As a sole proprietor, your business activities and assets are not separate from your personal activities and assets. When determining the value of your sole proprietorship business, you must consider all your assets from both categories. Any equity from your combined assets can be used to secure financing or may be subject to seizure in cases of advanced debt collection from either your business or personal liability.
Create an inventory list of all your business and personal assets.
Determine the market value of your assets. Market value is not the amount you originally paid for the item, but rather the amount you could sell the item for. For example, if you purchase a vehicle for $20,000 and can re-sell the vehicle for $8,000, the market value of the asset is $8,000.
Subtract any outstanding liability from the asset. If you make payments on the asset, subtract the balance of the loan from the market value. The result is the asset’s equity. If you do not owe a balance for the asset, your equity equals the market value.
Add the equity from all your assets. The result is the net worth of your sole proprietor business.
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.