Lower price on Money Management ebook

Start 2012 off right for your homeschool group!

Get your homeschool group’s finances organized!

I have lowered the price for Money Management for Homeschool organizations from $10.00 to $3.99.

This 39 page ebook covers money management for small, medium and large sized groups. Sample forms and examples of financial statements in clear English are provided. Also covered are topics such as using Quickbooks, collecting fees, creating a budget, insurance, and hiring paid teachers. All written specifically for homeschool groups.

Click here to read a sample and to purchase

Happy New Year 2012!

Carol Topp, CPA

An alternative to individual fundraising accounts

Hi Carol,
Fund raising is really on my heart right now. Most of our group operational expenses are covered by membership fees and activity fees, right now.  Probably the biggest need is for families who can’t afford class tuition or activity fees.

We want to be able to reduce the expenses overall, but also help these homeschooling families who are on very tight budgets.  I would like to have fund raisers during the year that families can participate in and know that if they work very hard the funds they raise can be applied to their own fees.

My sister used fund raisers through her high school band program to raise money for her own trip to an out-of-state band conference.  Some parents just wrote a check and their kids didn’t have to work the fund raiser, while others (like my sister) needed the help and worked hard for it.  How can this idea apply to our fund raisers?

Our treasurer is concerned about crossing the line and breaking the rules about fund raising with the IRS.  We don’t want to do that.  I just don’t want money to be a barrier for some great kids.

Angela

IRS pushes to reclassify independent contractors as employees

A recent article at CFO.com discusses the new regulations the IRS and several sates have passed to push employers to  reclassify independent contractors as employees.

 

A Loss of Independents?

Regulators have rewritten the rules regarding the use of independent contractors, forcing companies to make hard choices — and possibly pay heavy fines.

by David M. Katz

As companies make greater use of independent contractors, the Internal Revenue Service is pushing to get many of those self-employed workers reclassified as employees.

For many companies, particularly small and midsize firms, the ability to classify certain workers as independent contractors provides what they regard as essential flexibility.

If such reclassification were widely enforced, companies would have to start withholding federal income, Social Security, Medicare, and unemployment taxes from freelancers’ wages — not to mention possible payment of fees and penalties for previous misclassifications. Further, such firms would have to start paying for the same employee benefits and workers’ compensation that they currently do for full-time employees.

Carrot and Stick
How likely is it that such a scenario would occur on a broad scale? Not very — especially because the IRS, the Department of Labor, and the states themselves don’t have the staff needed to provide such enforcement. Yet even as the economy grows more reliant on temporary labor, regulators are becoming increasingly vigilant about getting employers to classify previously mislabeled workers.

The IRS, for example, has lately been wielding both carrot and stick. This fall the service introduced a voluntary program that might enable some employers to shed certain tax liabilities by dubbing certain independent contractors as employees. But that program came on the heels of a year-and-a-half-long crackdown by IRS agents on potential misclassifications, according to Kathy Mort, a managing director in PwC’s Washington, D.C., national tax services office.

Faced with burgeoning federal and state budget deficits, regulators see a vast pool of potential back taxes, fees, and penalties to be gleaned from the detection of employee-classification errors. Currently, the IRS estimates that 15% of all employers have misclassified a total of 3.4 million employees as independent contractors, resulting in an estimated annual revenue loss of $3.4 billion in 2010 dollars.

While many companies err on the side of caution and forgo the use of independent contractors, for those employers “that have [long assumed] that a large group of contractors is not going to be looked at, there’s a more significant risk than there ever was that someone — the DoL, the IRS, or state agencies — is going to look at them,” Mort says.

In September, Secretary of Labor Hilda Solis seemed to ratchet up that risk when she hosted a ceremony in Washington to sign a memorandum of understanding with the IRS and representatives of seven states “to end the business practice of misclassifying employees in order to avoid providing employment protections.” (The states are Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah, and Washington.)

 

Red the full article here.

 

What should your homeschol organizations do?

• Read my blog posts on hiring workers here.
• Buy my ebook Paying Workers in a Homeschool Organization. Only $3.oo
• Discuss this issue with your board and take proper action to be legal.

 

Carol Topp, CPA

 

Should your homeschool group be an LLC?

Limited Liability Company (or LLC) is a relatively new type of business structure. Several homeschool leaders have been asking if its something their homeschool group should consider.

In particular, many homeschool groups wonder if they should file for LLC status as part of becoming a 501(c)(3) tax exempt organization.

Caution:  I am not an attorney, nor am I offering legal advice.  I will relay what I have leaned about LLC’s filing for 501c3 tax exemption from the IRS, but I am not offering a legal opinion. I recommend that you seek legal counsel if you pursue either option.

Only recently has the IRS granted 501c3 tax exempt status to LLCs. LLCs are a relatively new business structure (only available in all 50 states in the mid 1980′s) and the IRS is slow to accept changes. In a document titled “Limited Liability Companies as Exempt Organizations-Update” (2001 Exempt Organization CPE Text. Available at http://www.irs.gov/pub/irs-tege/eotopicb01.pdf ) the IRS outlined 12 conditions that an LLC must satisfy to qualify for exemption under IRC (Internal Revenue Code) 501c3.

These conditions are legally complex and I would strongly recommend that you seek experienced legal counsel before organizing a nonprofit LLC.

I read an article titled “Nonprofit LLCs: Time for a New Experiment” (http://www.mayer-riser.com/Articles/nonprofit/npllc.htm) and the author, a nonprofit attorney, advises:

Until state legislatures address the unresolved issues, the actual use of the LLC form by nonprofit organizations should be undertaken only after careful review of current law in the applicable jurisdictions, and only with the assistance of qualified counsel with experience in drafting complex and detailed operating agreements and experience in the law of tax-exempt organizations.

Unfortunately, at the time of the article in 2002, only 11 organizations had obtained 501c3 status as LLCs, so experienced assistance may be difficult to find.

The reason that most businesses use the LLC structure is for limited liability. I organized my own sole proprietorship accounting practice as an LLC  because I wanted limited liability and protection of my personal assets. For a nonprofit organization, such as most homeschool groups, nonprofit corporation status in your state brings similar protections of limited liability. If your main reason for seeking LLC structure is for limited liability, nonprofit incorporation in your state is the easier option.

Carol Topp, CPA

I am not an attorney, nor am I offering legal advice. I recommend that you seek legal counsel if you have additional questions or pursue Limited Liability Company status.

Unplug the Christmas machine

 

About 18 years ago, I read Unplug the Christmas Machine by Jo Robinson and Jean Staeheli.

It changed the way I see and celebrate Christmas.

 

I created a mini ebook to share what I learned about having a happier, debt free Christmas.

Carol Topp’s Plan for a Debt Free Christmas (click to download)

I include tips, a funny poem and a recipe that eliminates holiday baking.

• Give yourself permission to break old habits and discover new traditions.
• Eliminate or greatly reduce Christmas baking. This will save time, money and gym fees in January! I quit baking
  Christmas cookies several years ago. I now bake a less fattening Christmas bread from my grandmother’s native country of Finland called pulla (recipe in the ebook). I will bake cookies only if I know they will be given to someone else or taken to a party within one day of baking. I keep less than one dozen for my family.
• Don’t kid yourself that homemade cards or gifts are less expensive. They cost in time, frustration, supplies, etc.

I hope you enjoy the mini ebook Carol Topp’s Plan For A Debt-Free Christmas.

 

Merry Christmas!

Carol Topp, CPA

 

Freebies at The Teacher’s Toolbox

 

 

This month I am the featured contributor for The Old Schoolhouse Magazine’s  Teacher’s  Toolbox.

Teacher’s Toolbox is the member site for subscribers to The Old Schoolhouse(TOS)

• Tons of FREE educational resources at your fingertips!
• Privileged, subscriber only, FREE access to flip through every DIGITAL TOS back issues ever created!
• Monthly history calendars with activities and lessons for each day!
• Delicious recipes your family will crave!
• Free eBooks, crafts, printable worksheets, unit studies, webquests and so much more!

In December you can receive a free ebook on starting a micro business and an article on entrepreneurship (and menus, printables,  & more!).

 

If you’re a subscriber, it’s all free for you.

If not, subscribe today! http://thehomeschoolmagazine.com/teachers_toolbox/

Kindle editions to Paying Workers and IRS and Your Homeschool Organization

I’m pleased to announce that two of my books are available for the Kindle:

        

 

Paying Workers in a Homeschool Organization Kindle price $2.99

The IRS and Your Homeschool Organization Kindle edition $3.99

Available here:

http://www.amazon.com/Carol-Topp/e/B00279FSNQ

 

Don’t have a Kindle? No problem! Read Kindle books on your PC with this free application:

Kindle for PC

 

Carol Topp, CPA

HomeschoolCPA’s most important blog posts

There are my most important blog posts.

I refer homeschool leaders to these blog posts most frequently.

These are keepers!

Print them put and share them with your homeschool leader.

Is your homeschool co-op’s hired teacher really an employee?

We’re not 501c3 and don’t want to be!

Do not use individual fund raising accounts

Are Homeschool Support Groups Automatically Tax Exempt?

What business structure and tax forms are needed for a new homeschool co-op?

Carol Topp, CPA

What tax forms do I file for a homeschool co-op?

photo credit: stevendepolo

Carol’s book has been so helpful in getting our co-op organized. We have determined we are going to file Articles with our state and create by-laws and set ourselves up for a non profit corporation. With our fundraising and dues, we never bring in more than  $5,000. We probably have around 50-60 families returning this year. We are 100% volunteer based for our fundraising (silent auctions, garage sale.)
Come tax time, do we file with the IRS (like I do for our household every year?) For example, do we use turbo tax and file for our co-op? And if we have let’s say, $1,000 left at the end of the year, is that taxable? We do not want to zero out our account as it is nice to have a cushion for various reasons.

Lisa

Lisa,

Good questions!

Q: Come tax time, do we  file with the IRS (like I do for our household every year?) For example, do we  use turbo tax and file for our co-op?

A: Nope. This is a nonprofit organization, not part of your family/individual income, and not a for-profit business, either. Don’t use TurboTax. Please! (we tax preparers are not crazy about TT in general)

Technically, you would file a corporate tax return (Form 1120), but I would not recommend doing that.

Since your group qualifies as an automatic 501(c)(3) tax exempt organization (under $5,000 gross annual income), you could file a Form 990N. It’s an online form of only 5 questions. You may have to call and register with the IRS first, since you are not in their database. But many small nonprofits do not file the Form 990N at all.

(If you make more than $5,000 gross annual income, you must apply for tax exempt status and then will file the Form 990N or the Form 990EZ or the full 990 depending on the gross income of your organization. If your nonprofit has gross income of $50,000 or less, you file the Form 990N. That covers 99% of all homeschool organizations.  So the paperwork is quite small and easy to deal with.)

The IRS expects nonprofit corporations to file for tax exempt status with in 27 months of formation (the date of your nonprofit incorporation status from your state). So you have about 2 years to run your program before you have to file for tax exempt status. In the meantime, you can file Form 990N each year.

Q: And if we have let’s say, $1,000 left at the end of the year, is that taxable?
A: Taxable, unless you qualify for tax exempt status (either automatically or by application).
Q:We do not want to zero out our account as it is nice to have a cushion for various reasons.
A: Yes, that the reason why groups want tax exempt status. To reserve their surplus for future use. It’s a wonderful blessing in the USA that our gov’t allows charitable, religious and educational organizations to exist tax free. Not every country allows that!

Hope that helps!

Carol Topp, CPA

P.S. I’m glad my books were helpful. I have just updated my book on  501(c)(3) tax exempt status for homeschool groups. It’s called  The IRS and Your Homeschool Organization and covers all this information in greater detail. Read about it here.

Does the IRS Form 990N apply to my group?

Hi Carol,
Thanks so much for all your help in getting our Christian Homeschool Network up and running.  Things are going well so far. My husband brought a card he saw at the post office and handed it to me thinking it might apply to our group. The same basic info is on this web site: http://www.irs.gov/charities/article/0,,id=169250,00.html

It is about a new filing requirement for small tax exempt organizations.Does this apply to us? I was unsure if this was just for 501 C 3 organizations.
Thanks, Carol
Sharon W

Sharon,
The new IRS ePostcard (Form 990N) notification is for 501(c)(3) organizations. The IRS is trying to clean up its database by using this short electronic postcard. They hope to find any “dead” nonprofits that are no longer in operation. They are also looking for small nonprofits that have “grown up” to the $25,000 (now $50,000) gross revenues per year and should be filing a 990EZ or 990 Form annually.  The ePostcard is a way for small nonprofits to acknowledge that they are still under the $25,000 (nor $50,000) annual revenue threshold for filing the 990.

I recommend that you consider 501(c)(3) status ASAP.  The IRS expects nonprofits to file for 501(c)(3) tax exempt status with in 27 months of formation (incorporation as a nonprofit).  Your nonprofit incorporation date was May 27, 2008, so you have until August 2010 to apply.  Otherwise, the IRS requests an explanation of why tax exempt status was not filed earlier and tax exemption is granted to the date of filing, not back to the date of formation.  This could mean that a nonprofit might owe back income tax for the period that they were not tax exempt.

If your gross revenues stay under $5,000 a year, you are granted an exception from filing the paperwork for 501c3 status. If gross revenues get to be over $5,000 a year, your group should file for 501(c)(3) tax exempt status or pay corporate income tax on any surplus (i.e. profit).

In a nutshell, a small nonprofit has three choices:
1. Stay under $5,000 gross revenues per year
2. File for 501(c)(3) tax exempt status
3. Pay corporate income tax on any annual surplus.

I hope that helps,

Carol Topp, CPA

Update as of August 2010:

The IRS is now asking all nonprofit organizations to begin filing the Form 990N , even if they have not yet applied for tax exempt status. Here is what the IRS states on their website http://www.irs.gov/charities/article/0,,id=156389,00.html

Tax Law Compliance Before Exempt Status Is Recognized

An organization that claims tax-exempt status under section 501(a), but has not yet received an IRS letter recognizing exempt status, is generally required to file an annual exempt organization return.

The annual return is either Form 990, 990EZ or the new electronic postcard Form 990N.

The difficulty in filing the Form 990N if you have not yet received 501(c)(3) tax exempt status is that your organization is not in the IRS system. You’ll have to call the IRS and get entered into their system before you can file your 990N online.

Any wonder why many small nonprofits are not filing the 990N prior to being officially tax exempt?

Carol Topp, CPA

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