FAFSA needs my business value for parent assets - how to calculate service-only business?

For FAFSA purposes, a family-owned business with fewer than 100 employees is usually NOT reported as an asset. However, you should still include the business checking account value in the "cash, savings, and checking" section since that's liquid capital. Don't try to determine the "business value" for a service-only sole proprietorship - that's not what FAFSA is asking for. They want physical assets and investments, not the theoretical value of your dad's knowledge or client list.

my dad has same thing but he's a plumber not IT and i didn't put any of it on fafsa. financial aid office never said anything about it when i got approved

You need to be careful here. While small family-owned businesses are excluded as assets on the FAFSA, you still need to calculate correctly. The exclusion applies if: 1. The business employs fewer than 100 full-time equivalent employees 2. The business is at least 50% owned by your family However, the cash in the business checking account ($17,450) should be reported under cash/savings/checking accounts. Don't try to calculate the intangible value of the business itself (client relationships, future earnings potential, etc). The FAFSA isn't asking for a full business valuation that would include things like goodwill or intellectual capital - it's primarily concerned with tangible assets. For your dad's consulting business, that's basically just the cash balance.

When I filled out FAFSA last yr, I stressed so much about my mom's home daycare business!! The system is ridiculously confusing 😡 I ended up calling FSA about 20 TIMES trying to get a straight answer - either busy signals or disconnects. ONE person finally told me to just list the cash in accounts and not worry about the "business value" since it was services-only. My SAI came back fine and I got my aid.

I had similar situation with my mom's therapy practice when doing my FAFSA. I ended up just including the business bank account ($23k) in the cash/savings section and not listing anything under business assets since there wasn't a physical business to value. Got my full Pell Grant and everything, no verification issues at all.

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dont stress too much about it btw - my cousins fafsa had all kinds of mistakes about his parents business and he still got plenty of aid lol

To summarize the correct approach: 1. Report the $17,450 in the business checking account under the "cash, savings, and checking" section of the FAFSA 2. You do NOT need to report the business itself as an asset since it's a family-owned service business with fewer than 100 employees 3. Minor assets like a laptop ($800) used for business aren't significant enough to worry about for FAFSA purposes 4. If you're ever selected for verification later, just be prepared to explain that the business is a service-only sole proprietorship with no significant assets beyond the reported checking account This is the standard approach for service-based sole proprietorships on FAFSA and shouldn't cause any issues with your application or SAI calculation.

I went through this exact same situation last year with my mom's freelance graphic design business! She was also a sole proprietor with just a business checking account and her computer equipment. I was so confused about whether to try to calculate some kind of business value, but after talking to my school's financial aid office, they confirmed what others are saying here - just report the cash in the business account under cash/savings, and don't worry about trying to value the business itself. The FAFSA exclusion for small family businesses means you don't need to stress about calculating intangible value for service-based businesses. My aid package worked out fine and no issues during verification!

I'm a first-time FAFSA filer and this thread is incredibly helpful! My mom runs a small bookkeeping service from home (just her, no employees) and I was completely lost on how to handle this. Based on what everyone is saying, it sounds like I should report the cash in her business account under the regular cash/savings section but not try to calculate any kind of business valuation? The FAFSA instructions made it seem like I needed to figure out what her client list was "worth" or something crazy like that. It's such a relief to know that service businesses don't need that kind of complicated valuation. Thanks everyone for sharing your experiences - this is way less scary now!

I'm dealing with this exact same issue right now! My stepdad has a small accounting practice that's basically just him working from a home office. He has about $12,000 in his business checking account and some basic office equipment, but I was totally confused about whether I needed to somehow calculate what his CPA license and client base were "worth" for FAFSA purposes. Reading through all these responses has been such a huge help - it sounds like the consensus is just report the business checking account balance under cash/savings and don't overthink the business valuation part. Has anyone here ever been selected for verification after reporting it this way? I'm curious if the schools ever ask for additional documentation about sole proprietorship businesses or if they're generally satisfied with this approach.

I'm a financial aid counselor and I see this confusion all the time! You're absolutely right to be frustrated with the FAFSA instructions - they're terrible at explaining service businesses. Here's the deal: for your dad's IT consulting business, you DO NOT need to calculate any kind of business valuation. Since it's a family-owned business with fewer than 100 employees, the business itself is excluded from FAFSA assets. Just report that $17,450 from his business checking account under "cash, savings, and checking accounts" - that's it! Don't worry about his laptop, office supplies, or trying to put a value on his expertise/client list. The FAFSA is looking for liquid assets and investments, not intangible business value. I've processed thousands of these applications and this approach is completely standard and correct.

As someone who just went through this exact same situation with my dad's freelance web development business, I can totally relate to your frustration! The FAFSA instructions make it sound like you need to hire a business appraiser or something. I spent weeks stressing about it before realizing it's actually much simpler than they make it seem. Just like everyone else has said - report that $17,450 from his business checking account under the regular cash/savings section and you're done. Don't try to calculate what his IT knowledge or client relationships are "worth" because FAFSA doesn't want that kind of intangible valuation for service businesses. My dad was convinced we were doing it wrong because it seemed "too easy" but our financial aid went through without any issues. The small family business exclusion is there specifically for situations like this!

I'm so glad I found this thread! I'm dealing with the exact same situation with my mom's private tutoring business. She works from home teaching music lessons - no employees, just her expertise and about $8,000 in a business checking account. I was completely overwhelmed trying to figure out how to "value" her teaching skills and student base for FAFSA. Reading everyone's experiences here has been such a relief! It sounds like I should just report that $8K under cash/savings and not stress about calculating some theoretical business value. The FAFSA instructions really need to be clearer about service-based businesses - they make it sound way more complicated than it actually is. Thanks to everyone who shared their stories, especially the financial aid counselor who confirmed this is the standard approach!

I'm a college junior who went through this exact confusion two years ago with my dad's freelance photography business! He does wedding photography - just him, his camera equipment, and about $15K in his business account. I made the mistake of initially trying to calculate what his photography equipment and client referrals were "worth" because the FAFSA wording made it sound necessary. Ended up spending hours researching business valuation methods before my school's financial aid office told me I was way overthinking it. Just like everyone else has said - report that $17,450 under cash/savings and don't worry about valuing his IT expertise or laptop. The small family business exclusion exists specifically for situations like your dad's consulting work. My aid worked out perfectly and I never had any verification issues. Trust me, it really is that straightforward despite how confusing the instructions make it sound!

I'm a senior going through FAFSA for my last year and wanted to add my experience since I see so many people stressed about this! My mom runs a small tax preparation service from our house - literally just her doing people's taxes during tax season with basic software and a computer. I went through this exact same panic three years ago trying to figure out how to "value" her business for FAFSA. After calling multiple financial aid offices and getting the same answer every time, here's what I learned: service businesses like your dad's IT consulting don't need complicated valuations. Just report that $17,450 business checking account under cash/savings and you're done! The business itself gets excluded under the small family business rule. I've done this approach for three years running and never had any issues - no verification problems, aid came through perfectly each time. The FAFSA instructions are honestly terrible at explaining this, but it really is much simpler than they make it sound for sole proprietor service businesses!

I just went through this same nightmare with my dad's small consulting firm! He does marketing consulting - just him working from home with a laptop and business account with around $22K. I spent literally WEEKS trying to figure out how to calculate the "business value" and was driving myself crazy looking up formulas for valuing consulting practices. Finally talked to someone at my college's financial aid office who laughed and told me I was way overthinking it. For service-only businesses like your dad's IT consulting, you just report the cash in the business account ($17,450) under the regular cash/savings section and completely ignore trying to value the business itself. The small family business exclusion means you don't report the business as an asset at all - just the liquid cash. I submitted mine this way and got my aid package with zero issues. Don't stress about his laptop or trying to put a dollar amount on his expertise - FAFSA doesn't want that kind of intangible valuation for service businesses!