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

Save

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

“Digital image content © 1997-2007 Hemera Technologies Inc., a wholly owned subsidiary of Jupiter Images Corporation. All Rights Reserved”.

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

How do homeschool groups identify their status as a public charity?

A homeschool group in MO is applying for 501c3 tax exempt status and had a question.

Hello Carol
I am working with Crossroads Christian Connection in MO. We need to complete our 1023 (Note: He means IRS Form 1023 Application for 501 Tax Exempt Status) . The question I have is on Part X Public Charity Status. We are a small homeschooling group of about 45 families with revenue of less then $5,000 per year, on line 5, I need to know how home-school groups identify their status as a public charity.
Do you have samples of other groups that have filed the 1023?
Thanks

Greg S


Greg,

Homeschool groups are usually classified as 509(a)(2) organizations because more than 1/3 of their income comes from membership fees or “activities related to the exempt function” (box 5h).

Form 1023’s are public information so you should be able to request a copy from any other 501c3 organization. You can use the IRS website to find homeschool organizations with 501c3 status. (Go to http://www.irs.gov/charities/index.html and click on Search for Charities on the right column). Guidestar.org also posts Form 1023’s for charities.

I provide a review service for the Form 1023. From my website:


Buying Peace of Mind
A review of forms you have prepared yourself. Save money by doing much of the work yourself. I will review Forms 1023 or Annual Form 990 and offer my opinion and advice. Cost: $100 per form. Time: 1-2 weeks.


I’m doing a review right now for a homeschool group in KY. I just sent them two and a half pages of corrections or omissions they had made on their Form 1023 as well as suggestions on how to phrase their Part III Narrative to help the IRS understand their mission. Please contact me if you’d like me to review your application before you mail it to the IRS. I’d be happy to help.

Carol Topp, CPA

Is it a homeschool co-op or Mary Poppins?

I started my website HomeschoolCPA to help homeschool organizations, but sometimes the lines between a family homeschool and a homeschool organization get a little fuzzy. Here’s one example of the new and creative ways the people are homeschooling today.

I am considering starting a homeschool with a group of 5 children. They are all from different families and none of them is my own. I have a Masters degree in education and am comfortable working as an independent contractor. I plan on teaching these children in one of the boy’s home with the parents’ blessing. Is this legal? What do I need to do to set it up? Would the parents need to set up a homeschool co-op? I am having difficulty finding information about this for Maryland. Thanks for your help!

Mrs. A in Maryland

Dear Mrs A,

Congratulations on your new venture. Teaching other people’s children is certainly a legitimate business. You will be a modern day governess. (like Mary Poppins!)

marypoppins

I do not believe the parents need to set up a homeschool co-op. But you need to set up a small business. I recommend these steps:

* Pick a business name, although you can use your own name

* Consider opening a business checking account to keep your business and personal expenses separate (it helps at tax time)

* Have a written agreement with the parents about your duties and your fees (i.e. how much and when will you be paid)

* Keep good records of all our expenses, especially mileage. Read my Small Business Start-up Guide available to download here: Small Business Start Up Guide

* Set aside 20-30% of your income after expenses (i.e. 20-30% of your profit) to pay income tax and self employment tax. You will probably also need to make quarterly estimates payments to the IRS. Here’s a great blog to help you learn more about being self-employed. http://junewalkeronline.blogspot.com/

I’m not familiar with Maryland’s homeschooling laws, but here in Ohio we must notify if someone other than the parent does a majority of the instruction. Maryland may have a similar notification rule. You might want to do a little digging on-line and ask the families that are hiring you about Maryland’s homeschooling laws.

Best of success to you!

Carol Topp, CPA

W-2s and tax filings for homeschool co-op teachers

A homeschool co-op treasurer asks about the tax filings for paid teachers:

Hi,
I am the treasurer for a new co-op we have setup this summer, and will be starting our class days in the beginning of September. I am looking to get some advice from you on how we need to define our mentors (teachers), and if we need to give them W-2’s, and if we need to with-hold taxes, etc.

We will have about 12 mentors, each teaching a class of 8-9 kids on Fridays. We follow a curriculum that the parents buy on their own. We try to keep the cost very low, so the mentors, which are all mom’s of kids in the program get paid $800 for the year.

We have already been setup as a South Dakota non-profit corporation, and would like to work towards a 501c3 in the future, but not this year. Our main issue right now is we need to move forward with setting up a checking account, which requires an EIN, and to get that we need to know if we have employees. Also, I want to determine how I need to be paying them, as far as tax with-holdings, etc.

Thank you,
Doug M, SD

Doug,
Congratulations on your new co-op. It sounds as if you are off to an great start! You should be very proud of all that you have accomplished.

As you described the co-op’s relationship with the paid mentors, they should all be classified as employees. Your co-op exercises quite a bit of control by telling them what curriculum to use, so they are not independent contractors.

IRS Publication 15 Employers Tax Guide has a nice checklist of forms and dates that you’ll need to file:

You should collect a Form W-4 from each employee for their information and federal tax withholding To make your job simpler you can tell your employees that the co-op will not withhold federal or state income tax since their wages are relatively small. The W-4 is kept by you and not mailed into the IRS.

The co-op will be responsible for paying federal employer taxes (Social Security and Medicare) and filing quarterly statements with the IRS (called a Form 941). See IRS Publication 15

If you have 501(c)(3) tax exempt status, your co-op would be exempt from Federal Unemployment tax. But the tax is rather small at 0.8% (See Form 940 and its Instructions)

At the end of the year you will issue a W-2 to each employee and mail copies of the W-2 and W-3 to the Social Security Administration. See Pub 15 (above) for details.

South Dakota may have unemployment tax requirements and workers compensation payments. Contact your state’s department of taxation or employment for details. I’m no expert on SD taxes, but here is a place to start: SD New Hire Reporting

Try not to be overwhelmed by all this. My new book Paying Workers in a Homeschool Organization can help you understand your payroll obligations.

Carol Topp, CPA


payingworkerscoveroutlined

Paying Workers in a Homeschool Organization-2nd edition

$9.95 paperback
130 pages
Copyright 2017
ISBN 978-0-9909579-3-5

BuyPaperbackButton