FAFSA business valuation for horse training service - how to report when business can't be sold?
Stuck on the FAFSA section about 'Current Net Worth of Businesses and Investment Farms' for my daughter's application. My situation is different than what FAFSA seems to be asking for. My husband runs a horse training business, but he IS the business - it's purely a service that can't be sold or transferred to anyone else! I've already included the property value (minus our homestead exemption) on the appropriate section. Most equipment is personally owned and paid off, so minimal business debt. How are other self-employed service providers handling this on FAFSA? How do you calculate the 'worth' of a business that's just my husband's skill and reputation? Several colleges on our daughter's list require the FAFSA, but this question has me completely stumped.
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Isabella Silva
ur overthinking it. jusst put $0 for the biz value since its a service biz. thats what we did for my husbands plumbing biz last year & had no prblems. fafsa wants to know if u own a mcdonalds franchise or a factory or something, not a service business that cant be sold.
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Malik Robinson
•Thanks, that's reassuring to hear. I was worried about accidentally understating assets and getting flagged for verification. Did your application get selected for verification after listing $0?
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Ravi Choudhury
•NO NO NO! Please don't just put $0 - they're looking for the fair market value of your business assets. For a service business, you need to calculate tangible assets like any specialized equipment, vehicles used primarily for business, inventory (if any), and accounts receivable. You should be able to find these values on your Schedule C. Putting $0 when there are actual business assets could trigger verification.
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Freya Andersen
I work in financial aid at a university and see this confusion all the time. For the FAFSA business valuation question, they're really asking about the market value of physical/tangible business assets minus any business debt. For a service business like horse training, you should include: 1. Value of specialized equipment used exclusively for the business 2. Value of business inventory (horse supplies, etc.) 3. Value of any vehicles used primarily for business (horse trailers, etc.) 4. Current accounts receivable 5. Business checking/savings accounts Then subtract any business-related loans or debt. You do NOT need to try to value the "goodwill" or reputation of the business. Just the tangible assets minus debts.
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Malik Robinson
•Thank you so much for breaking this down! This makes much more sense now. So we don't need to try to put some arbitrary value on his skills or client relationships - just the physical assets. That's a relief. We have about $47,000 in specialized equipment (saddles, training gear, etc.) and a $32,000 horse trailer, but we also use these personally sometimes. Should I prorate these somehow?
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Freya Andersen
•Yes, you should prorate assets that have mixed business/personal use. For example, if the horse trailer is used 70% for business and 30% for personal use, you'd include 70% of its value. Be prepared to explain your reasoning if selected for verification. Just make sure you're consistent with how these assets are reported on your tax returns.
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Omar Farouk
OMG I spent THREE DAYS trying to figure this out for my photography business last year!! Called FSA multiple times and got disconnected or put on hold forever. Super frustrating. Finally I used Claimyr (claimyr.com) to get through to an actual FAFSA agent who could help. They have this video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent told me for service businesses, they're looking for tangible assets minus liabilities. Not the "value" of skills or client list. Made WAY more sense than what the form implies. Good luck!!
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Malik Robinson
•I hadn't heard of Claimyr before. I might need that if we get selected for verification. Did you find the service worth it? The FAFSA instructions are so confusing for self-employed people.
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Omar Farouk
•Absolutely worth it for me! I'd spent hours getting nowhere. With Claimyr I got through to a real person in about 15 mins who actually knew what they were talking about. The agent confirmed I was right to only include my camera equipment, computer, and inventory of photo prints minus my business credit card balance. Saved me from making mistakes that might have flagged us for verification.
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CosmicCadet
My brother owns a small business too and the FAFSA was a NIGHTMARE. He ended up getting hit with verification because he made a mistake on that exact section. Took like 2 extra months to get my nephew's financial aid sorted out. Be super careful!!
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Malik Robinson
•That's exactly what I'm worried about! Did they end up having to submit additional documentation for the business?
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CosmicCadet
•Yeah they had to provide the entire business tax return, a statement of assets and liabilities, and some other form I can't remember the name of. Complete headache! Just be really careful and maybe even ask an accountant if you're unsure.
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Chloe Harris
The FAFSA business valuation question specifically refers to the net worth of your business investments. For a Schedule C sole proprietorship service business like horse training, you should: 1. Calculate the fair market value of all business assets (equipment, inventory, business bank accounts, accounts receivable) 2. Subtract all business liabilities (loans, accounts payable, credit card debt for business) 3. Determine what percentage of these assets are used exclusively for business vs. personal use Remember that the business itself isn't being valued - only the tangible assets minus debts. This is consistent with the FAFSA's focus on current liquid or potentially liquid assets that could contribute to educational expenses. If your assets are minimal or completely offset by business debt, a very low or zero value may be appropriate, but be prepared to document this if selected for verification.
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Diego Mendoza
•Agreed! Also important to note that if the business has employees (beyond just family) OR has a value over $1 million, you must report it differently. But for a small service business like horse training with mostly personal assets, it's really just about the tangible business assets minus debts.
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Malik Robinson
•This is so helpful - thank you! We don't have any employees and the business value is definitely under $1 million. I think I was overthinking this because some of the colleges my daughter is applying to are quite expensive, and I was afraid of making a mistake that would affect her aid package. I'll focus on just listing the business-specific assets and debts.
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Ravi Choudhury
FAFSA IS THE WORST!!! 😡😡😡 Every single question is designed to extract maximum $$ from hardworking families while giving handouts to others! My husband has a small business too and they basically forced us to count every penny of equipment as an "asset" even though you can't just sell used tools for retail value! Meanwhile our neighbor who keeps all their money in their primary residence gets to hide all their wealth because FAFSA doesn't count home equity! THE SYSTEM IS RIGGED!!
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Freya Andersen
•While the frustration is understandable, the FAFSA actually does have a logical methodology. Business assets are counted because they represent potential resources that could be liquidated if needed. The primary residence exclusion exists because forcing families to sell their homes for education would be counterproductive. The formula isn't perfect, but there is reasoning behind it.
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Ravi Choudhury
•Maybe in THEORY, but in PRACTICE it punishes small business owners! And don't get me started on the new SAI formula rollout - what a disaster! The whole system needs an overhaul.
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Isabella Silva
we got our fafsa back for my son last week & our SAI was way higher than expected even tho we didnt report much for my husbands biz. turns out they care more about income than assets for most ppl. good luck!
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Malik Robinson
•That's interesting! Did you get selected for verification? I've heard they're selecting more applications for verification this year with the new changes to the FAFSA.
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Diego Mendoza
I'm an accountant who works with small business owners filing FAFSAs. For a horse training business where the primary value is the skill of the trainer, you're correct that the business itself doesn't have a transferable value like a retail store would. Here's what I recommend: 1. Review Schedule C from your tax return 2. Identify depreciable business assets from Part I, Line 13 3. Calculate current fair market value of those assets 4. Add business bank account balances 5. Add accounts receivable (money owed to the business) 6. Subtract any business loans or credit card balances used for business This gives you the net worth of business assets, which is what FAFSA is actually asking for. They don't expect you to value intangible assets like skill, client relationships, or reputation for a small service business.
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Malik Robinson
•Thank you for such a detailed explanation! Looking at our Schedule C makes this much clearer. We have about $85,000 in depreciable assets, but their current market value is probably closer to $60,000. We have very little business debt (about $12,000 on a business credit card), so I guess our net worth would be around $48,000. Does that sound reasonable?
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Diego Mendoza
•That sounds very reasonable and well-documented based on your tax filings. If you're selected for verification, you'll have a clear methodology to explain how you arrived at that figure. Much better than just putting $0 or guessing at a number!
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Charlee Coleman
As someone who just went through this exact situation with my landscaping business last year, I can relate to the confusion! The key thing that helped me was realizing FAFSA isn't trying to value your husband's expertise or client base - they just want to know about physical assets that could theoretically be converted to cash. For our business, I listed equipment (mowers, trailers, etc.) at current market value (not what we paid), added our business checking account balance, then subtracted the remaining balance on our equipment loan. Came out to about $23,000. One tip: if you use any equipment for both business and personal use (like that horse trailer), you'll want to estimate the percentage that's business vs personal. I used 80% business for our trailer since we occasionally use it for personal hauling. The good news is service businesses typically have much lower asset values than retail or manufacturing businesses, so it shouldn't impact your daughter's aid eligibility too much. Just be consistent with whatever you report on your taxes!
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Zoe Kyriakidou
•This is exactly the kind of real-world example I needed to see! Thank you for sharing your experience with the landscaping business. The 80% business use calculation for equipment makes perfect sense - I was wondering how precise that needed to be. It sounds like as long as we're reasonable and consistent with our tax reporting, we should be fine. Did you end up getting selected for verification, and if so, was it straightforward to document your calculations?
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NebulaNomad
•Yes, we were actually selected for verification! But it was pretty straightforward since I had kept good records. I just had to provide our business tax return (Schedule C), a simple list showing how I calculated the equipment values (I used online marketplace prices for similar used equipment), and our business bank statements. The financial aid officer said my methodology was reasonable and accepted it without any issues. The key was being able to show my work rather than just pulling numbers out of thin air. Sounds like you're on the right track with your approach!
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