Used curriculum sales and taxes

When a homeschool group has a fund raiser like a used curriculum sale or mini-exhibit hall is the income taxable?
Thanks,
Dorothy
Dorothy,
Fundraisers are usually considered unrelated business income, meaning that the fundraiser activities are not related to your organization’s tax exempt purpose. In other words, a homeschool group’s purpose is education, not selling curriculum or hosting an exhibit hall.

 

Unrelated business income is taxable income. It’s called UBIT-unrelated business income tax.

 

From the IRS: Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization’s exemption. An exempt organization that has $1,000 or more of gross income from an unrelated business must file Form 990-T (and pay federal income tax).

 

Fortunately, the IRS has several exceptions to paying the UBIT tax:

  • A $1,000 threshold allows that the first $1,000 in gross revenues from an unrelated business will not be taxed.
  • If the fundraiser (or unrelated business) is run by volunteer efforts (i.e., no paid staff) then the proceeds are not taxed.
  • If the fundraiser is not regularly carried on, such as a once-a-year unsed curriculum sale, then the proceeds are not subject to UBIT.
  • If you are selling donated items, like in a garage sale, the income raised is not taxed.

One of these exceptions are bound to apply to most homeschool organizations.

So, while the income from an unrelated business activity may be taxable, in reality, no tax will be paid because one of the exceptions mentioned above applies.

 

Carol Topp, CPA

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What Motivates a Volunteer?

 

What motivates your volunteers? Do you know?

I was thrilled to meet Beth Mora of www.HereToHelpLearning.com  at a homeschool convention. That’s me on the left and Beth on the right with Melanie Young of Making Biblical Family Life Practical podcast in the middle.

In this short podcast episode (11 minutes) I interview Beth who offers tips on understanding what motivates volunteers to help in your homeschool group.

 

Beth’s entire workshop on Recruiting and Retaining Volunteers is available at https://www.alliancerecordings.com/?context=&cid=61.

The notes from Beth’s workshop on motivating volunteers is available at http://HereToHelpLearning.com/Notes

 

Carol Topp, CPA

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Recording scholarships in homeschool group bookkeeping

 
Hi Carol,

How are scholarships recorded in our homeschool co-op’s bookkeeping? We charge an amount for classes but would like to provide a scholarship and return the full amount of tuition or provide a partial scholarship back to the family. For example, we collect the full tuition payment due but then write a check with a certain scholarship amount back to that same family. Is that considered simply as an expense?

Thank you so much!
Sharon

 

Sharon,

What you call a scholarship is really a tuition discount.

The best way to handle this is to give the discount BEFORE the family pays anything. Then the payment is recorded as income (although smaller income than originally budgeted).

If instead you wish to return some of the tuition a family pays, then you record it as a reduction income. We accountants call it a “contra-income” account. Sort of a negative income account. It’s not an expense; it’s a reduction in income.

Something like this:

Income

Tuition Payments: $5,000

Tuition reduction to needy family: ($500) numbers in parentheses are subtraction or negative numbers

Total Tuition Collected: $4,500

So, it’s not recorded as an expense, even if you write a check. It’s recorded as a contra-income (or a reduction in income) transaction.

I cover this topic and many more in my book, Money Management in a Homeschool Organization. You might find it helpful.

Carol Topp, CPA

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Board topics to discuss every year

 

Your homeschool board has a lot to discuss. How can you find the time to cover important topics?

Make a plan to cover one topic a month and do board training all year long.

In the new Homeschool Organization Board  Manual, Carol Topp offers has important topics your board should discuss every year. She shares those topics on today’s podcast (17 minutes).

 


 

In the podcast I mentioned the new Board Manual for homeschool organizations. I think you’ll find it helpful to organize your board and run your homeschool organization successfully!

Read more about the Homeschool Organization Board Manual

 

Carol Topp, CPA

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Returning homeschool co-op supplies to parents

Carol,
How should our homeschool co-op should handle classes where there are nonconsumable items purchased?  We had a class where Lego kits were purchased for a class.  Students shared kits and we charged a small fee.  Now parents think they should get half of the kits or that future classes should have to pay for the kits and they receive a credit each time.
We have never done that with any classes in the past.  It has always just become property of the co-op.  It sounds like it would be a bookkeeping nightmare.
Thanks for your input,
Becky  in KY

Becky,

You’re right, tracking the LEGO kits sound like a bookkeeping nightmare.  I like to keep things simple but as fair as possible.

We had a similar situation in my homeschool co-op with Spanish books.  The teacher bought a curriculum to use and was planning on spreading out the cost of the teacher manuals and CDs over two years of students. It took some guess work to figure out how many students she would have this year as well as future years.  In the end we decided  that this year’s students would end up paying for a portion of the teachers books and CDs.  The rest of the cost was absorbed by the co-op as a whole. The co-op then owned the teacher books and CDs. Future Spanish classes were charged a small supply fee so that the co-op could recoup the cost of the teachers books and CDs.

I think the co-op should own non consumables, not the individual parents. Sounds like that’s how you have done it in the past. Parents pay a supply fee, but are not entitled to the equipment afterward nor a credit from future students.

So maybe instead of charging the current students full price for nonconsumables, your co-op could try to save up some money over a few years and purchase nonconsumable equipment that will be owned by the co-op. Or have a fundraiser to buy the equipment.

Carol Topp, CPA

A meeting agenda will keep your homeschool board on track

 

Do your homeschool meetings last forever and wander off topic? Maybe an agenda will help!

In her new Board Members Manual, Carol Topp offers tips on running a board meeting and creating an agenda. She shares those tips on today’s podcast (10 minutes)


In the podcast I mentioned the new Board Manual for homeschool organizations. I think you’ll find it helpful to organize your board and run your homeschool organization successfully!

Read more about the Homeschool Organization Board Manual

 

Carol Topp, CPA

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Is a surplus added to next year’s budget?

Carol,
When does extra money from the previous year’s budget get added into the new year’s budget? Our treasurer  dumped all the leftover money from our prior year into the new year. I am pretty sure that isn’t supposed to happen. The way she has it, it looks as though we have $1,200 more to spend in next year than we really do.
Am I right to think that we have to base our budget with just dues that we hope to get in the coming year?
Angela

 

Angela,

Technically, a surplus (leftover money) never gets added to the next year’s budget. The surplus stays in your checking account (as an asset) and is reflected on the Balance Sheet (as the balance in the checking account), not as part of next years’ revenues.

In accounting we have two major financial statements: the Statement of Revenues and Expense (sometimes called Profit and Loss) and the Balance sheet which shows what you own (the assets) and what you owe (the liabilities).

Of course your board should have a plan for your surplus. Maybe it stays as an emergency fund or as the deductible on your insurance policy or is accumulated for a big future purchase (like equipment or a building). Some boards like to have the treasurer put a footnote on the Balance Sheet about money is kept in reserve and it’s purpose, so it doesn’t get spent. Or they move some money into a saving account, so it is less likely to be spent.

Something like this:

Balance Sheet as of DATE
Assets
Checking Account $5,400.00
Savings Account* $1,550.00
Total Assets $6,950.00

*Savings set aside for:
Emergency fund: $1,000
Insurance deductible: $500
Saving for science equipment: $50

“Am I right to think that we have to base our budget with just dues that we hope to get in the coming year?” I think that is wise fiscal management to live within your means each year.

My book Money Management in a Homeschool Organization would be very helpful to your treasurer.

Carol Topp, CPA
HomeschoolCPA.com

Keep your homeschool organization’s important papers in a board binder

 

Can you find your homeschool organization’s bylaws or organizing documents quickly?

Nonprofit leaders should keep their organization’s important papers in a binder.

This short podcast episode (15 minutes) from Carol Topp, the HomeschoolCPA, will discuss what important papers need to be in your board binder.


 

In the podcast I mentioned the new Board Manual for homeschool organizations. I think you’ll find it helpful to organize your board and run your homeschool organization successfully!

Read more about the Homeschool Organization Board Manual

 

Carol Topp, CPA

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Background checks for homeschool organizations

A homeschool leader on the Homeschool-Life Leaders Forum asked,

Could you share what companies you use to do background checks for your organization?

 

Here are some of the companies that homeschool groups use for doing background checks on employees and volunteers:

Protectmyministry.com

We have used ClearStar.net for several years. They charge $7.95 for a basic criminal background check. Our members can fill in their own information, so we don’t have to deal with paperwork and shredding personal information.

We use Federal Background Services. very reasonable and efficient

My co-op uses SecureSearchPro.com. They charge us about $14/check. They customized our background search to fit our specific needs. They bill us on a monthly basis. I really like them, they are easy to use, members fill out an online form so I never have to gather their personal information.

 

Many states now require background checks on any individuals working with children. You church host may require background checks as well. So the companies mentioned above may be very helpful to you in running your homeschool programs.

 

Carol Topp, CPA

HomeschoolCPA.com

Helping homeschool leaders

Homeschool Organization Board Manual is ready (and beautiful!)

I’ve been thinking about creating a homeschool board member manual for several years. Well, 2017 is the year it happened!

I am pleased to offer this helpful (and beautiful) Homeschool Organization Board Manual.


This manual is a customizable template for you to create your own board member manuals.

It has pages that act as dividers for separate sections of the manual like this page that lists important legal documents you should have in your binder:

And then I’ve created helpful tools like a calendar of meetings, list of board members and a sample meeting agenda:

 

And then I got carried away and created a huge amount of other information. The Homeschool Organization Board Manual is 55 pages.

It’s like a board training guide.

The additional information has articles on

  • board duties
  • job descriptions
  • how to read financial statements
  • a list of best financial practices
  • an article from HSLDA attorney Darren Jones on “Developing a Child Protection Policy”
  • and more.

 

 

All this is to help your board get organized, trained and ready to run a successful homeschool organization!

Best of all, this Homeschool Organization Board Manual is customizable! It is delivered to you as a Word document, so your homeschool group can put their name and year on the cover, type specific information in the document, and print out pages for each bard member!

And it’s beautiful! Homeschool mom, Tara Mitchell did the graphic design for me so it’s lovely to look at too!

And it’s very affordable! $9.95.

You only order one copy for your organization and then I give you permission to print off as many copies as you need for each board member!


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

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