Income and expenses are a “wash.” Do I have to record them?

I’m treasurer for a nonprofit homeschool group. Every year some of the teachers charge a lab fee and it all gets spent on lab equipment. Do we have to claim that as income or is it just a wash because it’s used for materials or experiments?

Homeschool Treasurer

 

 

Dear Homeschool Treasurer,

You should claim/record the lab fees collected in full as income to your group.

Then also record the lab or equipment expenses to clearly reflect both the income and the expense.

If you don’t record the income, because it is a “wash” (meaning the same as the expenses, so no effect on your profit or surplus), then you are guilty of both under-reporting income and under-reporting expenses.

Your board will not have an accurate picture of all the income and all the expenses.

And you’ll be lying to the IRS! This is obviously more serious if your homeschool group is a for-profit business.

I warn against mixing income and expenses in your bookkeeping in my book Money Management in a Homeschool Organization.

Please take a few minutes and record all your income and all your expenses.

Carol Topp, CPA

HomeschoolCPA.com

Helping Homeschool Leaders

Is your homeschool program a ministry or a business?

Sometimes I hear people calling their business a “ministry.”

Maybe because they are motivated by concern and care for their customers or because they donate a lot of their time for free.

I don’t refer to my accounting and consulting business as a ministry, but some people have thanked me for “my ministry” to homeschoolers.

Yes, I do give a lot of my time away for free especially on social media like this Facebook group for homeschool leaders that I moderate and frequently I might reply to an email without charging a fee (if it is a short reply!)

But I am running a business and I don’t want to give the false impression that I am running a ministry or operating a nonprofit organization.

OK, not a lot of accounting firms get confused with nonprofits (!), but there are some businesses and homeschool programs that present themselves as nonprofit organizations or “ministries” but they are really for-profit businesses.

I don’t like that. At best, it is confusing to call your business a ministry. At worst, it is deceptive and can damage the reputation of homeschooling.

 

I have tremendous respect for the late Larry Burkett founder of Christian Financial Concepts (now Crown Financial Ministries) who was both a business owner and operated a nonprofit ministry. He wrote:

Don’t practice deception. If you have a product to sell that you honestly believe will benefit other Christians, let it be known, but don’t promote it as a ministry or as a spiritual happening.

Let your yes be yes and your no be no. In other words, let people know what the company is and what the product is.

If there is a referral or finder’s fee paid to another person for a lead, let that be known too.

If you’re afraid of losing a sale because of total honesty, the program is dishonest.

Source: Larry Burkett in Using Your Money Wisely p. 76 and 77 copyright 1985. You can read a longer excerpt here.

 

I have heard from several nonprofit homeschool organizations that say churches in their local communities got “burned” by for-profit homeschool groups posing as “ministries.” Read this blog post to understand why churches are reluctant to host for-profit businesses.

Now these legitimate nonprofit homeschool groups have difficulty getting a church to host their program.

Being deceptive hurts everyone.

We’re better than that!

 

Carol Topp, CPA

HomeschoolCPA.com

Helping homeschool leaders

Are my homeschool co-op fees a tax deductible donation?

I’m a homeschool parent and member of a homeschool co-operative that weeks weekly. I have to pay tuition to this group for the classes my children take there. Can my children’s tuition for the co-op be a tax deduction?

 

I assume you mean deductible as a charitable donation.

Co-op fees are not a tax deductible charitable donation because services (co-op classes for your children) were received in return for the tuition payments. Tuition payments are not a tax deductible donations.They are personal expenses and are not tax deductible.

But if a parent makes a charitable gift to the homeschool group (assuming it has 501c3 tax exempt status from the IRS) above and beyond the tuition and fee payments, then this amount would be a tax deductible donation.

Some homeschool parents ask if co-op fees can be deducted as childcare expenses. My reply is “usually not” and here are the details: Are homeschool co-op fees child care tax deductions?

 


Did you get paid for teaching at a homeschool program? You may have questions about your taxes? I offer webinar to help you understand the tax implications of being a paid homeschool co-op teacher or tutor:

I recorded a webinar on Tax Preparation for Homeschool Business Owners. It should be a lot of help to tutors, non-employee co-op teachers and other homeschool business owners! You can watch the recording at HomeschoolCPA.com/HSBIZTAXES for a small fee of $10.

Carol, thank you again for the webinar. It was one of the BEST webinars I’ve EVER attended. If you do hold another one, I would pay for it hands down. Totally worth the $10! -Denise, webinar attendee

“I actually don’t care for webinars at all – it is not my learning style at all and I struggle to focus, but this one was extremely value and had my attention”. -Mary, webinar attendee


I hope that helps!

Carol Topp, CPA

HomeschoolCPA.com

Helping homeschool leaders

13 benefits of homeschool co-ops

This is a throwback to 2009 when first posted and is still a great list of benefits to homeschool co-ops!

Heart of the Matter had a great article written by Katie Kubesh on the benefits of homeschooling with co-ops.  She surveyed several co-ops members and here is what they received by being in a homeschool co-op:

  1. Kids enjoy the variety of resources and materials provided
  2. Parents do not have to do as much research and footwork on their own; they are able to share with other co-op parents
  3. Co-ops gives homeschooling families the opportunity to bond with other families in their city or state
  4. Co-ops keep homeschooling families on schedule
  5. Co-ops keep homeschooling families accountable for their studies
  6. The extracurricular activities are fun for both the parents and kids, including football games, craft parties, theme parties, field trips, etc.
  7. People who belong to co-ops sponsored by their church appreciate the opportunity to share their faith and bond with other parish families and the pastors, who sometimes participate also
  8. Co-ops that offer classes or unit studies give students the opportunity to learn a broader range of topics and/or to learn a subject their own parents may not be comfortable teaching, for example higher level mathematics, music, or foreign languages
  9. Students are exposed to different types of teachers
  10. Students are held accountable by someone other than their parents
  11. Parents provide each other with support and encouragement
  12. Students have the opportunity to interact with kids of all ages, not just their grade or age level
  13. People who belong to co-ops have a wide selection of experiences. Some belong to large co-ops that include over 200 families. Larger co-ops are able to teach many classes (one offers 80 different classes from preschool through high school with subjects ranging from science, math, history, art, music, foreign languages, drama, and public speaking) and sponsor many field trips and other activities. Some larger co-ops even offer courses that students earn college credits for.

Isn’t that a great list?  I especially like # 9, 10 & 11  because those are the main benefits I received from my homeschool co-op.

Katie goes on to explain the benefits or large and small co-ops.  Sometimes small co-ops grow into large co-ops and the leaders find themselves managing larger groups of people, in a larger space and handling more money.

My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out can also help a homeschool co-op leader run a successful co-op, whether small, medium or large, without burning out!

Carol Topp, CPA

Leading a Virtual Homeschool Co-op

 

Homeschool families are pretty familiar with homeschool co-ops. It’s a gathering of homeschool families to cooperate together in teaching classes. They usually meet once a week at a location close to the participating families. But have you ever heard of a virtual homeschool co-op?

In today’s podcast Carol Topp interviews homeschool leader Sheri Payne who runs a virtual homeschool co-op that meets online. Participants attend from across the globe!

In this short podcast episode (18 minutes) of the HomeschoolCPA podcast,  Sheri explains:

• How the virtual co-op works
• What technology is used
• How to operate it without cost to the parents
• The advantages of a virtual co-op
• The disadvantages of co-oping online remotely and online

In the podcast Carol mentioned …

Homeschool Co-ops:
How to Start Them, Run Them and not Burn Out

Have you ever thought about starting a homeschool co-op? Are you afraid it will be too much work? Do you think you’ll have to do it all by yourself? Starting a homeschool co-op can be easy! This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Carol Topp, CPA

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Hybrid Homeschool Programs: How to Use Them Successfully

 

The Old Schoolhouse magazine published an article I wrote on article I wrote on hybrid homeschool programs

Hybrid homeschool programs are a mix of education done at home and classes outsourced to:

  • online classes
  • a homeschool drop-off program
  • a homeschool tutorial or university-model program
  • classes at a local private or public school or college

In the article I discuss the popularity of hybrid programs and the challenges as well.

Then I conclude with some advice and warnings including:

  • delaying hybrid classes until age junior high or older
  • delaying hybrid programs until you’ve been homeschooling a year or two.
  • a reminder that you can successfully homeschool without using a hybrid program!

I thought long and hard before writing that advice.

I may get some push back on my recommendations, but having seen homeschooling grow and change over the years, I’m trying hard to encourage homeschooling parents to embrace the freedom and joy that comes from educating your children–especially the young ones–yourself!

Don’t let a hybrid program steal that freedom and the joy!

Read the article here: Hybrid Homeschool Programs article

Carol Topp, CPA

What’s a Good Way to Handle Conflicts in a Homeschool Group?

 

Conflict, hurt feeling, gossip, even bullying. Does it happen in your homeschool group Probably!  What can you do about it?

In this short podcast episode (13 minutes)  Carol Topp, the HomeschoolCPA, interviews homeschool leader Anjoli Gallo. Anjoli runs a group in southern Florida and she shares insight into dealing with conflict.  But she also shares some great tips on how she manages her time so leading a group doesn’t take over her life.

In the podcast Carol mentioned the I Am a Homeschool Group Leader Facebook Group. It is a closed group (meaning you have to request to join) of 530 homeschool leaders from across the USA. You can join us here: https://www.facebook.com/groups/72534255742/

 

Is there conflict in your homeschool group? Need help managing the volunteers in your organization? Carol Topp’s book Homeschool Co-ops: How to Start Them, Run Them and not Burn Out has a chapter devoted to managing volunteers and conflict!

 

Homeschool Co-ops:
How to Start Them, Run Them and not Burn Out

This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Click Here to request more information!

 

Carol Topp, CPA

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Top 5 risks to churches (and maybe your homeschool group as well)

From the Managing Your Church webpage, I learned the Top 5 Reasons Churches are Taken to Court.

Maybe they are a risk to your homeschool group as well.

In 2017, the top five reasons were

(1) sexual abuse of a child,

(2) property disputes,

(3) personal injuries,

(4) zoning disputes, and

(5) insurance disputes.

 

The article goes on to say:

Churches must be aggressive (in preventing child abuse). Any reasonable suspicion of child abuse must be reported immediately. It doesn’t matter if you or your colleagues are defined as a mandatory reporter in your state or not. Report it. Transfer the risk to the state in terms of what can be done about it.

I think that advice applies to homeschool groups, as well.

Please, please protect the children in your program and get training on how to spot and deal with child abuse.

The article lists the following resources (check with your church host; they may already have some of these resources):

Reducing the Risk, a comprehensive child abuse prevention training program (available in DVD format or online streaming)

50-State Child Abuse Reporting Laws Survey for Clergy and Church Leaders (available as a PDF download or for ChurchLawAndTax.com subscribers)

Church Board Guide to a Child Sexual Abuse Prevention Policy

Child Sexual Abuse Response Plan

Draw the Line: Relational Boundaries for Safe Youth Ministry

Let’s work hard to keep children safe.

Carol Topp, CPA

HomeschoolCPA.com

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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