services to the business you are required to receive a salary as compensation. You can't be working and just pass all the income to yourself as dividends.

[rmosler]

Thank You! This answers my question. One more though, is art/writing as hobby considered a service?? Thanks again, very helpful!

[jk]

Thank You! This answers my question. One more though, is art/writing as hobby considered a service?? Thanks again, very helpful!

it's not a hobby. You are providing the service of writing to the LLC and as such, must receive compensation for your work.

So, either you get paid to provide writing services to the LLC or you recieve pass through dividends as a member of the LLC. In either case, you have income.

[Bubba Jimmy]

Well, if you are writing for your own enjoyment whether you are compensated or not, that's a hobby. Since I have not gotten a thing published, my own writing is a hobby. On the other hand, if you make money three out of five years from your writing, then it is presumed you are doing it with a profit motive and therefore it is self-employment. I'd say if someone is paying you to write, it's definitely a job.