The owner's equity is negative if a company's total liabilities are greater than its assets. Businesses showing a negative owner's equity face some tough financial decisions.nnThe first question is to identify why the owner's equity is negative. Possible reasons could be high levels of debt, depreciation of assets, or a negative P&L statement.nnEither way, a business owner needs to identify whether they can right the ship and get back into a positive equity situation or begin the process of bankruptcy.