FAFSA business valuation question - how to report family-owned pet grooming business?

I went thru the same thing with my daughter's FAFSA!! We own a landscaping business and it was SO CONFUSING trying to figure out the value. I ended up just using like 40% of our annual revenue from 2022 since that's what the rest of the form used. Better to be consistent i think?? But who knows, the whole process is ridiculous.

The FAFSA business valuation question specifically wants current market value, not historical value. So you should use the most recent data you have (2023), not the 2022 tax year data used elsewhere on the form. This is one of the few forward-looking questions on the form. For service businesses without significant assets, using a percentage of annual revenue (40-50%) is a reasonable approach. Your CPA's suggestion is in line with standard valuation methods for service-based businesses. Just make sure you're using gross revenue before expenses, not net profit. Also, if your business has fewer than 100 employees, it qualifies as a "small business" under FAFSA rules, which means its value will be excluded from your SAI calculation as a protected asset - so your actual valuation may not impact your son's aid eligibility at all.

ur overthinking this. just put $0 honestly. thats what i did for my parents cleaning business and it didnt matter. the fafsa people dont have time to check all that stuff anyway lol

We had this same issue with our family catering business! I called the FAFSA helpline like 5 times and never got through - just constant waiting and then disconnects. Sooooo frustrating. We finally just guessed on the value because we couldn't get any official guidance. I wish they'd make this clearer in the instructions!!!

Financial aid professional here - this is one of the most common FAFSA questions we get from small business owners. First, as someone already mentioned, if your business has fewer than 100 full-time equivalent employees, it's excluded from your SAI calculation. You still need to report the value accurately, but it won't count against your son's aid eligibility. For service businesses without significant hard assets, the FAFSA guidelines actually allow for several valuation approaches: 1. Revenue-based method (what your CPA suggested) 2. Book value (assets minus liabilities) 3. Comparable business sale method The revenue method is commonly used for service businesses like yours. And yes, for this specific question, you should use the most current data (2023), even though most of the form uses 2022 tax year information. Make sure to document your valuation method in case you're selected for verification. A simple note from your CPA explaining the method used would be sufficient.

Hi there! I had this EXACT same issue trying to reach the Federal Student Aid helpline for guidance on my daughter's FAFSA business valuation questions. After being on hold for hours across multiple days, I found a service called Claimyr that got me through to an actual FAFSA agent in about 20 minutes. They basically hold your place in line and call you when they connect with an agent. The agent was able to confirm that for service businesses, they accept multiple valuation methods (including the revenue percentage approach) and that businesses under 100 employees are protected assets. Saved me so much stress! Check out their demo at https://youtu.be/TbC8dZQWYNQ or their website claimyr.com if you're still struggling to reach someone.

why dont they just make this easier?? my dad owned a food truck and we had NO IDEA how to value it. ended up just putting the blue book value of the truck plus like $2k for equipment. the whole system is designed to confuse people i swear

One more thing I should mention - make sure you're only reporting the percentage of the business that your family actually owns. If you have business partners who own part of the company, you should only report your family's share of the business value.

My parents just went through this nightmare process and their CPA basically told them the same thing - to use about half of annual revenue for their commercial cleaning business. It worked out fine and we didn't get flagged for verification or anything.

Just wanted to add my perspective as someone who went through this last year with our family auto repair shop. We ended up using the revenue method (about 45% of gross revenue) and had our accountant document it with a simple one-page letter explaining the calculation. Even though small businesses under 100 employees are protected assets (like others mentioned), having that documentation ready was really helpful when we did get selected for verification. The financial aid office accepted it without any issues and actually thanked us for being so prepared! One tip - if you do get selected for verification later, they may ask for your business tax returns anyway just to verify the revenue numbers you used in your calculation. So make sure your valuation is defensible based on your actual reported business income.

Hey Drew! I'm actually going through this exact same situation right now with my family's tutoring business. We have 3 employees and similar minimal assets (mostly computers and educational materials). After reading through all these responses, I'm feeling much more confident about using the revenue method. The fact that businesses under 100 employees are protected assets is HUGE - I had no idea about that! One question for anyone who's been through verification - did they ask for additional business documentation beyond tax returns? Like bank statements or equipment lists? Trying to figure out what else I should have ready just in case. Thanks for posting this question - it's been incredibly helpful for those of us dealing with the same confusing situation!