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10.12.3 Self-Employment: Documenting/Tracking
ISSUE DATE: 09/2020
Self-Employment
Workforce One - Self-Employment
Activity Type in Workforce One.
| Job search:
When the participant is preparing for self-employment or when participants are approved for self-employment but have not yet begun earning money. This might include developing a business plan and/or meeting with a business plan professional or small business consultant.
Employed Full-time:
When calculations show that the participant’s earnings are equivalent to full-time work at the federal minimum wage ($7.25 an hour).
Employed Part-Time:
When calculations show that the participant’s earnings are equivalent to less than full-time work at the federal minimum wage.
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Workforce One Employment Plan Section.
| Employment.
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TANF Work Participation Rate - Self-Employment
Core or non-core activity for Work Participation Rate.
| Core.
The hours the participant reports working may not always reflect the hours the eligibility worker calculates using the federal minimum wage.
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How to calculate hours for this activity.
| Hours are based on net earnings, which are total earnings minus expenses. The net earnings are divided by the federal minimum wage to identify the countable hours, see Combined Manual 0017.15.33.03 (Self Employment, Convert Inc. to Monthly Amt - Cash).
Eligibility workers may use 1 of 2 methods to calculate net self-employment income:
1. Income from tax returns: · Using the net profit reported on the most recent tax form filed with the IRS in the last 12 months.· Dividing the net profit by the number of months the business was open in the year to identify a monthly income.
2. A standardized formula allowed in MFIP:
· Using 50% of the most recent month’s total gross earnings (Gross earnings are total earnings before allowable business expenses are subtracted).
The number is found in 2 places on Workforce One:
1. The DHS-IX Incoming Status Update tab in the Employment Status Updates section.
2. Participation Hours Tab. This information will be after the fact.
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How to calculate hours for child care authorizations.
| Child care assistance will authorize care for all the hours specified in the employment plan.
Child care assistance does NOT need to limit the authorized hours based on a calculation with the minimum wage when self-employment is part of the employment plan.
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Documentation and Verification - Self-Employment
Who collects the documentation?
| Eligibility worker if there are earnings.
Employment Counselor if there are not earnings (For instance in preparation stages).
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Which documents meet the requirements?
| When there is income the options include 1 of the following: · Tax returns filed with the IRS in the last 12 months.· Documentation of all self-employment income attached to monthly household report form as business records.· Self-Employment Report Form (DHS-3336) (PDF).
Participants still preparing for self-employment should use:
· Job search logs to track their hours and activities completed. |
What information needs to be included in the verification?
| · The participant’s name.· Dates covered.· Amount of gross income.· Participant’s signature. |
When is the documentation due?
| Weekly if developing initial efforts -- job searching.
By the 8th of every month, attached to the monthly Household Report Form (HRF) the participant submits to the eligibility worker. · For instance, the Household Report Form for February is due on March 8th. |
Where should documents be kept for this activity In the paper case file
| Follow the County’s or tribe’s human services general records retention schedule.
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Who provides daily supervision?
| Employment Counselor. · Have contact with the participant at least monthly.· Review participant’s progress. |
Who or what standard determines acceptable performance?
| The business plan or employment plan should identify key milestones with specific time frames. · If the participant does not make satisfactory progress on that plan and does not have good cause, revise the employment plan to replace self-employment with other approved work activities.· If the participant does not meet the minimum hourly requirements, find out if there is good cause, see 19.9 (Good Cause).· If there is not good cause: Revise the employment plan to include additional activities that could improve earnings in that job or another job.· If there is good cause: Use a temporary Reduced Hours Employment Plan. |
Specific Instructions - Self-Employment
Guidelines for how to assess progress in self-employment.
| Making satisfactory progress could include: · Pursuing and completing steps in Self-Employment business plan.· Meeting hourly requirements.· Increased income.
Not making satisfactory progress could include:
· Not taking steps outlined in the business plan.· Pursuing multiple steps in the business plan but repeatedly hitting dead ends.· Not obtaining needed financing or certification.· Not securing space necessary to run the business, etc.
If possible, include in the review meeting anyone working with the participant from an organization specializing in business plans and/or small business development.
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A self-employed parent in a 2-parent household may hire the other parent.
| The marital status does not matter.
This may result in reducing the family’s MFIP benefits because: · The wages paid to the 2nd parent will count against the benefits.
Contact the eligibility worker for help in determining the financial impact on any specific family.
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Related Links - Self-Employment:
For more detailed information about Self-Employment, see the Self-Employment Guide: A resource for SNAP and Cash Programs. It is primarily for eligibility workers and includes detailed information about:
· The types of business structures that are considered self-employment.· The calculations eligibility workers use to determine countable income.· The documentation self-employed workers must submit depending on their source of self-employment.
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