How do you figure the market value of your business. The instructions says "what your business could be sold for today? I have been reading, that the best answer is 0. I find it dificult to find a number if I had to sell it today!!
I have a relative who wrote a book on valuations & valuing business entities. Can be complex figuring out valuations for closely held businesses.
All Big 4 accounting firms & most large regionals have units who do nothing but valuations of businesses. A mjor function of investment banking firms as well.
My point is that there is no easy answer. Often a business broker will share their valuation method or methods for a business of your type.
Are you sure you need to report the value of your business? For FAFSA purposes, exclude if: the business is Family-owned and controlled small businesses (which can include farms) that have 100 or fewer full-time or full-time equivalent employees. “Family-owned and controlled” means that more than 50% of the business is owned by persons who are directly related or are or were related by marriage. (Family members do not have to be counted in the household size for this question.)
If you DO need to include it, here is the information for that Similarly for businesses and investment farms, the current net worth is reported for land, buildings, machinery, equipment, livestock, and inventories. The current market value of a business or investment farm is reduced by the debt owed on it to determine the net worth. Business or farm debt means only those debts for which the business or farm
was used as collateral.
The above information is from the Federal Student Aid Handbook. If you are reporting on CSS Profile, I would assume the FAFSA valuation explanation (above) should be used for that, as well.
You can use any defensible number (you may well be asked to submit the accounts for your business later on). My small business doesn’t have inventory or any undepreciated assets so I simply took the net equity from the balance sheet on the accounts from the prior year. If you have inventory or assets then add them back but discount to a lower value (what you could get in a liquidation sale). Explain how you did the calculation on the sheet at the end of the Profile form.
Please tell us which FA form you are working with. FAFSA, Profile, something else?
The value of your business is zero. Check with your accountant. Do not use the valuation of your business. There is a way to answer this question honestly and without ensuring you will not receive any FA.