FAFSA business asset reporting confusion - therapy practice with no property
I'm struggling with the FAFSA business section for 2025-2026. I run a small therapy practice with just myself and one part-time assistant. I don't have any office property (I rent space hourly) or expensive equipment - just a laptop and phone really. The business checking account usually has around $7,500, but that's basically reserved for the next 6 weeks of payroll and expenses. How am I supposed to report the net worth when there's hardly any physical assets? And do I need to list the checking account balance even though it's all earmarked for upcoming expenses? My daughter is starting college next fall and I'm worried about messing this up!
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Ella Harper
You'll need to report your business as an asset on the FAFSA, but you're in a good position because small family-owned businesses get special protection. If your business employs fewer than 100 people AND is family-owned and controlled, you don't have to report it as an asset at all on the FAFSA. Since you only have yourself and one employee, you qualify for this exclusion. Just make sure when filling out the form you indicate it's a family-owned business with fewer than 100 employees.
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Micah Franklin
•That's a huge relief! I had no idea small businesses were excluded. So I don't need to worry about valuing the checking account either? The FAFSA form seemed to be asking for all these asset values and I was stressing about calculating everything correctly.
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PrinceJoe
i seroiusly doubt what that person said is correct... my husband owns a plumbing business (just him, no emploeyees) and we had to report ALL of it. like everything. the truck, tools, accounts receivable, checking balance. its a HUGE pain
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Ella Harper
•There's actually an official exclusion in the FAFSA rules. From the Federal Student Aid Handbook: "A family-owned and controlled small business (which can include farms) that has 100 or fewer full-time or full-time equivalent employees does not count as an asset." This is directly from the Department of Education guidelines.
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Brooklyn Knight
I just went through this last month. The small business exclusion is real, but you need to be careful about how your business is structured. If it's a sole proprietorship or a single-member LLC that's reported on Schedule C, then you qualify for the exclusion as long as your family owns more than 50% and there are fewer than 100 employees. You just check the box indicating it's a qualifying small business. However, if your therapy practice is an S-corporation or partnership, the rules get more complicated. In that case, you might need to report certain assets depending on how your business is structured.
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Owen Devar
•This is 100% correct. The structure matters a lot. The FAFSA changed their reporting for 2025-2026, but this particular rule stayed the same. I had to call FSA directly to confirm because the wording on the form was confusing and I couldn't get through for TWO WEEKS! Eventually I used Claimyr (claimyr.com) to get through - they have this service that gets you past the hold times. There's a demo video that shows how it works: https://youtu.be/TbC8dZQWYNQ. Saved me hours of frustration and the agent confirmed exactly what was posted above about the business exclusion.
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Daniel Rivera
wait so if i run a small Etsy shop with just me, do i need to report that on fafsa too??
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Brooklyn Knight
•Technically yes, your Etsy shop is a business. But if it's just you and family-owned, it would likely qualify for the small business exclusion. You'd indicate on the FAFSA that you own a family business with fewer than 100 employees. However, if you have significant inventory value or equipment specifically for the business, you should mention that to your financial aid office for clarification.
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Sophie Footman
THE ENTIRE FAFSA SYSTEM IS DESIGNED TO PUNISH SMALL BUSINESS OWNERS!!! I had to report everything down to the PENCILS in my office and it pushed my SAI up by $4000!!! They count all your equipment that you NEED to run your business as if you could just sell it tomorrow for cash. Total BS when billionaires find ways to hide MILLIONS.
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Ella Harper
•I understand your frustration, but it sounds like you may have reported business assets that could have been excluded. For the 2025-2026 FAFSA, family-owned businesses with fewer than 100 employees are completely excluded from asset reporting. Did your financial aid office explain why they were requiring you to report those business assets? You might want to appeal their SAI calculation if they incorrectly included excluded business assets.
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Connor Rupert
My sister went through this with her interior design business. She didn't have to report anything because it's just her and an assistant. But she did have to provide a letter explaining the business structure when the school selected her for verification. You might want to prepare some documentation just in case.
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Micah Franklin
•That's helpful advice! I'll prepare a simple statement about my business structure ahead of time. Do you know what specific documentation your sister had to provide? Was it just a letter or did she need to submit tax forms too?
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Brooklyn Knight
The most important thing is to be consistent between your FAFSA reporting and your tax returns. Since you file a Schedule C for your therapy practice, the IRS data retrieval tool will import some of that information. Make sure how you characterize the business on FAFSA matches how it's reported to the IRS. That prevents verification flags. For your specific situation: 1. Check the box indicating you own a family business with fewer than 100 employees 2. You won't need to enter any value for the business itself 3. The business checking account doesn't need to be reported separately since it's part of the excluded business Some schools might request additional information during verification, but the federal rules are clear on this exclusion.
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Micah Franklin
•Thank you so much for the detailed explanation! One last question - my laptop is technically owned by the business but I also use it for personal stuff. Do I need to count that as a personal asset, or is it covered under the business exclusion too?
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Ella Harper
If the laptop is owned by your business and reported as a business asset on your tax forms, then it would be considered part of your excluded business assets. The key is consistency between tax reporting and FAFSA reporting. If you're depreciating it as a business expense on your Schedule C, then it's a business asset and covered by the exclusion.
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Micah Franklin
•Perfect! Yes, it's listed as a business asset on my taxes. I think I understand everything now. This forum has been incredibly helpful - I was really stressing about this section!
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PrinceJoe
why does everythng have to be so complicated with fafsa??? last year I spent 3 days trying to figure out how to report my husbands tool chest for his side business. ended up just leaving it off and nothing happened lol
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Sophie Footman
•EXACTLY!! The system is designed to be confusing on purpose. They want us to make mistakes so they can deny aid. It's all about keeping people out of college unless they're already rich.
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Hiroshi Nakamura
•I get the frustration, but for anyone reading this - please don't just leave things off your FAFSA! If you get selected for verification (which happens to about 1 in 3 applications), discrepancies between your tax returns and FAFSA can delay your aid or even disqualify you. The small business exclusion we've been discussing is actually designed to help families like yours avoid having to value every tool and piece of equipment. It's worth taking the time to understand the rules rather than risk your financial aid package.
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