Three kinds of insurance for homeschool groups

030429_1897_5028_xsmsCarol,

We were told by our host church that we’ll need our own insurance policy.  Can you look into that for us?

Beth S, Ohio

(I am a volunteer parent in this homeschool organization)

This homeschool group had been told by the pastor of the church where they would start some homeschool classes twice a week that they their own insurance policy.

So they need their own insurance.  But what kind? In talking to a helpful insurance agent, I learned there are at least three types of insurance a homeschool group could possibly need:

General Liability (sometimes called fire insurance).  It covers the property an organization owns or rents.  This is what the church is wanting from our group in question.  They want an insurance policy if our group damages their property.  Someone suggested that we ask the church to add our group as a rider.  It might be cheaper.  Or, it was suggested, we should get “event” coverage. It might be cheaper since we don’t meet every day in the church.

Accidental Medical coverage.  This is for coverage if a child hurts him or herself while at our homeschool function.  Since we don’t have gym classes or physical activities I think my group will skip this type of insurance.  We’ll probably get the parents to acknowledge that they will cover their children’s medical expenses.

Director and Officer insurance: This is to protect the leaders from being personally sued for liability.  The agent said these policies start at $1,000/year.  Yikes!  He said it is because it includes provisions for employee s*xual harassment, etc.. Because of the expense to the organization, some non-profits board members carry their own liability insurance.  Personal liability insurance, sometimes called an umbrella policy, can be purchased separately.  Our group doesn’t have employees (or a very large budget) and so I think that we’ll forgo the D&O insurance, also.

Carol Topp, CPA

How Much to Keep in Cash Reserves?

Bag of coinsHello,

I am wondering whether you have any guidelines about a good amount of cash to keep in reserve, or what to use as a basis for determining the amount of cash. We have a substantial surplus, growing every year despite our efforts to price classes at a close to break-even rate.

Thank you!
Shaun S in Minnesota

Shaun,

What a wonderful position to be in-cash reserves growing each year! Many for-profit businesses are not doing that well!

It’s a little difficult to be specific without knowing how you operate, such as do you collect all fees at the start of the semester or do you operate month to month.  Can families drop out or join mid semester? Do you offer refunds of fees paid if a family drops out? etc…

Basically, the tighter you run your cash flow (i.e., only collecting a month at a time), the more you need in reserve.

I recommend that you look at your sources of income.  Imagine any one item being eliminated, such as a major fund raiser. How would you run your co-op without that source of income? Sometimes when a nonprofit loses a major source of funding, it needs to fall back on cash reserves for a while.

Here are a few guidelines to help you determine the amount of cash reserves needed:
1. Have at least 10%, maybe 15% of your income in reserve for emergencies, damages or disasters.
2. Have at least one or two month’s rent in reserve in case you need to move locations.
3. If you pay employees, have at least three months of their pay  in reserve.
4. Consider creating a future plan of major purchases (like a computer or software) or programs you’d like to offer. Your surplus could be applied to your “wish list.”
5. Have at least enough in reserve to cover the deductibles on your liability and medical/accident insurance.

Here are a few ideas of what to do with your cash surplus:
1. Offer reduced fees to hurting families. In my homeschool co-op, we have a widow and another family with a disabled father, so they get free access to our co-op classes.
2. Offer reduced fees for significant volunteer efforts. We offer teacher discounts and discounts to our co-op director.
3. Make a contribution to the location you are renting if  it is a church or community organization.
4. Have an end of year party with a catered dinner.
5. Give appreciation gifts to all your volunteers.

I hope that helps!

Carol Topp, CPA

Ten Ways to Torture a Tired Leader

My friends Kristen and Denise of Homeschool Group Leader have a sense of humor.

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You have to be able to laugh at human weaknesses if you are a homeschool leader.

Here are their 10 Ways to Torture a Tired Leader:

Top 10 Ways to Torture a Tired Leader!
  1. Don’t Listen ~ Talk all during the announcements, the meeting discussions and while your leader shares important information.
  2. Be Clueless ~ Ask your leader repeated questions about the information that you didn’t just listen to. Send them one-line questions in individual emails spread out over time.
  3. Fill Other Members’ E-mail In Boxes ~ Send your repeated questions and comments to everyone on the list, filling all in-boxes, instead of only the in-box of the leader to whom you’re writing.
  4. Quit at the Last Second ~ Volunteer to help with, or better yet–lead–an activity, then back out at the very end, leaving it all for the leader to complete.
  5. Gossip ~ Discuss the leader’s clothes, kids, home life, homeschool, and leadership style –openly and with great fervor.
  6. Complain ~ Never be happy with the place, the decisions, the agenda, the trips, the teachers, or the way the leader looks at you.
  7. Show Up Late ~ Choose carefully the events that need to start at a specific time and strategically and systematically show up 15 or 30 minutes late.
  8. Never Help Clean Up ~ Don’t stay after any event and help clean up. After all, isn’t that what the leader is there for??
  9. Don’t Watch Your Kids ~ Let them run wild or talk while someone else is talking. Then get offended when someone asks them to be quiet or to sit down.
  10. Be Demanding ~ Always express your opinion as fact. Be sure you speak every time someone else does, making sure that your frustrations and wants are very clear each time.

Recognize anyone?  Maybe you at times? Some of these are too close to the truth to be truly funny!

Carol Topp, CPA

Observations from the Midwest Homeschool Convention

On April 16-18, 2009 , I attended the Midwest Homeschool Convention here in my hometown of Cincinnati, Ohio.

mwhsc-logo-3-inv

I did two workshops, one on Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out (named after my book of the same title) and the other on Micro Business for Teenagers (my upcoming book).

Here are a few of my observations:

Homeschool leaders from across the country all have similar problems:

  • No one wants to work or join the board
  • Older, experienced hoemschool mothes are not coming to meetings
  • There is a need for a clear vision and purpose. Leaders want to be everything to everyone.
  • Policies and bylaws are sorely needed to elect new board members, deal with conflict, and to prevent burnout

Meeting and talking to attorney David Gibbs of the Homeschool Legal Advantage was a highlight.  We look forward to a wonderful working partnership helping homeschool organizations. Individual families have long had access to legal advice, but now there is a need for homeschool groups to have access to legal advice also.

Some homeschool leaders lack business sense. I heard about fund raising disasters, mistakes with charging fees and offering discounts, etc.

Meeting some of my virtual friends in person was fun.  And I’m so sorry that I missed some of you! I was stuck in my booth (I shared a booth with Mary Hood, the Relaxed Homeschooler) and didn’t get out much.

Here were some of the questions that were asked during the Homeschool Co-ops workshop:

  • What does your co-op charge? Is it by student or by family?
  • How often does your co-op meet? How long each time?
  • Do you interview potential members?
  • How do we ensure everyone is like minded?
  • How can we encourage members to help out more?
  • Do you group grades/ages in your co-op?
  • What classes do you offer?
  • Ho do you “fire” a volunteer?
  • How do you elect a new baord?
  • Can a co-op keep the same director/leader forever?
  • Why collect a registration fee?
  • Where do you meet for co-op classes?
  • What is a typical rental fee?

Aren’t those great questions? I’ll work on answering them on this blog in the future.

I will also be presenting this workshop and several others at the Home Educators Association of Virginia convention  June 11-13.  Stop by my booth and say hello if you attend the convention!

heavlogo

Carol Topp, CPA

Conflict and Leaving a Homeschool Group

We have a situation where a mom feels her teen daughter is being “left out” by the other girls in the class.  It “hit the fan” yesterday when the mom yelled at one girl to leave the class, threatened that the other girl was next.

How does one get to the bottom of this? The family who has the child who was yelled at would like to quietly step down and leave the group. She’s been involved for 5 years -I’d be heartbroken to lose them!

All with only 2 weeks left of the quietest, smoothest co-op year ever!
Oh, help, help, help!
Lisa

Lisa,
Sounds as if a lot of  emotions and hurt feelings rose to the surface.

I wrote an article on Conflict in Homeschool Groups. You may read the entire article at Heart of The Matter Online. Here is part of what I say in the article:

Confession and Reconciliation

Some offenses are too large to be overlooked, perhaps because a relationship has been painfully damaged. In this case, confession and reconciliation between parties is needed. Reconciliation is gently restoring the relationship and it may involve confession on someone’s part. Each party needing reconciliation should ask themselves,

  • Have I said something unkind?”
  • Have I gossiped about the person or problem?”
  • Have I tried to control others?”

Confession to the other party maybe necessary in order to restore a relationship. Reconciliation isnot merely confrontation; it is restoring a relationship. Remind members to ask for God’s wisdom and a gentle spirit before they approach the other party. Each party should aim to be clear and specific.

Merely complaining about another’s behavior rarely helps a situation. The goal is restoring a relationship, not blaming or accusing others. Members should use “I feel” statements such as “I feel like a scolded child,” to explain the hurt feelings a member may suffer.

Using creativity through stories to make your point can be very helpful. An excellent example of using stories comes from the Old Testament prophet Nathan in II Samuel Chapter 12. He had the unpleasant task of confronting King David with his sins of adultery and murder. Nathan wisely used a story of a poor man with only one lamb to help David see his own greed.

I used The Peacemaker: A Biblical Guide to Resolving Personal Conflict by Ken Sande.  It’s a GREAT book and highly recommended. The Peacemaker.net website has some helpful articles from Annette Friesen, their Homeschool Advisor. Search on “Homeschool” and you’ll find an article titled Preparing Homeschoolers for Conflict.

Mrs Freisen says that when a person is offended, (and several people were offended in your situation) they desire three things:

1. An apology
2. Restitution if applicable
3. Reassurance that it won’t happen again.

I think you should work on #1 with the parties involved and perhaps the board could work on #3 if policies are needed.

BTW, I discuss conflict in my book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out and have several sample conflict resolution policies that other homeschool groups use.

I hope that helps!

Carol Topp, CPA

Group using personal Paypal account

money_exchange_100Hi Carol,

Our (homeschool group’s) yearbook is looking take in the money thru my personal paypal account, then deposit it into an separate bank account so that our Assoc. does cross over the $5000.00 mark. How is this done so that I don’t have to claim the money as extra income.

Currently the association is trying to do a paypal account not just for yearbook for membership dues, they are hesitant because they set up the a paypal account under non-profit, paypal is wanting proof of this and we don’t have it. I suggested that they explain to paypal that they we are a Unincorporated Non-Profit Assoc. and it should be fine.

Sandy in TX

Sandy,

The ideal way to operate is to set up a Paypal account for the association/homeschool group and not run anything through your personal Paypal account.

I understand from other homeschool leaders, that Paypal expects to see proof from the IRS of tax exempt status. They may also accept a nonprofit incorporation certificate from your state. They told one homeschool group they would accept “certified Articles of Incorporation.”

One homeschool registered with Paypal as “Category: Education, Subcategory: Elementary and secondary schools.” While not as accurate as “Charitable/Nonprofit”, it got the job done!

If your organization is not a nonprofit corporation or doesn’t want to be classified by Paypal as as a school, then tell your board that you are using your personal Paypal account and have them record it in the minutes of a board meeting. (“Sandy agreed to allow use of her personal Paypal account for the yearbook project”) Keep a very clear paper trail just in case you are ever audited by the IRS. Keep paper records of every transaction and especially the transfers in and out of the Paypal account. Make print outs from Paypal and file them away with wherever you keep your tax return information. (Do NOT send them to the IRS with your tax return.)

Anyone had problems setting up a Paypal account for their homeschool organization? Id like to hear your experience.

Carol Topp, CPA

Update on teachers as independent contractors

In Is Your Hired Teacher Really an Employee? I mentioned a homeschool group dealing with the IRS over teacher classification as an employee or independent contractor (IC).

They replied to the IRS via a letter stating their case for worker status as an Independent Contractor. They heard back from the IRS and the IRS determined that the teacher was misclassified as an independent contractor and should be reclassified as an employee.  The IRS wants $500 in back taxes (at least there are no penalties!)  The homeschool organization strongly disagrees and contacted a labor law attorney to help draft a letter back to the IRS.

Update:  The IRS issue was settled with the IRS winning the issue. The homeschool organization reclassified all their teachers as employees. There were no penalties to pay to the IRS, but then the State of Ohio audited this homeschool group and has fined them  $3,000-$4,000 a year for three years for unpaid unemployment taxes.  The State of Ohio sided with the IRS that the workers were employees and the organization should have been paying unemployment taxes on them.  Thankfully, the state can only audit back for three years.

The issue brought to light that many (perhaps most) homeschool organizations that hire teachers pay them as independent contractors.  Most homeschool groups are small nonprofits without accounting staff to manage the paperwork of withholding and paying employment taxes, creating W-2s, etc.  It’s easier to deal with an IC than an employee.  But the IRS reminds us the the facts of the situation determine worker status, not the organization’s preference.

Also, most hired homeschool teachers are only teaching about one hour a week and are given a lot of freedom in how to conduct their class.  This was all true for my client, but the IRS still determined the teacher was an employee. She even signed a IC agreement three years in a row, so even a contract was not enough evidence for the IRS.

Here’s what I’m doing:

1. Telling my homeschool clients that hire teachers to carefully consider worker classification.  Having a signed IC agreement is not enough.
2. Advising some of my homeschool clients to reclassify teachers as employees and start withholding federal income tax, Social Security and Medicare taxes.  These clients hire several teachers for several hours a week and exert a lot of control over what and how they teach.  One group also does teacher training and evaluations so the workers definitely look like employees.

3. Change the way my small co-op pays teachers.  The IRS letter stated , “if the worker had been an independent contractor, the parents would have directly paid the worker for the services she provided for their children.” Starting next semester we will have parents pay the hired teachers directly. See Paying teachers in a homeschool co-op to read our story

4. Trying to get out the word to homeschool leaders about the potential problems of worker misclassification and in general the employment laws regarding hiring paid teachers.

5. Encourage homeschool leaders to read my book Paying Workers in a Homeschool Organization. It can buy you a lot of peace of mind.

 

Please pass on this information to homeschool groups that you know hire paid teachers.  It doesn’t pay to be ignorant.

Carol Topp, CPA

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What's a volunteer worth?

Volunteers are worth their weight in gold. Most homeschool organizations are run completely by volunteers who are doing a wonderful service to their community and other homeschooling families. What’s a volunteer worth? Priceless? Independent Sector, a coalition of nonprofits,  calculates the worth of an hour of volunteer time.


The estimate for the value of volunteer hour jumped by 74 cents, from $18.77 in 2006 to $19.5
1 last year, according to Independent Sector (IS), a Washington, D.C.-based coalition of nonprofits and foundationsgirl-peeks-around-money.

Washington, D.C. had the highest hourly value ($30.10) .  The top states were all found in the Northeast: New York ($26.18), Connecticut ($25.75), Massachusetts ($24.29) and New Jersey ($23.62).

In all, 10 states eclipsed the $20 value and all but seven had values of more than $15.

Source: http://www.independentsector.org/programs/research/volunteer_time.html

Could your homeschool group survive if you paid your volunteers these wages? Probably not…they are indeed quite valuable.

I  am frequently asked if a volunteer can be paid. If you pay a volunteer, she is no longer a volunteer anymore.She  is an employees and your homeschool organization will owe employer taxes such as Social Security, Medicare, Unemployment and Worker’s Comp.

I recommend homeschool groups show appreciation though thank you notes, gift certificates, verbal appreciation and praying for your volunteers.

Carol Topp, CPA

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New eBook: HomeWork: Juggling Home, Work, and School Without Losing Your Balance

The Old Schoolhouse magazine has just launched a new electronic book on being a work at home, homeschool mom called HomeWork: Juggling Home, Work, and School Without Losing Your Balance

ebook only $12.95

Are you looking to creatively supplement your family’s income?
Would a home business even work for your homeschooling family?
Whether you are. . .

  • Considering a new home business endeavor, or already working from home
  • Seeking creative ideas, or exploring opportunities that might work for you
  • Wondering how to set up a home business
  • In need of some inspiration, encouragement, motivation or advice from experienced home’preneurs who’ve been there
  • Wondering how others manage homeschooling and homework and continue to smile

. . . this E-Book, HomeWork: Juggling Home, Work, and School Without Losing Your Balance contains the information and support you are looking for!

My friend, Katy, was the project coordinator and asked me to contribute a chapter. My chapter is titled “Keeping Finances Organized in a Work-at-Home Business.”

To see the rest of the topics and a description of the book, click here:
HomeWork ebook

Carol Topp, CPA

who is loving working from home and homeschooling!

A Homeschool Leader Gathering

Do you ever wish that you could gather with other homeschool leaders just to receive encouragement, share resources or bend someone’s ear?

020327_1397_0003_dsms1 Last month, 12 homeschool leaders from seven different homeschool groups gathered on a cold winter night in Cincinnati, Ohio just to meet and support each other.

We had coffee, cookies and laughed, gently reproved and empathized with other leaders.

We came from a diverse background.  Some were experienced homeschoolers-one with 15 years of leadership under her belt! Others had only been leading their group for two weeks! We had unschoolers, classical schoolers, virtual schoolers and traditional homeschoolers (whatever that means!)

After we exchanged names and information on our groups, we listed what challenges we face as homeschool leaders.  Here’s what the leaders listed:

Collecting money
Doubling in size in one year
Four of five board members leaving
Facility cost
Undefined roles
Low commitment from board members
Communication
Establishing policies
Parents test limits
Clean up building
New director
Late or unprepared teachers
Need a larger facility

Any of these sound familiar? I think these are common problems.  Sometimes the other leaders had helpful answers and suggestions; sometimes they just offered sympathy and encouragement. Everyone needs someone who can say, “I understand.”

I shared some resources including:

  • My website, HomeschoolCPA.com, for articles and ebooks on running a homeschool organization
  • The Old Schoolhouse magazine’s Homeschool Leader Yahoo group, a wonderful place for homeschool leaders to pose questions and get answers from leaders across the country

I hope you find these resources helpful too.

Carol Topp, CPA

HomeschoolCPA.com