Self-Employment Program (SEP) for PPMB & PWD

Effective: April 2, 2012

The Self-Employment Program (SEP) is a program of business deductions and exemptions permitted under the Employment and Assistance Regulation and the Employment and Assistance for Persons with Disabilities Regulation.  SEP is only available to eligible BC Employment Assistance (BCEA) recipients with a Persons with Disabilities (PWD) designation or recipients who qualify as a person who has persistent multiple barriers (PPMB) to employment.

The ministry may accept eligible clients into SEP who have existing businesses or who are starting up self-employment enterprises.  Clients who are accepted for self-employment service options through WorkBC Employment Services may also be eligible for SEP. 

PWD clients and their  spouses, and PPMB clients who are currently operating a small business, may enter directly into SEP.  This includes clients who have seasonal or sporadic earnings from small-scale part-time enterprises, as well as those in a bigger, full-time or more complex business enterprise.    

Acceptance of clients into SEP means the ministry authorizes them to utilize the SEP business deductions and exemptions specified in the Employment and Assistance Regulation and the Employment and Assistance for Persons with Disabilities Regulation.

Effective: December 1, 2003

The Self-Employment Program (SEP) is intended to:

• assist clients who have the Persons with Disabilities (PWD) designation or qualify as a person who has persistent multiple barriers (PPMB) to employment in establishing or operating a self-employment enterprise, through the provision of business deductions and exemptions
• encourage self-reliance, personal independence, and quality of life through self-employment
• encourage clients to work to the extent they are able and to pursue self-employment careers that are suited to or fit with the management of their disability 

SEP is intended to provide support to clients engaged in operations that are as small as seasonal part-time micro-enterprises, or as complex as businesses that require full-time involvement, significant loans for equipment and inventory, and paid employees. 

Effective: April 2, 2012

The Self-Employment Program (SEP) is comprised of the following components:
 

• self-employment support services, consisting of the BCEA SEP Orientation for clients including information on eligible business deductions and limits on cash reserve bank account for the business; administration of the SEP Questionnaire and Acceptance of Terms (HR3258); review of a business plan if one is required by the ministry. It is encouraged for PWD and PPMB clients who have not yet started their businesses to enquire at their local WorkBC Centre about eligibility for WorkBC self- employment service options.
• self-employment business deductions and exemptions for the purposes of calculating SEP participants’ monthly eligibility for income assistance or disability assistance as approved by the ministry [see Policy – Deductions and Exemptions]

Effective: April 2, 2012

The Self-Employment Program (SEP) is distinct from the self-employment service options available through WorkBC Employment Services (ES).  WorkBC ES may be available to PWD and PPMB clients who have been assessed by WorkBC ES as suitable for and needing these services to become financially independent or to reduce dependency on BC Employment Assistance (BCEA).

BCEA PWD and PPMB clients who have been assessed as eligible for WorkBC ES self-employment service options will be encouraged to discuss impacts to their BCEA eligibility with ministry staff before their acceptance into WorkBC ES.  This is to ensure that clients:

• understand any potential impacts to ongoing BCEA eligibility,
• understand the ministry’s income reporting requirements,
• understand business deduction and exemption rules, and
• have had eligibility assessed for any SEP business deductions and exemptions.

Effective: June 30, 2008

To be authorized to use the Self-Employment Program (SEP) business deductions and exemptions set out in regulation [see Policy – Deductions and Exemptions], clients must meet all of the following criteria:

• be eligible to receive income assistance or disability assistance in one of the following categories:
  • Persons with Disabilities (PWD) designation
  • the spouse of the client with PWD designation [see Policy – Participation of Non-PWD Family Members]
  • qualify as a person who has persistent multiple barriers (PPMB) to employment. [For information on participation of other family members in the business, see Policy – Participation of Non-PWD Family Members.]
• providing the business is not incorporated, be seeking to start a business for the purposes of self-employment, or have an existing business in which they are self-employed

Recipients of hardship assistance, Child in Home of Relative [see Related Links – Child in Home of Relative] and non-PPMB spouses of PPMB clients are not eligible for Self-Employment Program (SEP) business deductions and exemptions.

Clients may continue in the Self- Employment Program (SEP) as long as they are:

• eligible to receive income assistance or disability assistance
• eligible for SEP [see Policy – Eligibility Criteria – Loss of PWD Designation or PPMB Status]
• compliant with the SEP requirements specified in regulation [see Policy – Reporting Requirements]

Loss of PWD Designation or No Longer Meet PPMB Criteria

If a client loses the PWD designation or no longer qualifies as a PPMB while participating in the Self-Employment Program (SEP), the business deductions and exemptions may continue to be authorized until the effective PWD or PPMB end date (that is, three months' notification is given).

Effective: December 1, 2003

Principal Operator

In situations where more than one person in a PWD or PPMB family unit will be involved in a self-employment business, the principal operator may be any of the following:

• the client with the PWD designation
• the client with the PPMB status
• provided that self-employment is the most direct route to self-sufficiency for the family unit, the non-PWD or non-PPMB spouse of a PWD client [see Policy – Requirement for Employment Plan or Voluntary Participation Plan]
• the spouse of the PWD-designated client, who has PPMB status
• the PWD client and their spouse can both be co-principal operators
• if only one adult in the family unit has PPMB status, both adults cannot be co-principal operators
• if both adults in the family unit have PPMB status, both can be co-principal operators.  However, in order to qualify for the monthly PPMB earning exemption, both co-principal operators would have to meet PPMB criteria.  Furthermore, if a business involving a PPMB spouse and a non-PPMB spouse was accepted into SEP, although the family unit would not qualify for the monthly earning exemption, the business would be authorized to use the SEP provisions for business deductions and asset exemptions when reporting earnings on a monthly basis  
• non-PPMB spouses of PPMB clients are not themselves eligible to start a business under SEP.

Employees

Non-PWD family members, including spouses, may participate in the self-employment enterprise as employees (for example, be paid for work done).  Their earnings must be reported on the Monthly Report (HR0081).

[For Monthly Report (HR0081), see Forms and Letters.]

Note: Gross wages paid to the principal operator or any person in the same family unit are not permitted in regulation as a business operating expense.  In addition to the SEP deductions and exemptions, the family unit’s earnings exemption will be applied to earnings (wages) reported on the HR0081, and the balance deducted from their assistance rate [see Procedures – SEP Deductions and Exemptions].

Note: In PPMB family units, both adults must have PPMB status in order to be eligible for the earnings exemption in addition to the SEP deductions and exemptions [see Procedures – SEP Deductions and Exemptions].

Effective: April 2, 2012

Clients with PWD designation or Persons with Multiple Barriers (PPMB) status who participate in the Self-Employment Program (SEP) enter into a Voluntary Participation Plan (VPP).  For clients who do not have employment obligations, the VPP records their participation in the SEP and documents the activities and requirements of the SEP.  [For more information, see Related Links – Voluntary Participation Plan and No Employment Obligations.]

Effective: April 2, 2012

All case managed clients of WorkBC ES will enter into an Action Plan with WorkBC, outlining the steps and services they have agreed to undertake in order to achieve labour market attachment. 

This includes PWD and Persons with Multiple Barriers (PPMB) clients accepted by WorkBC for either WorkBC Self-Employment Services or Customized Employment Services (Self-Employment Option).

Spouse with Employment Obligations

Policy is not intended to support spouses who have employment obligations as principal operators of self-employment enterprises that do not appear likely to result in the family unit leaving assistance. Where the spouse is the principal operator of the business (or is proposing a new one) and has employment obligations, the spouse’s Employment Plan must indicate that self-employment is the most direct route to employment leading to  independence.  [For more information, see Related Links – Employment Plan.]

When developing an EP with a spouse who has employment obligations, ministry staff must first consider whether the spouse could find employment directly leading to self-sufficiency for the family unit through:
 

• WorkBC services,
• Supervised Independent Work Search, or
• Non-ministry programs such as the Indigenous Skills and Employment Training (ISET) program or other non-ministry options.

When self-employment is determined to be the spouse’s best option, only spouses who are currently principal operators of a business that is likely to enable the family unit to leave disability assistance shall be authorized to use the Self-Employment Program (SEP) deductions and exemptions.

Effective: September 1, 2016

Clients Interested in Developing a Self-Employment Enterprise

PWD or PPMB clients who are seeking to start a self-employment enterprise and have been determined by the Ministry to have the necessary knowledge and experience to be successful, may enter directly into the Self-Employment Program.

PWD or Persons with Multiple Barriers (PPMB) clients who are seeking to start a self-employment enterprise but who lack essential experience in business and business planning may be encouraged to access WorkBC services.  If the client is determined by WorkBC as requiring case management, the service provider will determine if the client needs and is suitable for WorkBC self-employment service options.  This includes determining whether the client is personally suitable, and the business concept is eligible, as well as assisting individuals to determine business viability.

Note:  Clients are not required to participate in WorkBC self-employment programming in order to access the ministry’s Self-Employment Program of business deductions and exemptions.  However, PWD and PPMB cClients who have been assessed as eligible for WorkBC self-employment service options will be encouraged to discuss impacts to their BCEA eligibility with ministry staff before their acceptance into WorkBC Employment Services. 

All clients interested in entering the ministry Self-Employment Program and who meet the eligibility criteria will:
 

• participate in the SEP Orientation [see Policy – Self-Employment Support Services]
• complete the ministry SEP Questionnaire (top portion of HR3258)
• sign the SEP Acceptance of Terms (bottom portion of the HR3258)
• develop and submit a business plan acceptable to the ministry [see Policy – Business Plan] in accordance with SEP Acceptance of Terms and Business Plan (HR2998) unless the requirement is waived

[For SEP Acceptance of Terms and Business Plan (HR2998), see Forms and Letters.]

New Clients with Self-Employment Earnings Seeking to Access SEP

To be accepted for the Self-Employment Program (SEP), clients with self-employment earnings are required to complete the following before they are authorized to report their earnings under SEP:
 

• SEP Orientation [see Policy – Self-Employment Support Services]
• SEP Questionnaire and Acceptance of Terms (HR3258)
• Provision of any other information the ministry requires
  • to confirm eligibility for income or disability assistance
  • to understand the nature of the client’s business (for example, overview of business, estimated income, business assets position, liabilities position, inventory levels, etc.)

Note: For existing SEP clients with self-employment earnings, see Procedures Section

Effective: September 1, 2016

SEP Orientation

The Self-Employment Program (SEP) Orientation includes each of the following:

WorkBC Employment Services:

• suitability assessment for WorkBC self-employment service options
• administration of the SEP Business Concept Proposal (HR3454)

EAW:

• an orientation to BCEA regulations about the Self-Employment Program (SEP), including:
  • permitted business deductions and exemptions as set out in the Employment and Assistance Regulation and Employment and Assistance for Persons with Disabilities Regulation
  • limits for cash asset bank accounts for the business
  • net income and business asset reporting obligations as specified under the Employment and Assistance Regulation and the Employment and Assistance for Persons with Disabilities Regulation [see Acts and Regulations]
• administration of the SEP Questionnaire and Acceptance of Terms (HR3258) to determine which form (HR2988S or HR2988L) a client should use when reporting self-employment income and business assets, and to indicate understanding of client obligations under SEP
• instructions for completing the appropriate SEP monthly reporting forms for the ministry:
  • SEP Client Monthly Report (HR2988L “long,” and HR2988S “short”)
  • Monthly Report (HR0081)
• the ministry’s requirements under SEP as to when a client must prepare and get approval for a business plan [see Policy – Business Plan]
• provision of any additional information needed by the ministry about business activities, assets, and estimated income, including the re-administration of the Questionnaire (HR3258) when ministry staff determine there may be a need for the client to change which monthly income and business asset reporting form to use.

[For SEP Client Monthly Report (HR2988S or HR2988L), Monthly Report (HR0081), SEP Questionnaire and Acceptance of Terms (HR3258), see Forms and Letters.] 

Income Reviews 

Each month, or less frequently depending on when income is earned by clients, ministry staff:
 

• review the self-employment income and assess the business deductions and exemptions claimed by the client for consistency with “permitted deductions” as set out in regulations (see Deductions and Exemptions section for specific allowable items).  

Clients are responsible for submitting all monthly income reports to the ministry using the Monthly Reporting Form (HR0081) form [see Policy – Reporting Requirements]

More detailed reviews of self-employment income, including re-administration of the HR3258 Questionnaire may be requested of clients using the HR2988S short form if any of the following occur:

• The client’s business has undergone significant growth (e.g., gross income increased by 50% or more over previous month, or the previous time that income was reported) since the last time income was reported to the ministry and the EAW requires additional information to clarify growth.
• The value of the client’s monthly gross income is $2000 or more.
• The total value of client’s business assets has exceeded $25,000. 
  • Business assets include:  funds in a cash reserve account (separate bank account for business) up to a maximum of $5000; business inventory of supplies, products, materials; value of any unexpended business loans and value of business equipment and tools. 
• Allowable deductions claimed exceed 25% of gross self-employment earnings.  Receipts may be requested to verify deductions are permitted business expenses in accordance with BCEA regulations.

Annual business reviews provide the ministry with the opportunity to look at SEP employment enterprises in greater detail on a regular basis. The purpose of the annual review is to examine a year-long pattern of earnings and business assets to understand whether a business is growing or not, to request additional information from a client that clarifies the reporting income and business assets, or to inquire about a client’s suitability for the self-employment program.  The amount of detail required in an annual business review will depend on the nature of the business and the level of business activity.

Effective: April 2, 2012

A business plan may be required to participate in the Self-Employment Program (SEP).  A business plan may be required for clients seeking to develop a new business opportunity through self employment, for clients with a business loan, or clients whose businesses involve significant capitalization for business assets including business equipment, inventory or renovations to the client’s residence.

The requirement for a business plan may be waived if:

• there is a health related limitation(s) that would impact the client's ability to complete a business plan
• the business concept is simple and requires only modest levels of business assets such as inventory, or equipment (for example but not limited to, handicrafts made for sale at a seasonal craft sale)
• The business operates on a short-term or periodic basis (for example, business of carving and selling wooden toys at annual Christmas craft fairs)
• clients already operate a business prior to applying for the SEP program.

Clients that meet the above exceptions may still be required to submit a short descriptive paragraph outlining their business and goals to support eligibility for the SEP program.

When a business plan is required, the plan must be submitted to the ministry prior to authorization of the Self-Employment Program (SEP) deductions and exemptions and business launch by a client starting a new business.  The business plan together with a signed copy of the HR2998, Acceptance of Terms and Business Plan, should be obtained by the EAW, and copies provided to the client.

Business Plan Requirements

The business plan may be as basic as a description of the business opportunity including the product or service to be sold, and projected gross revenues, expenses and monthly and yearly net income [see Questionnaire HR3258, regarding the description of a new business]. More detailed business plans would be required for businesses that are more complex or larger in scale (e.g., have employees, require business loans, have significant business assets). 

To be acceptable by the ministry, a business plan must be a written document that minimally outlines all of the following:
 

• the nature of the self-employment business (for example, goods produced, services provided, products to be sold, and projected customers)
• an explanation of the timeframe within which the proposed business can reasonably be expected to make a profit
• projected monthly revenues and expenditures for the timeframe indicated
• any capital requirements (for example, business loans, assets, equipment, inventory, renovations to a facility) that are necessary to operate the business and achieve its goals of making a profit in the timeframe indicated

Effective: June 30, 2008

For the purposes of the Self-Employment Program, a business is considered “launched” when:

• the business plan (if required) has been accepted by the ministry
• the SEP Acceptance of Terms and Business Plan (HR2998) or the SEP Questionnaire and Acceptance of Terms (HR3258) has been completed as required
• the client is operating the business.

[For SEP Acceptance of Terms and Business Plan (HR2998) and SEP Questionnaire and Acceptance of Terms (HR3258), see Forms and Letters.]

Effective: November 28, 2022

Subject to limits on assets and loans exemptions [see Policy – Limits on Asset and Loan Exemptions], gross revenue from the self-employment business and used for purposes that are consistent with the business plan may be exempted for the purposes of determining the Self-Employment Program (SEP) client’s eligibility for assistance.  In addition, SEP participants are eligible for an earnings exemption applicable to their family unit [see Procedures – SEP Deductions and Exemptions].

A summary of the allowable SEP deductions and exemptions follows. Schedule B of either the Employment and Assistance Regulation and the Employment and Assistance for Persons with Disabilities Regulation can be reviewed for deductions and exemptions rules regarding small business [see Acts and Regulations].

Gross revenue derived from operating a business under SEP may be exempted if used for any of the following:

• operating expenses incurred in operating the business, including all of the following:
  • purchase of supplies and products (inventory)
  • accounting and legal services
  • advertising
  • taxes, fees, licences, and dues incurred in the business (see note below regarding fees)
  • business insurance
  • interest and other financial institution charges
  • equipment maintenance and repairs
  • gross wages paid to employees of the business, except those paid to the principal operator of the business or any person in the principal operator’s family unit
  • motor vehicle expenses
  • Employment Insurance (EI) or Workers’ Compensation Benefits (WCB)
  • employer contributions for EI, WCB, or the Canada Pension Plan (CPP)
  • personal contributions to CPP
  • rent and utilities, except for the place of residence of SEP family unit, unless, because of the business, there is an increase in rent and utility costs which is not covered under the family unit shelter allowance
  • office expenses
  • equipment purchases or rentals
  • principal and interest payments on a loan described in a business plan accepted by the ministry, and used to operate the business

Note:  Fees may include commissions that are charged against a client for short-term, occasional earnings (e.g., a client who must pay an agent a finder’s fee for short-term work as extra on a movie set).  However, commissions earned as income may not be considered as permitted deductions from gross income. 
 

• to establish a cash account that is reserved for paying permitted operating expenses, up to the amount shown in Procedures – SEP Deductions and Exemptions [see Procedures]. A client may have multiple accounts established for this purpose, as long as the overall balance of all accounts does not exceed the limit set in regulations.
• renovations to the client’s residence, up to the amount shown in Procedures – SEP Deductions and Exemptions [see Procedures], if both of the following are met:
  • the renovations are justified in the business plan as a business expense
  • the renovations are made during the period of self-employment

The exemption limit for the total value of the business assets and loans permitted by the Self-Employment Program (SEP) for all participants is shown in Procedures – SEP Deductions and Exemptions [see Procedures]. For clients with ministry-approved business plans, amounts for the total value of assets and loans that exceed the limits established by regulation may be exempted if both of the following are met:

• the amount is justified in the business plan
• the amount is approved by ministry staff

[For authority to approve a greater exemption amount for renovations or for the total value of assets and loans, see Authorities and Responsibilities.]

Effective: June 30, 2008

Reporting Forms

Each month, SEP clients are required to submit the following reporting forms to the ministry:

• Self-Employment Program Client Monthly Report, either the HR2988L or HR2988S, signed by the client
• Monthly Report (HR0081) signed by the client

For clients who are to use the long form (HR2998L), it is recommended (but optional) to use the SEP Monthly Reporting Worksheet (HR3010).  Instructions are provided on the HR3010 to ensure that clients may utilize the appropriate business deductions and exemptions available when reporting their monthly earnings.

Reporting Time Frame

Self-Employment Program (SEP) participants will begin submitting the SEP Client Monthly Report (HR2988S or HR2988L) to the ministry as follows:
 

• new clients interested in self-employment:  upon launching their business [see Policy – Meaning of Business Launch]
• clients with existing self-employment enterprises: upon entering the SEP Orientation module

SEP participants will report all required information about the previous month’s earnings to the ministry on the forms by the fifth of each month [see Related Links - Monthly Reporting Requirements].

Non-compliance with Reporting Requirements

Clients participating in SEP may be asked to submit additional information, correct errors or provide missing monthly reports or forms.  If required information is provided promptly EAWs may continue to authorize the SEP deductions and exemptions.

When clients do not meet the monthly reporting requirements of SEP, including the monthly timeframe and reporting format of the ministry, the client’s participation in SEP will be ended, with no further authorization to use SEP deductions and exemptions.

[For SEP Client Monthly Report (HR2988S and HR2988L), Monthly Report (HR0081), SEP Monthly Reporting Worksheet (HR3010), see Forms and Letters.]

Effective: December 1, 2003

The ministry may determine that a client receiving assistance and operating a small business under the Self-Employment Program (SEP) is self-sufficient, or capable of independence from assistance, based on all of the following criteria being met:
 

• the assets and inventory outlined in the business plan have been accumulated and are over the amount shown in Procedures – SEP Deductions and Exemptions [see Procedures] for assets and loans
• the cash reserve account has reached the amount shown in Procedures – SEP Deductions and Exemptions [see Procedures]
• the permitted operating expenses for the month have been paid
• after applying the appropriate earnings exemption [see Procedures – SEP Deductions and Exemptions], the remaining business cash receipts exceed the family unit’s assistance

Once self-sufficiency has been achieved, the client will no longer be authorized for SEP deductions and exemptions and will no longer be eligible for income assistance or disability assistance.

Effective: September 1, 2016

For clients who have earnings to declare from established self-employment enterprises and want to participate in Self-Employment Program (SEP), follow these steps:

Effective: September 1, 2016

Effective: January 19, 2015

EAWs provide clients with a detailed explanation of the deductions and exemptions to SEP including exemptions to earned income to which they are entitled.

SEP Deductions and Exemptions

For Exemptions to Earned Income see Related Links – Income Treatment & Exemptions – Policy – Employment Income – Income Assistance Recipients or  Employment Income – Disability Assistance Recipients

Effective: September 1, 2016

Effective: September 1, 2016

Employment and Assistance Worker (EAW) is responsible for:
 

• monitoring clients’ compliance with Self-Employment Program (SEP) monthly reporting requirements
• reviewing monthly SEP reporting forms submitted by clients (both simplified short (HR2988S) and long (HR2988L) forms)
• asking clients for more information about business income and business assets when needed for determining eligibility for assistance
• authorizing business deductions and exemptions allowed by regulation
• waiving the requirement for a business plan for SEP clients
• determining acceptance of business plans submitted by SEP clients
• exempting business loans of up to $50,000 as business assets, when specified in a business plan 
• notifying clients who become ineligible for SEP business exemptions and deductions due to losing their PWD designation or no longer meeting Persons with Multiple Barriers (PPMB) criteria
• explaining possible impacts on any future BCEA payments
• monitoring and reviewing SEP clients for self-sufficiency through self-employment activity and eligibility for assistance
• conducting annual business reviews of all clients participating in SEP

WorkBC is responsible for:
 

• as considered appropriate, referring an eligible WorkBC Employment Services client for assessment for suitability for self-employment and/or business training
• advising BCEA clients to contact their EAW to request the SEP deductions and exemptions, and ensure they understand the impacts of self-employment on their eligibility for BCEA

EAW (subject matter expert on self-employment (SME for SEP)) is responsible for:

• recommending whether a SEP client should be required to have a business plan
• when a business plan is required, reviewing the business plan and deciding if it should be accepted
• providing training to SEP clients on the use of the long form (HR2988L) for reporting monthly income
• monitoring SEP clients’ reports on the long form (HR2988L) providing any necessary follow-up with clients, and  as necessary deciding if to accept the monthly reports
• resolve any concerns about a SEP client’s business activity or reporting
• managing all matters arising from SEP client files, monthly reports, etc., and conducting annual business reviews of all clients participating in SEP
• if indicated, deciding that an independent third party audit of the client’s business be conducted.

A summarized Authority Level matrix is available in Additional Resources.