Is your homeschool program running a daycare?

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True story: A homeschool program was meeting at a church one day a week. They provided nursery care and a preschool for younger siblings of the homeschool students enrolled in the program. The church also had a preschool program operating as a licensed daycare. One day while a state inspector was visiting the church’s preschool, he noticed another group of young children in another hallway.

“What’s that?” he asked.

“Well, those are the children involved in a homeschool program that meets here,” was the reply.

The inspector visited the homeschool program to ask a few questions to determine if the homeschool program was running an unlicensed daycare!

Is your homeschool program running an unlicensed daycare? Should your homeschool preschool be licensed?

It pays to take a little time to check your state laws regarding allowable exemptions from being licensed.

I checked out the laws regarding childcare or daycare licensing in my state of Ohio.

Some examples of programs which do not require licensure (in Ohio):
• Care provided in a child’s own home;
• Programs which operate two weeks or less a year;
• Programs where parents remain on the premises (unless at the parent’s employment site);
• Specialized training in specific subjects, such as art, drama, dance, swimming, etc.
• Programs which operate one day a week for no more than six hours.

So a homeschool program in Ohio might qualify to run a childcare program without being licensed if the parents remain on the premises or the program operates only one day a week for less than 6 hours. The other criteria of specialized training may apply as well, but a lot of homeschool programs do not specialize; they offer a variety of educational classes.

Check out your state laws regarding daycare licensing. Every state is different!

Carol Topp, CPA

 

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Overwhelmed by QuickBooks? Help is available.

QuickBooks is a great accounting software package, but it can be overwhelming. I have some suggestions to help you learn QuickBooks or get the help you need to use it correctly.

TechSoup (the program that offers QuickBooks online for free to nonprofit organizations) offers videos:

QuickBooks for New Nonprofit Users

QuickBooks for Existing Nonprofit Users a more advanced video

Techsoup also has some blog posts on QuickBooks.

Running QuickBooks in Nonprofits by Kathy Ivens is a great book. My go-to-referral for all things QuickBooks.


The resources listed above are helpful, but they are not specific to homeschool organizations.

I can recommend some homeschool moms and dads with bookkeeping experience who can help you. They know QuickBooks and have experience with homeschool organizations. These wonderful bookkeepers can help you get setup (that’s the hardest part), do a monthly or quarterly check up to see if you’re using the software correctly, or fix your QuickBooks file if you’ve blundered it up.

Email me to get a recommendation of a homeschool-friendly QuickBooks expert.


Carol Topp, CPA

HomeschoolCPA.com

 

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Are homeschool co-op fees childcare tax deductions?

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Carol,

A parent asked me for our tax ID number to give to her accountant for listing out tuition as a childcare expense. Is this common practice? Is it the EIN that she’s asking for? Should I give it to the accountant directly? We are 501(c)(3) state-registered corporation.

–Lisa C

 

Lisa,

The parent is asking for your EIN (Employer Identification Number), but the tuition and fees she pays to your homeschool program are (probably) not tax deductible.

IRS Pub 503 Child and Dependent Care expenses make it clear that tuition/education expenses are not child care and are not tax deductible.

Expenses to attend kindergarten or a higher grade are not expenses for care. Do not use these expenses to figure your credit.
However, expenses for before- or after-school care of a child in kindergarten or a higher grade may be expenses for care.
Summer school and tutoring programs are not for care.

If the child was in preschool at your co-op, then, maybe, the portion for the child’s preschool expenses could be childcare. By the way you may need to check your state laws to see if you are required to be licensed as a daycare.

But the child car tax deduction is only allowed for the parent to work. Was this mom going to work while her preschool daughter was at co-op? If yes, then it’s childcare; if no, then it’s not childcare and not eligible for a tax deduction.

I recommend that you not give her your EIN and explain that her tuition and fees to your homeschool organization are not child care expenses and not tax deductible.

In reality, she could find your EIN on the internet if she knew where to look, but it’s more important that you explain that tuition and fees are not tax deductible child care expenses.

Carol Topp, CPA
HomeschoolCPA.com

 

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Board members who won’t do anything

 

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I hear from a lot of homeschool leaders that they have board members who don’t do much. How frustrating.

Here’s some advice:

Do something. The problem is likely to get worse and a board member who is not participating can demoralize the entire board.

But stay hopeful. Many board members need a reminder to be more conscientious. You’re all in this together. Some inactive board members may need to be let go. They may be grateful that you’ve given them a graceful way to reduce their work load or even leave the board.

  • Check to be sure that expectations were made clear to the board member before he or she joined the board. “I know you joined the board recently and I’m not sure that you realize that we ask all board members to attend the annual dinner and, hopefully, to help sell tickets. Let me explain to you what most board members do, so you can see whether you’ll be able to work on this with us.”

Here’s a good list of Requirements of Board members.to get you started.

  • Hold a board discussion at which expectations are reconsidered and reaffirmed. Agree on a list of minimal expectations for every board member, and ask people to suggest how they might individually help as well.
  • Be sensitive to possible health issues or personal reasons why a good board member isn’t participating as much as he or she has in the past.

Remember, homeschool leaders carry a lot or responsibility. Your inactive member may be having health, marriage, or parenting problems that she is not sharing with you. Show grace and compassion and she may be so grateful for your support that she becomes active again.


Sorry, but the rest of this content is available only to my email subscribers! I know that’s a little bit sneaky, but I want my email subscribers to get special content like this list of steps to help an inactive board member.

Subscribe to my email list and get helpful tips for dealing with a board member who won’t do anything as well as special reports, discounts and and helpful resources that I don’t share on my blog or website.

 

 

 

My book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out also has helpful advice in picking board members, managing volunteers, and running a successful homeschool organization.

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Carol Topp, CPA

HomeschoolCPA.com

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Webinar on business failure in the homeschool market

I am always saddened to hear about business failure in the homeschool market. I feel pain for the business owner, their employees and their customers.

  • How can this happen?
  • Can it be avoided?
  • What can a customer do if they have lost a lot of money?
  • What lessons can a homeschool business or homeschool co-op learn from others’ failures?
  • Are homeschool teachers and tutors at risk?

I’m going to answer all these questions and more during a live webinar hosted by Tammy Moore of Virtual Homeschool Group 

Webinar: Business Failures in the Homeschool Marketplace

 

Date: Saturday January 14, 2017

Time: 2:00 pm ET, 1:00 pm CT, 12 noon MT and 11:00 am PT. The webinar will last about 60 minutes.

Cost: Free

Topics:

  • For parents: How can parents avoid losing money?
  • For homeschool businesses and nonprofits: Could it happen to us?
  •  IRS audits, penalties and safe harbor provisions
  • Worker Classification: General guidelines and possible solutions
  • For homeschool teachers and tutors: Are you at risk?

Join the webinar  here

You’ll need to download the webinar application on your computer or mobile device before the webinar begins.

or phone in on Saturday January 14 at 2 pm ET/1 pm CT (only audio)

Call-in number: 571-392-7703

Participant PIN: 375 427 129 85

 

Here’s a handout I created.

I hope many of you will join me on Saturday January 14, 2017 to discuss this very important and timely issue.

Carol Topp, CPA

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Top 10 blog posts of 2016

 

Here is a round up of the top 10 most important blog posts from HomeschoolCPA in 2016.

 

Many of them have to do with paying workers in a homeschool organization, probably because I was asked a lot of questions about paying volunteers, giving discounts in stead of paying teachers and the difference between employees and independent contractors.

I also spent a lot of time in 2016 researching and writing Paying Workers in a Homeschool Organization and my blog posts reflect what I was learning.

Compensation to homeschool board members is taxable income

Paying Workers in a Homeschool Organization updated book is ready!

Are homeschool co-op tuition discounts taxable income? Probably!

Can you discount a homeschool co-op class in lieu of paying the teacher?

How you pay your homeschool teachers could affect the property tax exemption for your host church

Can a homeschool group just get together without having to report to the IRS?

Adding religious purpose to bylaws and Articles

Use Quickbooks online for free

Are discounts to homeschool board members taxable compensation?

How the IRS defines a school

I wonder what 2017 will bring in the world of homeschool organizations!

Sign up for my email list to be kept up to date on the questions homeschool leaders are asking.

P.S. Subscribers to my email list get freebies, discounts and special reports I share only with them.

Carol Topp, CPA
HomeschoolCPA.com

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Accepting in-kind donations of equipment or services

Carol,

My homeschool group (a 501c3 nonprofit) was donated $500 in science equipment. How to I record a gift like this in my record keeping? We use QuickBooks.

 

How wonderful to receive such a generous donation. As a 501(c)(3) tax exempt organization the donation is a tax deductible contribution for your donor.

Thank the donor

First, be sure to thank the donor with a nice letter. State what the donation was (science equipment) but not the dollar amount. Only state the dollar amount when the gift is cash.

And be sure to include this note: “No goods or services were provided in exchange for this donation.”

Understand in-kind donations

A contribution that is paid or given in goods, commodities, or services instead of cash is called an “In-kind” contribution.

Free Church Accounting offers some great information on accepting and recording in-kind donations for small nonprofits like homeschool groups.

There are typically three categories of in-kind donations. They are

  • contributions of tangible and intangible goods
  • use of property
  • donations of services

Tangible gifts in-kind (physical goods that can be touched or held) include: furniture, equipment, food, clothing, supplies.

Example: The donation of science equipment is a tangible in-kind contribution.

Intangible gifts in-kind (goods have value but do not have a physical presence) include: trademarks, copyrights, patents, royalties, advertising.

Example: If a member of your homeschool group lets you print copies of her book or curriculum at no cost she has granted you an in-kind contribution of her copyright.

Use of property include free leased space and discounted rent.

Example: A church lets your homeschool co-op use their building for free.

Professional services given as gifts in-kind include services of accountants and bookkeepers, lawyers, plumbers or electricians, computer programmer, designers, technical support, etc.

Example: One of your members is an attorney and created bylaws for your organization.

Recording donations of in-kind contributions

Some small homeschool organizations don’t record in-kind contributions at all because they do not have to report financial statement to the IRS (they file the Form 990-N) or don’t use accounting software.

But if you would like to record your in-kind contributions in your accounting software here are a few examples from Free Church Accounting

An accountant donates 5 hours a month to do some accounting work that your organization would have had to pay another accountant to do. She regularly charges $100 per hour to do a similar service. To record this gift in-kind you would:

  • Debit Professional Service In-Kind $500
  • Credit In-Kind Contributions $500

Important reminder: Thank your donor for their services, but do not give them a tax deductible receipt for the value of their services. Donors cannot take a deduction for the time that they donated. Only donations of cash, tangible and intangible goods are tax deductible, not the value of services.


A business donates a portable building valued at $12,000. Assuming that your organization has a policy to capitalize assets of this value (meaning you depreciate the value over several years), you would record this gift in-kind like this:

  • Debit the fixed asset account (Portable Building In-Kind) $12,000
  • Credit the In-Kind Contributions $12,000

A person donates an computer valued at $400. Assuming that your organization has a policy to expense assets of this value (meaning you do not depreciate it; you deduct the full amount as an expense in one year), you would:

  • Debit the Equipment In-Kind (expense account) $400
  • Credit the In-Kind Contributions $400

 

Have more questions about properly recording your income, expenses and contributions? My book Money Management in a Homeschool Organization can help.

Or contact me to get help with your accounting set up and transactions. I can refer you to a cadre of homeschool parents with experience in bookkeeping.

Carol Topp, CPA

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Are you asking for donations on your website?

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Does your homeschool group accept donations on your website? Lots of nonprofits do and its a handy way for donors to send a donation.

But did you know that having a donation button on your website could mean that your organization would need to register as a charity in almost all 50 states? What a load of paperwork!

Harbor Compliance explains that, fortunately, many states follow the Charleston Principles for accepting donations on a website.

Generally, the Charleston Principles assert that registration (with each state) should only be required if:

  • non-internet activities alone suffice to require registration, or
  • the nonprofit solicits contributions through its interactive website or specifically invites further offline activity to complete a contribution, and either:
    1. Specifically targets persons physically located in the state, or
    2. Receives repeated or substantial contributions. (“Repeated” and “substantial” are left up to each state to define.)

The principles leave a lot of room for interpretation, which brings us to some practical state-specific pointers.

Top 5 Tips When Soliciting Donations Online:

As you prepare to solicit donations online:

  1. Always register in your state of incorporation.
  2. Following-up with fundraising contacts residing in unregistered states may trigger registration. For example, you receive an unsolicited and insubstantial contribution through your website from a resident of a state in which you are not registered. If you then solicit that contact via e-mail, phone, mail, or any other medium, that will be treated as solicitation triggering registration. E-mail is generally treated the same as a mail or in-person solicitation.
  3. Soliciting through a charity portal alone such as www1.networkforgood.com does not trigger registration. That is because it is a donor-advised fund that exists to distribute funds to other nonprofits. Technically the donation is given to the fund as the payee. Scrutinize any website before assuming it is a donor-advised fund; their fine print may pass the burden of charitable registration on to you.
  4. Your nonprofit may consider hosting a non-interactive websites that encourage donations through third-party sites or offline means. This may still trigger registration – it is not a loophole.
  5. You can use social media to send out information about your nonprofit’s activities without needing to register. When your language invites solicitation, you do need to register. A fan promoting donation independent of the nonprofit does not trigger registration.

Thanks to Harbor Compliance for this helpful information.

My source: https://www.harborcompliance.com/information/online-fundraising-charleston-principles

Carol Topp, CPA

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What financial reports do we need to generate monthly?

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Hi Carol,
We have purchased QuickBooks and our treasurer is working hard to learn  the software. What financial reports do we need to generate monthly?  We need these reports to be a simple process.The Balance Sheet and Profit and Loss statements in QuickBooks looks overwhelming.

Hilary S.

Hilary,

QuickBooks  can be as simple or as complicated as it needs to be. The reports your treasurer generates is based on what the board wants to see.

When I was treasurer, I gave my board a Profit and Loss statement.  They really liked to see the budget in one column and actual income and expenses in another column.  Then they could see how we were doing compared to our budget. This report can be generated in QuickBooks as a Budget Report.

I also created a mini balance sheet.  I took the amount in the checking account and then listed payments to be made.  This gave the board an idea of how much cash we had on hand and where it was planned to go.

If the stCover Money Mgmt HS Orgatements in QuickBooks are too overwhelming, then perhaps you’re not using QuickBooks correctly.  I frequently see QuickBooks users make their Chart of Accounts too long.  Then the Profit and Loss becomes 2-3 pages long.  I recommend that a Profit and Loss be kept to one page or less.

My book Money Management in a Homeschool Organization could be a big help to your treasurer. It has tips, samples and lots of examples.

 

If your treasurer would like my help in setting up QuickBooks, I’d be happy to help.  She can e-mail me with what needs to be done and I’ll give you an estimated cost.

I hope that helps.  I wish you the best of success!

Carol Topp, CPA


Want more tips on managing money in your homeschool organization? Sign up for my email list and I’ll send you my list of “best practices.”

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Avoid controlling your independent contractor

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This is an excerpt from my update book, Paying Workers in a Homeschool Organization

Avoid Controlling Your Independent Contractor

If your homeschool group would like to exert some control over teachers such as choosing curriculum or class content, requiring teachers to attend training sessions, or evaluating their performance, then you should pay them as employees.

One homeschool co-op was very particular about what method of teaching and content was taught to their students. They picked the curriculum and required training in their methods and their view of instruction. Then they evaluated the teachers on their teaching style, control of the classroom, and engagement with the students. They may be too controlling for their teachers to be accurately classified as independent contractors. They could increase the likelihood of properly treating the teachers as independent contractors by hiring teachers who are already trained in their methods and views of instruction, not require training (i.e., make it optional), and change their evaluation to focus on the completion of the tasks listed in their agreement and not focus on the teacher’s style of teaching. Or they could hire the teacher as an employee.

How Much Control is Too Much? The Plumber Test

How much you can control an independent contractor is a very difficult question to answer, because every situation is unique. Consider the model of a plumber when thinking about control and independent contractors. A plumber is an independent contractor who is hired for a specific, temporary job: to fix your plumbing. You usually have an informal, verbal agreement and may get an estimate of the cost before he begins work. He comes to your house at an agreed-upon time and brings his own tools. You may show him the problem and be in the room while he works, but you do not tell him how to do his job. You assume he knows what tools to use. He may return for additional work and will invoice you.

Now compare the plumber model to your relationship with your homeschool program’s independent contractors. Does it look like the plumber model? Then you are treating your independent contractors properly. If instead you exert more control over your workers than you do a plumber, then consider reclassifying them as employees.

If you need more information about your homeschool organization teachers, order Paying Workers in a Homeschool Organization today and consider a personal Worker  Classification Consultation with me for your peace of mind.

Carol Topp, CPA


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Paying Workers in a Homeschool Organization-2nd edition

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

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