okigotoschoolnow

I see a lot of intermittent questions about those having stake in a business and how it will affect their aid, their son's aid, their spouse's aid, etc.

Most of the answers are vague and sometimes lack necessary details.

FAFSA excludes small businesses (under 100 employees) that are owned (51%) by the family as 'assets'. We know this.
[http://www.finaid.org/fafsa/smallbusiness.phtml]

What about the Profile?

Your AGI is your AGI - presumably anything the business actually pays you. Wages, dividends, stock options(cash value?); anything disbursed. What about the retained earnings and assets?

If you own 20% of a business that grossed 50k last year and had/has 50k in assets, is the Profile going to look for somewhere in the 20k range (your 20% stake)?

Any and all information is more than welcome. Clarity! Please!

vballmom

The Profile asks the following about a parent-owned business:

Enter the total current market value of this business.
Enter the amount your parent(s) owe on this business.
Enter the number of people your parent(s) employ in this business.

Which parent owns this business?
* Father/Stepfather
* Mother/Stepmother
* Both parents

Enter your parent(s)' percent of ownership.
Are there other family members with ownership in this business? If yes, list their names, relationship to the parent(s), and percentage of ownership.

Are there other family members who receive a salary or wages from this business? If yes, list their names, relationship to the parent(s), and yearly salary or wages
Enter the full address where this business is located.
Use this space to provide additional information on this business as requested above, or to explain any special circumstance pertaining to this business.

------------------------------------------------------------

What each college does with this information is not easily known.

dt123

There is also the Business/Farm Supplement that puts the parent-owned business under a microscope in an attempt to discover the value of the business as an asset. This is an add-on to the Profile that is triggered when the question of "Does your parent own a business?" is answered Yes.

My experience has been that the FA dept does not seem to know what to do with the Supplement.

hmom5

Many Profile schools will also parse your tax return, adding back deductions to up the AGI of business owners.

romanigypsyeyes

Side note: I now have the song I'll Make a Man Out of You from Mulan stuck in my head because of your title.

Carry on with relevant financial aid advice now .

okigotoschoolnow

After asking about:

'Enter the total current market value of this business.
Enter the amount your parent(s) owe on this business.
Enter the number of people your parent(s) employ in this business.
Who owns the business'

-what do they do with those numbers? Is there a way/typical ratio to estimate the percentage they would expect from your share of the business?

How can they even justify expecting you to liquefying equity? Long term investments are what lead to a more stable/well rounded economy - isn't that our goal at this point?

(That's funny Roman, I didn't even think of Mulan when I wrote it but now I have the chorus playing in the back of my head: you must be swift as a coursing river, with all the force of a great typhoon..)

hmom5

It's like home equity, they expect you to borrow against it. This is really when the concept of Every F****** Cent (EFC) really comes in. We have seen colleges take a sharp pencil and disallow a lot the IRS has no problem letting you deduct. Posters here have posted about unreasonable valuations for solely run service organizations!

romanigypsyeyes

Lmao. I just started humming that in class and now my whole row is looking at me and smiling and one other person is humming it along with me.

ebeeeee

There are two issues at stake here (small business owner and FAFSA three year vet here).
For the FAFSA assets remaining in the business are not counted provided the business has under 100 employees and falls in the 51% rule. But income which shows up on the parents schedule C and then on the AGI is included. If it is on your individual *not business tax return it is on your FAFSA.
For the profile a different set of rules apply.

PinotNoir

ebeeeee - how is it handled on the Profile?