Search Results for: Classical Conversations

Homeschool mom has concerns about Classical Conversations

I’ve written several blog posts answering questions from Classical Conversations (CC) Directors regarding:

Usually these issues affect CC Directors the most since they are the business owners that carry the responsibility and liability for operating a licensed CC Community that is compliant with local, state, and federal laws.

But sometimes the individual families in a CC Community are affected by these issues as well.

Homeschool blogger at As for Me and My Homestead, Jamie, wrote a blog posts titled, “Why My Family Left Classical Conversations.” In her post she outlines several reasons her family left CC after four years.

If you scroll to the end, she explains several business practices that she found concerning enough to make the decision to leave behind a group of homeschool families she deeply enjoyed and loved.

Through all the rest of this, I pushed the nagging, “something isn’t quite right” issues out of mind, and tried to focus on the positives.  Fortunately for me, the person who brought the errata sheet to my attention also invited me to join a Facebook group where I learned more about Classical Conversations that went beyond the mistakes and poor curriculum.

Jamie writes about several issues that bothered her including:

  • CC Corporate calling themselves (and the Directors’ businesses) a “ministry,” which can be misleading
  • Communities (as for-profit business) using churches
  • Misclassifying tutors as Independent Contractors
  • CC Corporate and local Directors using teenagers and parents as volunteer labor

She calls these issues “the tip of the iceberg.”


It’s never easy to publicly criticize a homeschool program, especially if your friends are still enthusiastic about it.

Jamie ends her post with this wish:

My hope is that in reading this, other families will see that CC is a corporation that is not operating in a godly manner, while claiming the name of God, and will find out that they could do so much better with their money & time, than join a CC community.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Do I Give Classical Conversations a 1099-MISC?

Carol Topp starts a new feature on her Homeschool Leader podcast: Q&A with HomeschoolCPA. 

In this first Q&A session, she is asked by a Classical Conversations® Director of she needs to give Classical Conversations® Corporation a 1099-MISC for the licensing fees she pays them.

It’s an excellent question and Carol Topp, CPA explains the purpose of the 1099-MISC, who needs to get one, and why.


In the podcast Carol mentioned an online service she uses to prepare her 1099-MISC statements, Yearli.com.  If you use this referral link you save 15% and Carol makes a small commission.


In the podcast Carol mentioned her book Paying Workers in a Homeschool Organization. This 130 page book covers paying workers as employees or independent contractors. It includes sample forms, tips, and advice to help you pay workers in accordance with the IRS laws to help your organization pay their workers correctly. Written specifically for homeschool organizations and businesses.


CC Directors and tutors may find Carol’s latest book Taxes for Homeschool Business Owners to be useful this tax season.

And she’s giving it away for free, but only in January 2020!

The ebook is 60 pages long and contains information on:

  • Business Start Up
  • LLC status
  • Tax Deductions
  • Tax Forms
  • Sample Tax Returns
  • Self Employment Tax
  • Paying Yourself
  • Paying Others
  • Businesses Using Churches
  • Should My Homeschool Program Be a Nonprofit?

This ebook is a great resource for:

  • Tutors or teachers for a homeschool program paid as an Independent Contractor
  • Classical Conversations®Directors
  • CC tutors
  • Coaches, musicians, artists, etc. hired to teach at a homeschool co-op

Get your copy of the ebook Taxes for Homeschool Business Owners today Homeschoolcpa.com/TAXESHSBIZ

Classical Conversations Consultations

Summer 2020 Special Offer: 50% off phone consultations for CC Directors

For details on this special offer and to book your consultation visit: HomeschoolCPA.com/CCBiz

 

I provide several services for  Classical Conversations Directors, Support Reps, Area Reps and tutors

Business Consultation

Discuss via phone or video chat the best business entity for you: sole practitioner, single-member LLC, partnership or corporation. Cost $100/hour. Prorated for partial hours.

Tax Consultation

Review your individual tax return to check accuracy in reporting business income and deductions. Or discuss tax record keeping and tax planning before tax season.

Worker Determination

Determine if a CC Director’s tutors and other workers are employees or independent contractors. The service will include a phone or video interview and will be followed up with Carol’s determination in writing, recommendations of changes you should make, and the consequences and penalties of misclassification.

I will also explain the IRS relief programs and help you apply for the IRS amnesty program to avoid costly IRS penalties.

Tax Exempt Application

Assist in determining eligibility for tax exempt status, the IRS application, and state filing forms for a CC Community formed as a nonprofit organization.

________________________________________

A valuable resource for CC Directors. Many friends of mine are living with anxiety about their tax status.

Katherine, CC Director

Allow me to express my gratitude and deep appreciation for the professional honesty that you have presented in your blog about tax classification, specifically regarding Classical Conversations.

– Daniel, CC tutor

________________________________________

Contact HomeschoolCPA, Carol Topp, CPA, at Carol@HomeschoolCPA.com to arrange for any of these services.

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Should a Classical Conversations Director be an LLC?

I am a CC director. I am not sure what is the best option when it comes to register our community. A LLC or as a Sole Proprietor? Thank you so much for your help.

Maria

Maria,

By default, if you are the only owner of your business, you are a sole proprietor. You could consider adding LLC status to your sole proprietorship business if you want the limited liability protections that LLC status offers.

The reason that most businesses use the LLC structure is for limited liability. That means the liability is limited to your business and its assets and not your personal assets. I organized my own sole proprietorship accounting practice as an LLC  because I wanted limited liability and protection of my personal assets. LLC status can be added to your sole proprietorship business at any time. I ran my accounting business for 3 years and then added LLC status.

I recommend that you read up on LLC status (an article I wrote for authors, but applies to all businesses), how to get it, maintain it (there are things you should do like not co-mingle funds and sign contracts in the name of the LLC, etc) , and what is required in your state regarding fees and reports. Some states charge a one-time fee, some charge a yearly fee and annual reports.

My new ebook for CC Directors answers the most common questions I am asked by CC Directors about running a business including LLC status!


Since this is a website mainly for homeschool nonprofit organizations, I will add this note:

For a nonprofit organization, such as most homeschool groups, I typically do not recommend LLC status since nonprofit corporation status in your state brings similar protections of limited liability. 

Here is a podcast episode where I discuss Should Your Homeschool Group Be An LLC?

But Maria is asking about LLC status for her for-profit business, not a nonprofit organization, and my advice to her may be very different from my advice to a nonprofit organization.


I am not an attorney, nor am I offering legal advice. I recommend that you seek legal counsel if you have additional questions about Limited Liability Company status.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Aren’t Classical Conversations tutors just like online tutors?

I’m a Classical Conversations Director and I have a local CPA. I have a question about independent contractor status for tutors. The articles I read here seem to suggest we should treat tutors as employees. Yet, for several years I worked as a tutor for national online tutoring company as an independent contractor. I was given training, direct oversight, evaluations, worked for 5-10 hours a week, yet I was an independent contractor.

What is the difference with CC tutors in the eyes of the IRS? Just trying to understand!

Thanks, Allison

 

Allison,
Thank you for contacting me.

You seem to assume that your worker classification as an Independent Contractor as  a tutor for a national online tutoring company was the correct classification. I’m not convinced it was.

You only told me four bits of information about your relationship with the online tutoring company (I was given training, direct oversight, evaluations, worked for 5-10 hours a week), yet three of those practices (training, evaluations, and oversight) would confirm your status should have been as an employee, not an Independent Contractor.

When I make a worker determination, I do not base my conclusions on what other companies have done or are doing. I base my conclusions on the IRS guidelines, tax court cases, IRS rulings, and the facts and circumstances of each case.

You asked, “What is the difference with CC tutors in the eyes of the IRS?” There may not be many differences in the online tutoring and tutoring for CC,  but I don’t assume that you were correctly treated as an IC when you did the online tutoring.

Classical Conversations offers an ebook I wrote, Taxes for Licensed Classical Conversations Directors, where I explain the options to CC Directors in how to pay tutors.  You can treat your tutors as Independent Contractors and in the ebook I explain the risks and consequences involved.

You might show portions of the ebook to your local CPA and get his/her opinion. If he or she determines your tutors are Independent Contractors, then you should request that your CPA put his/her conclusion in writing and on firm letterhead. A letter like that could possibly help you avoid IRS penalties if you are ever investigated by the IRS. But let’s hope you never need it!

If you have more questions, I would be happy to arrange a phone consultation with you. We can discuss a lot of topics in an hour, but in particular your questions about paying your tutors.

Carol Topp, CPA

 

Taxes for Classical Conversations Directors

UPDATE 2020: I have been told that the ebook Taxes for Licensed Classical Conversions Directors is no longer available in the most recent 2020 Classical Conversations Director’s Licensing Guide.

But you can purchase a copy of my latest ebook Taxes for Homeschool Business Owners. It is more up-to-date than the other ebook since there were major changes in the tax laws and forms in late 2018.

Last tax year I was asked a lot of questions about taxes by Classical Conversations directors and tutors. Things like:

  • What tax form should I to use to report my income and expenses?
  • What expenses were tax deductible?
  • What tax forms do I need to give to my tutors?
  • How should tutors be paid?
  • How do I pay myself as a CC Director?

Fortunately, there is an ebook in the works to help CC Directors titled:

Taxes for Classical Conversions Directors

The ebook is available only to Licensed CC Directors from Classical Conversations, Inc

You can find the ebook here

 

I recommend the following blog posts:

CC Directors: Do not give yourself a 1099-MISC

Tax return for a Classical Conversations homeschool business

I’m a Classical Conversations Director. Do I have to file any forms with the IRS?

Understanding Taxes for a small homeschool business


There is a lot to learn about running a business. I don’t mean to discourage you or anyone else away from operating a homeschool business. You provide a valuable service to homeschool families! I am offering this webinar to help you understand the tax implications:

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


 

Consult a local small business CPA. To find a local tax preparer I recommend two sources:

Both of these websites allow you to search for a local tax preparer who is knowledgeable about taxes for small sole proprietor businesses.

 

Carol Topp, CPA


Free Resource

In the ebook, I mention a bookkeeping spreadsheet for CC Directors. You can get the spreadsheet now (all it costs is your email!)

 

 


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Tax return for a Classical Conversations homeschool business

We are a new Classical Conversations community set up as a single member LLC. We only had 2 students and so my tutor’s income was below the requirement for filing 1099s. Same for me. However, I saw that I shouldn’t be filing a 1099-MISC for myself. What should I be doing?

And what is considered profit for a CC community?

Esther

 

Thank you for emailing me your question about taxes and your Classical Conversations (CC) business.

As a single member LLC, you are a sole proprietorship and you report your income and expenses from your CC business on a Schedule C Profit or Loss from Business as part of your Form 1040.

All your income from the tuition and fees charged to your customers (i.e. parents) goes on line 1 Gross receipts or sales. In this example the total income is $4,500.

Your payment to your teacher(s) goes on Line 11 Contract Labor.  In this example a total of $2,250 was paid to independent contractors. Other expenses go in the categories listed in Part II of the Schedule C. Other expenses made the total expenses sum to $2,982 as shown on Line 28.

The profit is shown on Line 31. It is calculated  from Gross Income (Line 7 on the form) minus Expenses (Line 28). The profit is what you get to keep (and pay taxes on!) as the business owner. In this example the profit is $1,518. This amount will carried forward to the Form 1040.


There is a lot to learn about running a business. I have a webinar to help you understand the tax implications:

My webinar Tax Preparation for Homeschool Business Owners 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


P.S. I am no longer taxing new tax clients, so I recommend you find a local CPA to help you in preparing your tax return. To find a local CPA or accountant I recommend you try Dave Ramsey’s Endorsed Local Providers and Quickbooks Proadvisors. A lot of CPAs and accountants listed on these sites specialize in small businesses.

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

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I’m a Classical Conversations Director. Do I have to file any forms with the IRS?

On April 15 last year (you know, that day the personal tax returns are due!), I received this email:

I need to be sure I don’t have any tax forms to file with IRS. This was our first year as a CC community, with only 2 tutors and 12 children.
-Name withheld to protect the guilty

 

Just as aside before I answer her question: This CC Director treated her tutors as independent contractors all year long. That may or may not have been the proper worker classification for them. She may have exerted enough control over the tutors that they should have been treated as employees, but I did not address that issue with her. At this point, what the director did in the past with regard to paying her tutors is done; it cannot be changed now. I addressed what she needs to do now to properly file her taxes.

Dear Name withheld,

As a Classical Conversations (CC) director, you are a small business owner.

You should have given your tutors a Form 1099-MISC to report the income you paid them (assuming you classified them as independent contractors). The Form 1099-MISC is to be given to each tutor by January 31 each year for the income paid in the prior year. A copy is also sent to the IRS. It sounds like you missed that deadline.

By the way, you cannot simply print the Form 1099-MISC from the IRS website. You must order forms from the IRS, purchase them at an office supply store, or use an online filing program like Yearli.com (that’s the service I’ve used to file my 1099-MISC and my affiliate link).

You should also have reported your income and expenses from your CC business on your personal income tax return, using Form 1040 Schedule C Profit or Loss from Business.

If you had a profit of more than $400 for the year, you will also owe Self-Employment Tax. It is calculated on Form 1040 Schedule SE.


Taxes for 2018 will be very confusing with the new tax law changes and redesigned IRS Form 1040. I am offering this webinar to help you understand how to prepare your tax return:

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’m afraid Name-withheld is very late in filing these forms! She may owe a penalty for late filing your 1099-MISC forms. She may need to file an amended federal income tax return (Form 1040X)  if she failed to include her CC income and expenses. She may also need to amend her state income tax return.

I strongly recommend that Name-withheld contact a local CPA to discuss amending her federal and state income tax returns.

She may also need to address if independent contractor status is the proper classification for her tutors. My book Paying Workers in a Homeschool Organization can help determine the best classification for workers.

Carol Topp, CPA

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Are Classical Conversations tutors employees or independent contractors?

Hi Carol,
I am a part of a Classical Conversations community with a Foundations/Essentials director. The Foundations/Essentials directors hire tutors to run the classrooms on community day.

I am concerned that the  tutors are being treated as employees even though they are paid as independent contractors. Can a Foundations director hire tutors as independent contractors and still be able to specify what time they start, what material to cover and for how long they are to cover it, require training in the summer and training every 6 weeks of class etc?

Would a contract help? It seems like the contract could call the tutor an independent contractor but the Director could still treat them like employees.

This is hugely concerning and our campus wants to operate in a legal way. We are considering hiring a lawyer to help us understand all this. Is the lawyer the way to go? Or would you be able to advise on how to handle this?

We want to be legal and try to sort out truth in this whole legal situation.

Thank you for your time,

Katherine

 

Katherine,

Thank you for contacting me. I have been talking to several Classical Conversation (CC) Directors and tutors about worker classification. It’s a confusing and complex topic!

Factors: control and key activity

The question of whether CC tutors are independent contractors (IC) or employees involves many factors to consider including some you mentioned such as training, specific time and place to work, the curriculum to use, etc. But you are majoring in the minors and neglecting the overarching issues.

Two overarching factors to consider are:

  1. the amount of control the Director exerts (or has the right to exert) over the worker
  2. if the tutors are providing the key activity of the business.

By the way, these factors of control and providing a key activity apply to all types of homeschool groups, not just Classical Conversations.

Some homeschool organizations may depend heavily on the tutors’ services as the key activity of the business, while other homeschool groups may not use tutors as the key activity because they rely on volunteer parents to teach their classes.

My conclusion: CC tutors are employees

In my professional opinion as a CPA qualified and licensed to practice before the IRS and after much research and interviews with CC Directors, I conclude that CC tutors provide the key activity of the business and the Director has the right to exert control over the tutor, making them employees.

Would a contract help?

You asked, “Would a contract help? It seems like the contract could call the tutor an independent contractor but the Director could still treat them like employees.”

You’ve hit the nail on the heard. Having a contract is not assurance that a tutor is an independent contractor; how they are treated carries more weight in determining proper worker classification.

Worker Classification Determination

You asked, “Is the lawyer the way to go?  Or would you be able to advise on how to handle this?

I can make a fact-based worker classification determination. In this determination, I substantiate my opinion based on all the facts, not just the few you mentioned, and court cases involving worker classification.


Additionally, I also just updated  my book Paying Workers in a Homeschool Organization. It explains both the current criteria the IRS uses and the criteria they have used in the past to determine independent contractor or employee status.

 

 

 

 

You could, of course, convert all your tutors to employees, and sleep better at night! I can explain the steps you’ll need to take.  It will be more paperwork and more expense, but you won’t worry about an IRS investigation on worker status.

Carol Topp, CPA

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Can a Classical Conversations community be a tax exempt nonprofit?

 

I am directing a local Classical Conversations group, and many churches in our area will not consider housing us because we are not a nonprofit. Since I am basically an independent contractor licensed by CC corporate to run a community in my area, am I potentially eligible to have my community declared a nonprofit?

-Jen, Classical Conversations Director

 

Jen,

I recently discussed nonprofit status for CC Communities with Classical Conversations COO, Keith Denton.  He explained to me that “CC Directors (who are licensees of CC) may form an entity through which to run their homeschooling operations.

“CC does not require a director to run his/her homeschooling program through an entity, nor does it require that such director choose a specific type of entity (non-profit versus for profit) for its homeschooling community.

“CC recommends that all directors consult with an accountant and lawyer when making the decision of whether to form an entity, and what type.  The decision of which entity to form depends on a variety of factors specific to the director and state where the homeschooling community is formed.  As such, consultation with an attorney and accountant in a director’s community is highly recommended to best address all relevant factors. ”

I have helped several classical homeschool program apply for 501c3 tax exempt status, but not a community under a licensed director.

I can help you weigh the pros and cons of for profit or nonprofit status for your CC Community. Contact me to schedule a phone consultation.


 

Have you considered wanting to start a homeschool program? An academic program, but not a co-op and not a for-profit business, either. But a nonprofit organization with an academic emphasis–maybe with a classical education focus.

Sounds like a great idea! But where to begin?

Carol Topp, CPA, the Homeschool CPA and Jamie Buckland are teaming up to to bring you:

ABC’s of an Academic Homeschool Program

An hour-long webinar on Monday February 18, 2019 at 8 pm ET

The webinar will be recorded for later viewing.

Get details and register here.


Carol Topp, CPA

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