Hi,
I could not find much information about this so I thought I’d try asking here:
Does anyone have experience with owning a small business, while being a student, and applying for financial aid?
How does it get accounted for in the CSS application, and what ramifications does owning a business have on your financial aid award? Are there any terms under which you can/cannot own a business while a student applying for finaid? Any experienced good advice?
It depends on how much you earn, and the value of the business. Without that information, it’s impossible to answer.
If you start. Business in 2017, the income from that will not be used until the 2019-2020 financial aid forms.
BUT any money you have in the bank the day you file your financial aid forms WILL be an asset.
Thank you!
Could you just elaborate on the sentence “if you start business in 2017… financial aid forms”, or direct me to a link or some more information about that specifically? Does that apply for the CSS finaid application?
The fafsa and Profile are using prior prior year income on the forms now. That began THIS round.
So…
2017-2018 forms used 2015 income tax year info.
2018-2019 will use 2016 income tax year info.
2019-2020 will use 2017 income tax year info.
2020-2021 will use 2018 income tax year info.
But your assets…money IN your accounts…is reported as of the date you file the forms.
My sentence is missing a word. It should say “if you start a business in 2017, the income from 2017 will not be used until the 2019-2020 financial aid forms are filed”.
And yes…this applies to both the FAFSA and the Profile.
You say you can’t find information? Business owners file income tax. If younownna business, younwill file income taxes. The income from your business will probably be your income. The info on your federal income tax return will be used.
But one thing you should be aware of…the IRS does allow deductions for some business expenses that the schools do NOT allow for financial aid purposes. Those deductions will be added back onto your income for financial aid purposes.
Also, for FAFSA purposes, your assets will be assesssed at 20% and will add to your EFC.
But really…a LOT depends on what amount your business earns.
If you are working as a self employed person, or an independent contractor, then the money you receive is your gross income.
Depending on the amount, the customer might have to issue a 1099.
On your tax return you report your gross receipts and you might be able to deduct some business expenses like postage, mileage, etc that relate directly to your business.
Then you get taxed on your net profit.
You might also owe some self employment tax, since there is no employer withholding soc sec taxes for you.
The FAFSA and CSS profile ask about your income on your tax return from 2 years prior. Then you link your tax return to the FAFSA and send your tax return to the CSS profile school the way they ask you to.
What kind of business are you starting?
I don’t own a business per se, but I have self-employment business income according to taxes, and yeah, student income and assets get hit a lot harder than parent income and assets.
But… it’s a good problem to have. Being MORE ABLE to pay for your education is really not a problem 
Also a friendly reminder that FA is for people who can’t afford to pitch in much/anything, not for people who can afford to but don’t want to.