Net Worth Calculators

Business Net Worth Calculator

Q: Is business net worth the same as what I could sell my business for?

No - book value and market value are genuinely different numbers. Book value doesn't account for earning potential or brand recognition.

This tells you your business's book value — what's left if you sold every asset and paid off every debt today. It's a genuinely different number from what a buyer would actually pay for your business.

Calculate your business net worth

Owner's equity: total assets minus total liabilities.

Assets — what your business owns

Cash & bank accounts

Accounts receivable

Inventory

Equipment, property & other assets

Liabilities — what your business owes

Accounts payable

Business loans & lines of credit

Wages payable, accrued expenses & other liabilities

Business net worth (owner's equity)

—

Total assets$0

Total liabilities$0

Use current valuations for assets, not what you originally paid — and keep personal and business finances completely separate in this calculation.

A simple formula, correctly applied

Business net worth — more formally called owner's equity — is your business's total assets minus its total liabilities. It represents your actual stake in the business: if you sold every asset and paid off every debt today, owner's equity is what you'd have left. The formula itself is simple; getting an accurate number depends on using current, honest valuations for what the business actually owns and owes.

Item	Amount
Warehouse/property	$1,000,000
Equipment	$1,000,000
Inventory	$800,000
Accounts receivable	$400,000
Total assets	$3,200,000
Bank loan	-$500,000
Creditors owed	-$800,000
Wages & salaries owed	-$800,000
Total liabilities	$2,100,000
Owner's equity (business net worth)	$1,100,000

The distinction that trips up business owners

Business net worth (book value) and business market value are genuinely different numbers — and confusing them is one of the most common mistakes owners make when thinking about what their business is "worth." Book value reflects historical cost on your balance sheet and captures only tangible assets and recorded liabilities. It does not account for earning potential, brand recognition, customer relationships, or other intangible value that a buyer might actually pay for. For a genuinely profitable, growing business, book value very often understates what the business could actually sell for.

How buyers actually value a small business instead

For small, owner-operated businesses specifically, buyers commonly use Seller's Discretionary Earnings (SDE) rather than book value:

SDE = Net income + Owner's salary + Owner's personal expenses run through the business + Non-recurring expenses. A business reporting $500,000 in net income, with the owner running a $50,000 vehicle and $30,000 in personal insurance through the business, has an SDE of $580,000. Buyers then typically apply a multiplier — commonly 1x to 4x — depending on the industry and perceived risk, producing an estimated sale value anywhere from $580,000 to over $2.3 million on this example alone.

This is why a business with modest book value can still sell for a meaningful multiple of its earnings, and why book value alone is a poor stand-in for what you could actually get in a sale or acquisition.

Common mistakes to avoid

Using outdated asset valuations — equipment purchased years ago at cost may be worth significantly more or less today.
Forgetting smaller liabilities — accrued expenses, small vendor balances, and deferred obligations all count, even if individually modest.
Mixing personal and business finances — especially common among sole proprietors, this makes an accurate business-specific net worth calculation genuinely difficult. Keep the two completely separate.

The owner's equity formula and the SDE valuation methodology are standard, well-established small business accounting and valuation concepts, verified across multiple independent 2026 sources with a matching detailed worked example. This is a planning estimate — a CPA or business valuation professional should confirm your specific figures, especially if you're considering a sale.

Frequently asked questions

Before you assess your business's finances.

What is business net worth?

Also called owner's equity, it's your business's total assets minus total liabilities - what you'd have left if you sold everything and paid off every debt today.

Is business net worth the same as what I could sell my business for?

No - book value (net worth) and market value are genuinely different numbers. Book value doesn't account for earning potential, brand recognition, or other intangible value a buyer might pay for.

How do buyers actually value a small business?

Commonly through Seller's Discretionary Earnings (SDE) multiplied by an industry-specific factor, typically 1x to 4x - a fundamentally different calculation than book value.

What is Seller's Discretionary Earnings (SDE)?

Net income plus the owner's salary, personal expenses run through the business, and non-recurring expenses - a measure of the total financial benefit an owner-operator takes from the business each year.

What's the most common mistake in calculating business net worth?

Mixing personal and business finances together, especially among sole proprietors - keeping them completely separate is essential for an accurate calculation.