When Applying for an EIN, They Want my Social Security Number!

 

Homeschool leader, Paula, was applying for an EIN (Employer Identification Number) online, but the IRS website asked for her SSN (Social Security Number). She is reluctant to give it out. Should she be concerned?

Someone (the “responsible party”) must give their Social Security Number (SSN) so that the IRS can always trace leadership of a nonprofit (or a business) to a human being.

The IRS wants the name and Social Security Number of a specific individual it can contact if needed.

Requesting a name and SSN is also meant to prevent people from setting up dummy or scam organizations.

Listen to this episode (12 minutes) to find out more.

Featured Product:

Money Management in a Homeschool Organization

  • Does your homeschool group manage their money well?
  • Do you have a budget and know where the money is spent?
  • Do you know how to prevent fraud?

This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement, and hire workers. Sample forms and examples of financial statements in clear English are provided.

Carol Topp, CPA

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How to Start a Homeschool Co-op

I was interviewed by Mary Jo Tate of Homeschool Channel TV talking about homeschool co-ops!

We discussed the

  • pros and cons of co-ops,
  • how to evaluate if a co-op is right for your family,
  • how to avoid burn out and
  • how to start your own co-op.

Click to watch video

 

My book Homeschool Co-ops: How to Start Them Run Them and Not Burn Out can be a big help to get you starting creating a homeschool co-op!

Read a sample chapter from Homeschool Co-ops: How to Start Them Run Them and Not Burn Out
Sample Chapter

Order a copy of Homeschool Co-ops in print or ebook.

 

Should Your Homeschool Group Be An LLC?

 

Have you heard of LLC status? It stands for Limited Liability Company status. Sounds like a good things, right? Doesn’t everyone want to limit their liabilities? Yes, they do! So maybe your homeschool group should be an LLC! Or maybe not!

The reason that most for-profit businesses obtain the LLC status 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.

Becoming a Limited Liability Company (LLC) is a more complicated issue for nonprofit organizations. Most small nonprofits such as a homeschool co-op do not become LLC’s because the IRS has 12 conditions that must be met for the LLC to be tax exempt. For a nonprofit organization such as a homeschool co-op, nonprofit corporation status in your state brings similar protections of limited liability.

In this short podcast episode (15 minutes)  Carol Topp, the HomeschoolCPA, will share:

  • What does LLC mean?
  • What is limited liability?
  • How nonprofit corporation offers limited liability
  • Becoming a Limited Liability Company (LLC) is a complicated issue for nonprofits.
  • How the IRS views nonprofit LLCs

In the podcast Carol mentioned …

The IRS and Your Homeschool Organization

Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group? I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

Click Here to request more information!

Carol Topp, CPA

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Is buying T-shirts from a board member a conflict of interest?

Homeschool Mom T-Shirt

Hi, we are wanting t-shirts for our homeschool group. One of our board members can make the t-shirts.

Is it a conflict of interest if she makes them? There would be a little profit made from what is charged to the members.

Would she be able to keep that profit or would it need to go back into the co-op so that there would be no benefit to her?

Thank you. Mary

 

Mary,

You asked if buying T-shirts from a board member is a conflict of interest. Yes it is a conflict of interests between her T-shirt business and her duty of loyalty to the homeschool group.But that does not mean she is forbidden to offer her t-shirt service to your group!

There is a practical, easy way to handle conflicts of interest.

When you discuss the T-shirts, the board member who could benefit from the sale should explain that she has a conflict of interest, leave the room, and not have a vote in the decision.

Your board should do its due diligence and get bids form at least two other T-shirt sellers and compare it to the board member’s offer. Then make a decision.

So, just because a board member has a conflict of interest, does not mean that you cannot buy T shirts from her, if she has the lowest bid.

And she gets to keep the profits because it’s her business doing the work.

 

If you have more questions about conflicts of interest you might find these books helpful:

It’s a template for you to create your own board manuals as a place to store important papers and policies.
Carol Topp, CPA

Should a Homeschool Nonprofit Let Members Vote?

 

Should your homeschool nonprofit group let its members vote? There are many nonprofit groups that do not give their members a vote, but some do! What are the pros and cons or each arrangement?

In this short podcast episode (12 minutes)  Carol Topp, the HomeschoolCPA, will share:

  • Is it okay to not allow members a vote?
  • Sample bylaws can be found at   HomeschoolCPA.com/Samples
  • Can a board chose its own replacements?
  • How can a board get input from the membership?

In the podcast Carol mentioned …

 

Homeschool Organization Board Manual

Sometimes current group leaders have none of the important paperwork for their organizations. Homeschool board members should keep all their organization’s important papers in a safe and accessible place. Usually, a 3-ring binder works well.

Author and homeschool advisor, Carol Topp, CPA, has created a Homeschool Organization Board Manual. It is a template to create a board member binder. It has:

  • A list of important documents to keep in your binder
  • Section dividers so you can organize the important papers
  • Tools to help you run your meetings smoothly including
  • A sample agenda that you can use over and over again
  • A calendar of board meetings

Click Here for more information!

Carol Topp, CPA

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Can homeschool groups give free tuition to teachers like private schools?

I taught at a private school before I started homeschooling and I received free tuition for my children. Now I teach at a homeschool program. Can homeschool groups give free or reduced tuition as a fringe benefit like private schools?

 

Maybe!

You’re talking about what the US Tax Code calls “Qualified tuition reduction.”

The United States Tax Code, or 26 U.S.C. § 117(d) has some good news:
 In General. – Gross income shall not include any qualified tuition reduction.
“qualified tuition reduction” means the amount of any reduction in tuition provided to an employee of an organization described in section 170(b)(1)(A)(ii)

 

In plain English that means a school may provide its employees with tuition breaks, or cash grants for payment of tuition, without that benefit being considered taxable income to the employee. Good news for school employees!

But notice a few important words: employee and school

Are you an employee of the homeschool program?

If so, keep reading. But if you are an Independent Contractor, you cannot get tax-free tuition reduction benefits.

Is the homeschool program you work for as an employee a “school”?

The US Tax Code defines a school in section 170(b)(1)(A)(ii):

 An educational organization is described in section 170(b)(1)(A)(ii) if its primary function is the presentation of formal instruction and it normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. The term includes institutions such as primary, secondary, preparatory, or high schools, and colleges and universities. It includes Federal, State, and other public-supported schools which otherwise come within the definition.

 

One aspect of a school is a “regular faculty,” which the IRS defines as

“qualified teachers instruct the students, and the same teachers do so on a recurrent basis.” 

Source: Internal Revenue Manual viewed http://www.irs.gov/irm/part7/irm_07-026-002.html#d0e549 on 5/11/15.

And by “qualified” the IRS means:

“certifications by the appropriate state authority or successful completion of required training.” 

Source: Instructions for Form 1023

Hmmm…

…regular faculty…regularly enrolled student body…qualified teachers…recurrent basis…teacher certifications…

Do those words used to definition a “school” apply to your homeschool program?

Maybe. Or maybe not. It might be hard to tell what the IRS meant since this part of the US Tax Code was written long before anyone thought of homeschool programs employing teachers.

Here’s my concern: If a homeschool program fits the IRS and US Tax Code definition of “school” so that its employees can get tax-free fringe benefits, is that homeschool program also a school in the eyes of its state laws regarding private schools? And are the students then attending a school and not really legally homeschooling?

Additionally, since states regulate education in the USA, your state’s definition of school may be VERY different from the US Tax Code’s definition.

It gets confusing. Very confusing. I’m a pretty conservative CPA and don’t like advising my clients unless things are pretty clearly stated in the tax code.

I also don’t want homeschool programs to be treated as schools or to even call themselves schools. I’m concerned that if homeschool programs call themselves “schools” the state may start imposing all the rules that schools must follow onto independent homeschool programs. That will stifle creativity, educational freedom, add a paperwork and reporting burden, and may end up restricting our homeschool freedoms.

It’s just not worth it!

My advice: Avoid attempting to fit the US Tax Code definition of “school.” Avoid even calling your homeschool program a school with both the IRS and with your state. Maintain homeschooling freedom even if it means you cannot offer your employees tax-free fringe benefits of “qualified tuition reduction.”

You may decide differently from what I wrote above. You may decide your homeschool program is a “school” by the IRS and US Tax Code definition. But if you do, please, please get a legal opinion on your organization’s status as a school from a qualified attorney experienced in educational institutions and get it in writing. Yes, you’ll have to pay for it, but it will be your defense if your State Board of Education wants to regulate your homeschool program!

 

Carol Topp, CPA

Does My Homeschool Group Need Directors and Officers Insurance?

Does My Homeschool Group Need Directors and Officers Insurance?

 

Does your homeschool group need to protect your leaders? Sure you do, so you may consider purchasing Directors and Officers (D&O) insurance.

In this short podcast episode (12 minutes)  Carol Topp, the HomeschoolCPA, will explain:

  • What is D&O insurance?
  • What does D&O insurance protect?
  • When to buy D&O insurance?
  • How does being a nonprofit corporation help?
  • Article on Insurance for Homeschool Groups.

In the podcast Carol mentioned …

Money Management in a Homeschool Organization

Does your homeschool group manage their money well? Do you have a budget and know where the money is spent? Do you know how to prevent fraud? This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement and hire workers. Sample forms and examples of financial statements in clear English are provided.

Click Here to request more information!

Carol Topp, CPA

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Motivation to homeschool is changing. How does your group adapt?

Homeschool is changing! I know that you as a homeschool leader see those changes.

In her 2012 book Home Is Where the School Is, sociologist Jennifer Lois broadly divided homeschoolers into two groups: first-choice and second-choice homeschoolers.

A 2017 Pioneer Institute whitepaper characterized the groups this way: “The ‘first-choice’ family is in essence the traditional homeschooling family, viewing homeschooling as a lifestyle and an integral part of a student’s growth.

‘Second-choice’ homeschooling parents might be described as ‘pragmatic homeschoolers,’ perhaps even ‘reluctant homeschoolers.’ . . . this sub-set tends to view homeschooling as a stop-gap solution to a school-based problem as opposed to an overall family lifestyle.”

As more people start homeschooling for different motivations other than as a lifestyle, raising life-long learners, or faith, how does your group adapt?

Are you accommodating the parents who are just looking for a stop-gap solution?

Here is what some groups are trying:

  • Allowing more drop off students  and less parental involvement
  • Hiring more paid teachers
  • Offering more parent education on how to homeschool
  • Opening their formerly exclusive groups to allow public-school-at-home families to join

Share your ideas in the comments or join the I Am a Homeschool Group Leader group on Facebook and leave a comment.

 

Carol Topp, CPA

Helping Homeschool Leaders

Blurring Lines of What is Homeschooling

 

On the I Am a Homeschool Group Leader Facebook page, a lot of discussion happened around the topic of being an inclusive group (open at all) or exclusive group (limiting membership). Several homeschool leaders contributed the reasons for their group’s decision. Carol Topp shared those views in Episodes # 129 and #130 which you can find here:

Reasons to be an Inclusive Homeschool Group

Reasons to be an Exclusive Homeschool Group

In this episode of the HomeschoolCPA podcast, Carol Topp will share some of the reasons that some groups are exclusive (they do not allow public school students into their homeschool group) but it comes from a few people who are active in legislation or in their state homeschool groups. They have a different viewpoint that you may find insightful and interesting.

These state homeschool leaders mentioned:

  • The lines of what is homeschooling are blurring and state legislators may not understand the difference between traditional or independent homeschooling and public-school-at-home.
  • There are concerns about government control and oversight
  • There is a concern of being grouped with charter schools or public school funding and therefore be subject to more government oversight

 

 

In the podcast Carol mentioned the Facebook  group for homeschool leaders I am a Homeschool Group Leader. Join 400+ homescool leaders for ideas, encouragement and respective exchange of ideas. https://www.facebook.com/groups/72534255742/

 

Featured resource:

Phone Consultation with Carol Topp, CPA

You can learn a lot about running your homeschool group from the HomeschoolCPA podcast and website (and books) , but sometimes you just need to TALK to someone who understands homeschooling, running a group and the laws surrounding the finainces and operations of homeschool groups. Why not call Carol Topp, the Homeschool CPA, to set up a personal call?

Carol is happy to set up a conference call so several of your leaders can join in from their own homes. The call can be recorded or future reference or for those who are unavailable. This is Carol’s most popular service for homeschool leaders. It’s like having your own homeschool expert CPA on the phone!

Cost: $75/hour to nonprofit organizations.  $100/hour to for-profit businesses. $60 minimum.

Contact HomeschoolCPA, Carol Topp, CPA, to arrange a telephone consultation.

Click Here to request more information!

Carol Topp, CPA

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Why is being a homeschool group leader so exhausting and thankless?

On the Facebook group I am a Homeschool Group Leader, Lesley asks,

Why is being a homeschool group leader so exhausting and thankless?

Here are some replies from other homeschool group leaders (my emphasis added).

Jennifer: Because those you are leading haven’t done it and don’t have a full appreciation for the workload. Empathy is hard to come by when a person hasn’t ‘been there.’

Some people just don’t know how to say thank you. We had a team of 5 leaders. Every semester, I gave them a small gift and thank you note, letting them know I appreciated what they personally brought to our group.

 

Beth: Do you have a reliable team of leaders working alongside you? That has made all the difference as I’ve been in homeschool group leadership – as president as well as a numerous other roles – over the past 24 years. Our group grew from 20 families to almost 400 families during that time. There have been tough seasons and also smooth seasons. Make sure you prioritize and try to delegate or let go of things to minimize stress where you can.

The leaders don’t plan everything, but provide the structure and administration for the group, and establish policies as needed. I started our group with 2 other moms, and we were the core at first. When we found like-minded people, we mentored them and encouraged them to use their gifts and talents for the benefit of the group. We really did find some wonderful people who saw that their own families benefited by their contribution. We worked hard to repeatedly convey the message that we all helped one another. We also have those who just want to be served, and it can be frustrating as a leader when you also “are busy” and have your own family to homeschool and care for.

 

Melissa: First because the workers are volunteering so you don’t always get what you need from who is willing to work for free. It can be difficult to fill all the positions with people that will work as a team, complimenting each other’s skills. Sometimes you take what you can get.
Second, you are working for a group of people that want a service. It’s not like you are all saving the whales. The parents want something. For as low cost as possible.

 

Cheryl: Sometimes effective leaders seem to have it all under control in a way that makes others think they’re not needed. Those who stepped in in the group took time to figure out jobs that needed doing and clearly and repeatedly asked for help. And then let people run with those jobs rather than micromanaging them.

Another difference I see is in expressing thanks. Leaders who manage teams well tend to be public and loud with praise on a regular basis—rather than criticizing often. Speaking about them to the group with thankfulness for their work, mentioning in emails or other group communication their hard work, giving out awards and certificates, etc. can help.

Darlene Cheryl, this reminded me of another problem I saw in a group that I was part of several years ago. The leader of the group was a very capable woman. Someone in another role would falter or step away, and she would fill that role. After a few years, she wanted to step away from the head position. The problem was that everyone looked at her and said, “I can’t do that!” She was wearing too many hats! Her job looked daunting. We had to break down all she did into about a dozen positions before anyone would step forward to take on any of it.

Sheri: Hmmm. Are you expecting too much? Too little? Giving too much guidance? Not enough guidance? Are you working with their personality type and not against it?
Start with your WHY. Why do you exist? What is your vision? Then work on clearly communicating that vision. People will “catch” a passionate, clear vision and buy into it. Don’t try to be all things to all people; those who have a different vision, let them go with your blessing to find or start something else. I’d rather have a small group of committed people than a large group of apathetic people.
We made our yearly planning meeting mandatory. We asked for ideas and wrote them on a whiteboard. Then I would ask who would run that. If no one volunteered, I just erased it off the board. One year our favorite event, a yearly picnic, no one stepped up and I erased it. I think members thought the board would just do it, but we did not. Everyone complained but we stood firm. That next year, it was quite simple to get a whole 5 person committee to step up and make it happen.
Also, I paid attention to who was proposing events but never volunteering. As leader, I would take them aside and have a talk.

  • Are there extenuating circumstances?
  • Are they intimidated?
  • Lazy?
  • Overwhelmed?
  • Apathetic?
Depending on what I discerned in conversation, I could approach it several ways.
  • Sign them to assist someone else,
  • give them something simple,
  • discourage them from asking for events that they wouldn’t also work for, etc.
  • Even someone with a chronic illness can head a field trip with no cost; they can call the facility to arrange a date, set out a sign up sheet at meetings, and call the facility back with a final number.

Sometimes they just need a little guidance.

 

That’s helpful advice for Lesley and maybe you too!

If you need help running your homeschool group my books can help.
My  Homeschool Organization Board Manual may be very helpful. It is a combination of a template for your board to create binders to keep important documents and a board training manual to explain the board’s duties and responsibilities.
Carol Topp, CPA
HomeschoolCPA.com