​Chapter 8.17 Contents:

[REVISED: 4/1/14]

  1. Self-employed or self-employment enterprise (SEE) means an individual earns income from his or her own small business, trade, or profession rather than from a specified salary or wages from an employer.

  2. For a client already self-employed who requests assistance with low-cost, non-assistive technology occupational tools and equipment rather than SEE start up assistance, see Chapter 8.18, Tools and Equipment, Policy 1.

  3. The business shall not involve illegal activities.

  4. The business shall comply with all relevant state, federal, and local laws and regulations.

  5. The business shall be solely owned and managed by the client. Franchises and multi-level marketing shall not be sponsored. An exception shall require a written policy exception from the DARS commissioner.

  6. The business shall be expected to enable the client to meet ongoing living expenses and business expenses, generally within the first twelve (12) months.

  7. The business shall be intended to become a major source of income for the client.

  8. The business shall be for-profit.

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[REVISED: 11/22/16]

  1. Marketing.
    Marketing expenses, such as advertising, business cards, etc. may be included in the SEE proposal. Use the S/I code for SEE Advertising.  Business social or entertainment costs shall not (per federal OMB Circular A-87 revised May 10, 2004 and see Chapter 14.1, FINANCIAL, Policy 9) be included in the SEE proposal. 

  2. Tools and equipment.
    Occupational tools and equipment, including office equipment and supplies, furniture, livestock feed, livestock that will not be sold (such as dairy cattle, honey bees, etc.), etc., may (per 2016 Federal Regulation 34 CFR § 361.48 (p)) be included in the SEE proposal in accordance with policy in Chapter 8.18, Tools and Equipment, Policy 1. Use the “S” prefix for the service/item (S/I) codes A7500 to A7580 to identify the item is for self-employment. When appropriate, feasible, readily available, and more cost effective to DRS than purchasing, the counselor shall pay to rent the item under the client or business name. For ownership and retaining title, See Policy 1: Section C of this chapter.

  3. Initial inventory.
    Initial inventory and stocks (per 2016 Federal Regulation 34 CFR § 361.48 (p)), including livestock to be sold (such as beef cattle, etc.) may (per State Regulation 22 VAC 30-20-120) be included in the SEE proposal. Purchase specifications shall be determined with the client, counselor, and knowledgeable objective third party. For S/I authorization code, see DRS Services Reference Manual, Other Services/Items, “Self-Employment Enterprise” category, “Initial Inventory” item code. For ownership and retaining title, See Policy 1: Section C of this chapter.

  4. Business license.
    Business license tax required by state or local government regulations may be included in the SEE proposal.  The counselor shall not authorize business license tax required to maintain client current employment because this is the financial responsibility of the client or is an ongoing operational expense of self-employment. Occupational license shall (per 2016 Federal Regulation 34 CFR § 361.54) be subject to consumer financial participation policy. See Chapter 14.3, FINANCIAL, Policy 1. The maximum allowed is the actual cost, subject to consumer financial participation.

  5. Occupational fees.
    Occupational license, certification, or permit fee required by state or local government regulations may (per 2016 Federal Regulation 34 CFR § 361.48 (p)) be included in the SEE proposal (see Chapter 8.12, LICENSE, Policy 1). For occupational examination fees and examination prep course costs, see Chapter 7, SCHOOL.

  6. Insurance.
    Premium for occupational-type insurance coverage (such as inventory insurance, professional liability insurance, bonded employee, malpractice insurance, etc.) may be included in the SEE proposal (see Chapter 8.11, OCCUPATIONAL, Policy 1). The client shall provide proof of insurance upon request.

  7. Rent and utilities.
    Rent and utilities at the business property may be included in the SEE proposal.

  8. Property improvements and modifications.
    DARS staff may consider rehabilitation technology goods and services needed to the business property to accommodate the VR client disability (see Chapter 8.02, REHABILITATION TECH, Policy 1), but not other changes, improvements, or permanent additions.

  9. Buildings and land.
    DARS staff shall not purchase any building or land even if necessary to the business.

  10. Name on accounts.
    Client or business name shall be on any business property lease, utilities accounts, tools and equipment rental agreements, financial accounts and loans, etc. Under no circumstances shall DARS or the Commonwealth of Virginia be named.

  11. Memberships.
    DARS shall not pay costs of non-mandatory membership organizations.

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[REVISED: 11/22/16]

  1. Case status.
    Technical assistance and other consultation services to conduct market analyses and develop business plans may (per Public Law 114-18) be provided during the SEE approval process and under the SEE IPE. Other SEE services shall (per 2016 Federal Regulation 34 CFR § 361.45 (a) (2)) only be provided under an Individualized Plan for Employment (IPE) and only if listed in the SEE Proposal approved under the SEE approval process (See Policy 2 of this chapter).  DRS assistance is for SEE start up and the SEE proposal and approval processes are complex; therefore, it is not appropriate to provide SEE services under a Post-Employment Services (PES) Plan.

  2. After case closure.
    After VR case closure, the client or business, including clients exempt from consumer financial participation and regardless of the Client Financial Statement (RS-13 form) results, shall be responsible for all SEE costs, including goods and services listed on the approved SEE proposal, ongoing operational costs, one-time unexpected business expenses, taxes, long term costs to maintain or expand the business, retirement fund, etc.

  3. Startup costs only.
    DRS may fund the costs needed to start up the business (See Policy 1: Section B of this chapter). Business costs that are not "startup" costs include, but are not limited to, retirement fund, ongoing operational expenses and one-time unexpected business expenses incurred after the startup period, business expansion costs, etc.

  4. IPE requirements.
    At the successful conclusion of the SEE approval process (See Policy 2 of this chapter), the client and counselor shall develop or amend the Individualized Plan for Employment (IPE). The client and counselor shall be responsible for implementing the IPE and SEE startup. The DRS SEE coordinator may serve in a consulting role. The IPE shall include:

    1. Employment goal that reflects the business, trade, or profession, not "self-employment”.
       
    2. Goods and services listed in the approved SEE proposal.
       
    3.  Progress measure or client responsibility statement that DRS assists only in the business startup and the client shall be financially responsible for business expansion and ongoing operational expenses.
       
    1. Progress measure with a schedule for periodic business review, with reviewer and review frequency determined case-by-case.

                  
  5. Client use and retaining title.
    The client shall be responsible for using the goods as intended for self-employment. The client shall be responsible for establishing and maintaining proper on-site controls and security for inventory, occupational tools and equipment, and cash on hand. Inventory is sold as intended, but the client shall not sell, lend, dispose of, give away, or borrow against other goods needed for self-employment. The client shall inform the counselor right away if the client no longer needs the goods for self-employment. Occupational tools and equipment, tool sets, and inventory on hand/in stock shall (per § 51.5-126 of the Code of Virginia and OMB Circular A-87 revised August 29, 1997) remain DARS state property unless DRS paid less than $5,000 for the item or set (order splitting violates state purchasing laws) or the inventory is perishable (such as fresh produce).  If DARS retains title, the counselor and client shall follow policy in Chapter 14.1, PURCHASING, Policy 7.

  6. Theft. 

    1. If initial inventory or occupational tool or equipment is stolen during the startup period, within one week the client must file a stolen property report with the local police (per State Regulation 22 VAC 30-20-120) and notify the insurance carrier if insured, and notify the counselor. 
       
    1. The counselor is not obligated to, but may, authorize replacement during the startup period. After case closure, the client or business is financially responsible for replacement. A copy of the police report can be used to justify the need for replacement. Insurance is a comparable benefit if the item is insured.
       
    2. If DARS retains title, unless the current depreciated value is $0, the goods are state property, and the counselor shall call the State Police local office. DARS General Services staff do not need to be involved.

  7. Stable employment.
    Stable employment and case closure is determined case-by-case. The counselor may consult the DRS supervisor, SEE Committee, or DRS SEE coordinator when determining if the employment is stable. For the typical SEE, it is usually is achieved within twelve (12) months.

  8. Fee-based.
    SEE costs shall (per 2016 Federal Regulation 34 CFR § 361.54 (b)) be subject to client financial participation policy and Client Financial Statement (RS-13 form) results (see Chapter 14.3, FINANCIAL, Policy 1).   DRS shall not (see Policy 3 of this chapter) be the primary funder of the SEE costs, including clients exempt from consumer financial participation and regardless of the Client Financial Statement (RS-13 form) results.

  9. Encumbering funds.
    DRS staff shall not issue authorizations directly to the client for self-employment or SEE costs. Consult the DRS SEE coordinator regarding exceptions on a case-by-case basis. The client cannot financially obligate DARS funds; the counselor (per 2016 Federal Regulation 34 CFR § 361.50 (e)) encumbers DARS funds with a written authorization to the service provider (see Chapter 14.1, PURCHASING, Policy 1).

  10. Lowest cost.  
    For policies on lowest cost, add-ons, and upgrades, see Chapter 14.1, PURCHASING, Policy 6.

  11. Repair.  
    See Chapter 8.08, REPAIRS, Policy 1.

  12. Client debts.
     For policy on client or business loan interest payments, consumer debts, liens, judgments, fines, court costs, and similar expenses, see Chapter 14.1, PURCHASING, Policy 8.

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[Revised: 1/4/14]

  1. Client shall agree in writing (may be included on the IPE, client signature on a copy of this policy, or client signed and written statement) to successfully complete all the Self-Employment Enterprise (SEE) approval process steps. Client signature affirms commitment to participate in the SEE approval process; it does not obligate DRS to fund part or all of the SEE cost.

  2. Client and counselor shall meet with the DRS SEE coordinator to discuss self-employment. The SEE coordinator is available for consultation on all self-employment cases, including cases within the counselor’s dollar level authority.

  3. Client must score 60 or better on the Business Assessment Scale administered and scored by DRS staff.

  4. Based on the Business Assessment Scale results, the DRS SEE coordinator may recommend small business training and self-employment counseling, etc. The counselor may authorize recommended training. The client shall successfully complete authorized training.  Following training, the client may re-take the Business Assessment Scale to reach a score of 60 or better.

  5. Client shall write a SEE proposal and submit it to the counselor and DRS SEE coordinator.  The proposal shall include the business plan, itemized list of client investment in the SEE (including tangible goods contributed), requested SEE services and anticipated cost and funding source, and income and expense projections.  For guidance, see the SEE Handbook.

  6. DRS SEE coordinator shall prepare a written review and attach it to the SEE proposal and forward it to the counselor. To demonstrate viability of the SEE proposal, the DRS SEE coordinator may recommend the counselor authorize a small scale SEE trial within counselor dollar level authority. The client, counselor, and SEE coordinator shall coordinate the trial SEE and add the trial SEE services to the IPE, including a progress measure that specifies the criteria that will demonstrate viability.

  7. If the total SEE cost to DRS is within the counselor dollar level authority (see Chapter 14.1, PURCHASING, Policy 3), the counselor shall make the decision to approve or disapprove the SEE proposal. Upon approval, the client and counselor shall amend the IPE (for SEE IPE requirements, See Policy 1: Section C of this chapter).

  8. If the total SEE cost to DRS exceeds counselor dollar level authority and the counselor and DRS SEE coordinator support the SEE proposal: i) the client shall present the SEE proposal to the SEE Committee, ii) SEE Committee shall issue a written recommendation to the counselor, iii) if the recommendation is favorable, the SEE proposal shall move to the dollar level approval process (see Chapter 14.1, PURCHASING, Policy 3).  For SEE Committee details, see the SEE Handbook. Upon management approval of the SEE proposal, the client and counselor shall develop or amend the IPE (for SEE IPE requirements, See Policy 1: Section C of this chapter).
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[Revised: 4/1/14]

  1. DRS assistance is determined in part by client circumstances, market considerations, and other factors impacting the potential success and sustainability of the proposed business. Therefore, DARS is under no obligation to fund any SEE. The decision shall be determined case-by-case (for approval process, see Policy 2 of this chapter). DRS shall not be the primary funder; VR funds shall not equal or exceed the sum of all non-VR funds for the SEE, and VR funds may be much less than half the total needed to fund the SEE. SEE funding is a three step process.

                  

    Step 1: Determine client financial participation for IPE cost:
    Client percentage (from Line 12 of RS-13 form)
    Times annual IPE cost (non-SEE and SEE services)
    Equals client financial participation amount.
    However, this amount cannot exceed the dollar maximum (from Line 11 of RS-13 form).
     

    Step 2: Fund non-SEE services, such as physical restoration, etc.:
    DRS maximum allowances
    Subtract comparable benefits
    Subtract client financial participation amount
    Equals DRS funding for non-SEE services.
     

    Step 3: Fund less than half the SEE cost:
    Annual SEE cost
    Subtract remaining client financial participation amount.
    If this funds the SEE, then DRS SEE authorization is $0.
    However, if there is a remaining SEE cost, DRS SEE authorization must be less than half the Annual SEE cost.

  1. To sufficiently fund any remaining SEE cost, it may be necessary for the client, including those exempt from consumer financial participation and those who have contributed the maximum amount on the RS-13, to obtain additional resources (such as to contribute money over and above the RS-13 results, contribute tangible goods, reduce the SEE scope and cost, apply for a small business loan, etc.). For guidance on funding sources, see the SEE Handbook.

  2. Tangible goods shall be valued at the current market value less percentage of personal use.

  3. Services and “sweat equity” shall not be accepted in lieu of funds or tangible goods.
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Links to the Code of Federal Regulations (CFR) are currently unavailable while we await federal changes to the vocational rehabilitation program. Upon promulgation of the final regulations the links will be updated and activated.