"Family-owned business"

<p>After reading further into the Fafsa, it says for a small business exclusion that the family member must own more than 50% of the business. But what if my mom is in a partnership, but the other partner is her sister? Will it still count under it, since my aunt is a family member, and not by marriage.</p>

<p>FAFSA</a> frequently asked questions - Concordia University, Nebraska</p>

<p>So technically my family owns 100% of the business, no? Because both partners are my family (one my mother, one my aunt), and has less than 100 employees. Does the small business exclusion apply to me?</p>

<p>This is very urgent because I'm submitting the fafsa tonight, if only can give me a quick answer, that will be greatly appreciated. I know I've made a lot of topics but no one answered in the last one...</p>

<p>And my other question is, my mom owns half of the real estate that the business is lying on. Do I report that in the investments question or the business question (and if it's the business, I can exclude it?) Or if it's in the investments question, can I exclude it there also?</p>

<p><a href="http://www.finaid.org/fafsa/smallbusiness.phtml%5B/url%5D"&gt;http://www.finaid.org/fafsa/smallbusiness.phtml&lt;/a&gt;&lt;/p>

<p>On here, it says something else though. The other family member must be listed on my household? :/</p>

<p>Here is the description from the federal verification guide, which the financial aid community must use: Family-owned and controlled small businesses (which can include farms) that have 100 or fewer full-time or full-time equivalent employees do not count as an asset. “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).</p>

<p>It doesn't actually matter if the land is reported in business or investment assets - it's all assessed the same way. However, if you determine that your mom's business is exempt from reporting, it does become important. The question is: Is the land part of the business?</p>

<p>That's great news! So I'll be able to exclude it (I've been pulling my hair out on this for the past few days).</p>

<p>The small business is a salon, and it's under the business's name. So I would say yes?</p>

<p>If the business is located on that real estate, your mom can count it as part of the business ... unless there are other businesses located on that property. That could make a difference.</p>

<p>It is the only business on that property. Thank you so much for the help!</p>

<p>You are welcome! :)</p>

<p>I have another question. XD I'm currently filling out the CSS Profile, under the Parents' Businesses, there's only a spot for one business. What if my mom owns two businesses, where do I answer the questions for that? I don't see anything that'll let me add another business to the page.</p>

<p>Can you add the two amounts together?</p>

<p>So your mom has a beauty salon. What other business does she have?</p>

<p>They're actually two beauty salons, both are partnerships with the same person. It says to answer all the questions for each business. For now, is it alright to just add that business in the Special Circumstances/Explanation section? Or should I just combine them?</p>

<p>I think it makes sense to add the two together, but detail the two in the explanation section. Maybe other posters who have experience with this can chime in (I worked at a FAFSA only school, so am not well-versed in Profile other than filling it out for my daughter).</p>

<p>Ah, I've figured it out. It's because I said they only owned one business in the registration, but I've fixed it now. xD</p>

<p>Kelsmom, I am very glad you provided clarification from the federal verification guide about what qualifies as a family business. The OP references guidance from finaid.org. While I realize this is a well-respected website, their guidance on this particular issue seems to be at odds with the fed. ver. guide. Finaid.org says, "...more than 50% of the voting rights must be owned by the family as listed in household size on the FAFSA...
If the small business is a partnership where each partner owns exactly half of the business, and the family is one partner and a third party is the other, it does not qualify for the small business exclusion. In order to qualify, the family must own a majority of the business (more than half)... If the small business is owned and controlled by the extended family, but is not owned and controlled by the family as reported on the FAFSA, it does not qualify for the small business exclusion." I have emailed finaid.org twice trying to clarify this very situation (parent owns 50% of business, sibling of parent owns 50%) and have never received a reply (has been four months). Thanks again.</p>

<p>Finaid.org is a very reputable source, but sometimes I am not sure that they update their information when the feds clarify things. It is possible that the info on finaid.org was correct when it was written, but the verification guide has clarified it in a subsequent edition. Anyone can find the latest edition of the verification guide by going to Federal</a> Student Aid - IFAP: Home. Click on Handbook on the right side. The current handbook is still 11-12 ... financial aid professionals are verifying using the old guide, and if the new guide changes or clarifies things, they have to go back & make changes, if necessary. For example, in 11-12, the 10-11 guide was used until the new guide was published. Unfortunately, the guide did not state that the Making Work Pay credit had to be included in untaxed income (and the FAFSA did not state this, either). Somewhere along the line, the feds issued guidance to the financial aid community through a Dear Colleague letter ... and we had to go back and re-verify what had already been verified. Fun stuff.</p>

<p>Thanks -- I appreciate the link and now have the website bookmarked for future.</p>