Good, easy and cheap. Your homeschool program cannot offer all three!

01/21/2020 by Leave a Comment

Shelly wants to offer a high quality, low cost homeschool program that doesn’t require parents to volunteer.

I told her the bad news: “You cannot offer all three.”

She can’t and you can’t either!

Business success (and failure) prove it:

McDonald’s provides fast food very quickly at a fairly reasonable price; But you have to admit the quality is not the best. They offer two things consumers want, but not all three.

Another example could be Starbuck’s coffee.  At Starbuck’s they offer high quality coffee drinks provided quickly, but we know that it’s not cheap! 

Or how about MoviePass which allows you to go to a movie theater once a day for $9.95/month, or see three movies a month for $7.95. It’s cheap, convenient and high quality (these are first run movies, not oldies!)  Is Movie Pass able to offer all three! Nope! MoviePass is having serious financial problems. It is losing $40 million a month, and those loses are expected to increase. Their attempt to offer all three is crushing them and they are on the road to failure.

How does this apply to homeschool groups?

Your group can offer two of the three things that homeschool families may want:

High quality: maybe small classes, qualified, caring teachers, fun enrichment classes or rigorous academic classes

Low Cost: Affordable prices, low fees, maybe even free!

Convenient: No time commitment from the parents, maybe even a drop-off-the-kids-and-leave option for homeschool parents who need to work.

Many homeschool co-ops offer quality and low cost but have a requirement that the parents stay in the building and help by teaching or serving in a classroom or other jobs. Hence the name “cooperative.” The parents keep the cost low by cooperating together to run the classes.

A tutorial program might offer academic classes taught by highly qualified teachers with no volunteer commitment for the parents, but it will not come cheap. The tuition may approach that of private schools.

 

Shelley wanted all three (drop off academic classes at a low price) and I explained that she could not sustain the program unless she either charged more or started requiring the parents to volunteer.

“But many parents can’t pay more,” she complained to me. “And they work, so they need the drop off feature. They can’t stay and volunteer.”

She had 3 options:

  1. Find other sources of funding including fundraisers, donations and grants.
  2. Require parents to volunteer. This was going to be be very difficult since Shelly was having problems even recruiting board members to meet once a  month!
  3. Close the program and start over. The expectations of the parents was so entrenched that they should get drop-off classes at a low fee, there was no changing that! The entire program needed an overhaul.

My book Money Management in a Homeschool Organization has a chapter on fundraisers for homeschool groups.

Money Management in a Homeschool Organization available here

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Filed Under: Co-ops Tagged With:

Free ebook: Taxes for Homeschool Business Owners

01/09/2020 by Leave a Comment

Are you a tutor, teacher or CC director of a homeschool business? You might be very confused about your taxes.

Carol Topp, the HomeschoolCPA, has a book for you! And she’s giving it away for free, but only in January 2020!

In this podcast episode Carol explains who the ebook is for: tutors, CC Directors, teachers in a homeschool program, and coaches, musicians, artists, etc. hired to teach at a homeschool co-op.

Listen to the podcast

Get your copy of the ebook Taxes for Homeschool Business Owners today (all it costs is your email)

Homeschoolcpa.com/TAXESHSBIZ

Did you hear about the special offer Carol is making?
In the month of January 2020 Carol is giving away the ebook for free! Just to help homeschool parents who are running a homeschool business prepare their taxes correctly and stay out of trouble with the IRS!

Filed Under: Podcast

Taxes for Homeschool Business Owners ebook: Free in January

01/07/2020 by Leave a Comment

I am please and proud to announce my latest book, Taxes for Homeschool Business Owners!
Read more here.

I am also excited to announce that the ebook will be available for free during the month of January 2020!
(after January it will be for sale for $10)

I am offering the ebook for free because I have spoken and emailed with so many homeschool business owners that are confused about their taxes. This is my attempt to keep you put of trouble with the IRS!

To get your copy of the ebook, enter your email here:

Please do not share the ebook file with other people or post the ebook file on the internet. If you know someone who would be helped by the book, please send them to this page and they can download their own copy.
Share this link: HomeschoolCPA.com/TAXESHSBIZ


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(R) Directors
  • CC tutors
  • Coaches, musicians, artists, etc. hired to teach at a homeschool co-op

Thank you so much for the tax resources you put out there, it’s been super helpful for me as a director of our CC Homeschool campus! -Jessica

As we do our taxes this year I am thankful for your knowledge and being willing to share it. I GUARANTEE many women WEREN’T doing their taxes correctly. -Julie

I also have a webinar that explains the details of preparing a tax return called “Tax Prep for Homeschool Business Owners.” I think it will be very helpful (in addition to the ebook). The cost to view the 90 minute webinar is $10.  Purchase the Tax Prep Webinar for $10

I hope you find the ebook and the webinar helpful this tax season!

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Filed Under: IRS Issues, Money & Budgets Tagged With:

End of Year Tasks for Nonprofit Homeschool Groups

12/31/2019 by Leave a Comment

Happy New Year! In the new and out with the old.

But wait! Not so fast!

There are several tasks a nonprofit homeschool group needs to do to finish out the prior year before forging ahead.

1. Wage Form W-2 to employees by January 31st:  Your treasurer should furnish Form W-2 to employees who worked for your organization during the past year by Jan 31st.
The cover sheet for the W-2s, called a transmittal form W-3 transmittal form is due the end of January as well.

2. Independent Contractor Form 1099-MISC are also due January 31. Provide a Form 1099-MISC to individuals paid $600 or more in 2019 for performing a service for your nonprofit. Like the W-2s, the 1099s have a cover page, Form 1096 transmittal form that is also due by Jan 31st.

In 2020, the IRS will be replacing the 1099-MISC for non-employee compensation with a separate form called 1099-NEC. It will be used in early 2021 to report 2020 payments to independent contractors. Click here to see the IRS draft.

PaperW-2s and 1099-MISCs are a nuisance to fill in and mail, so do what I do and file online.
I used a service called Yearli.com for years. They are fast, easy and inexpensive.
Check them out! https://mbsy.co/rzrbp
Using this link gets you a 15% discount and (full disclosure) I make a small commission.

The start of a new year is a great time to determine if your workers should be classified as an employee or independent contractor.

Worker misclassification is a serious issue and can cause significant financial hardship and has caused several businesses to close. Penalties for misclassifying a worker as an independent contractor are very stiff and strictly enforced so now is a good of time to make sure every one of your workers are properly classified. Read more here…

My book Paying Workers in a Homeschool Organization will help to determine if a worker is an Independent Contractor or employee.

For more specific advice, I offer a Worker Classification Consultation.

3. Contribution statements for donations your nonprofit received in 2019. A donation is recorded when it is received even if you don’t deposit the check until the new year. The only exception to that rule is if you receive a check in the mail and the envelope is dated December 31st or before. You can count that as a donation in 2019.
Your contributions statements to donors should be mailed in January so donors can prepare their tax returns.

Those tasks will keep your treasurer (or hired bookkeeper) pretty busy in January!

If you’re needing bookkeeper, I recommend Mary Musick, CPA (inactive) and current homeschool mom. Mary runs a bookkeeping service and can help your homeschool nonprofit with bookkeeping and payroll. Her email is hfbkkpg@gmail.com.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Filed Under: Paying workers, Uncategorized Tagged With:

Merry Christmas 2019! Don’t plan on getting a lot done!

12/24/2019 by Leave a Comment
Topp family in Zion National Park, Utah August 2019

Merry Christmas from HomeschoolCPA and the entire Topp family! The photo was taken in August 2019 on our family vacation to Zion National Park in Utah. What an amazing, beautiful place. We loved the time we spent there.

I hope you have a restful, peaceful holiday.

Are you like me and think, “I’ve got some time off (from homeschooling, running a homeschool group, work, etc.), so I’ll get a lot done!” but you never do?

I always think I will get so much done on my Christmas break. My list this year includes:

  1. Organize my basement so I can have a real studio to paint and draw.
  2. Read novels, nonfiction books, and a required textbook for my CPA license continuing education.
  3. Catch up on blog posts and podcast episodes for this site (and a few others sites I manage).
  4. Take an online classes (in colored pencil drawing my new hobby).
  5. Prepare emails, blog posts, tweets for a new book I am releasing in January. 🙂

Who am I kidding? I’d be lucky to start two of these tasks and get one of these tasks finished!

Why can I not get everything done that I plan over a break?

Well, it’s because my husband is off work and my adult daughters hang out at our house a lot during the holidays.

So the real reason I don’t get a lot done is that getting stuff done is NOT the point of a holiday break.

The point is to rest, recharge, and spend time with my loved ones!

So I plan to do that and let the list be replaced with this task:

Rest and spend time with my family.

I wish you and your family a restful, peaceful Christmas and New Year. Just don’t expect to get a lot done! 🙂

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Filed Under: Burn Out

Where to get initial funding for a homeschool nonprofit start up?

12/17/2019 by Leave a Comment

A homeschool parent is launching a new homeschool program. Like many nonprofits, she needs some money to start up.

The main concern for our group at the moment are funds for filing (for nonprofit incorporation and 501c3 tax exempt status).

We have brained stormed and agreed on holding a spaghetti dinner fundraiser but we aren’t positive that this will bring the funds we are hoping for. Another idea is to present the exact cost to those members interested and see if they will be willing or able to divide the start up cost.

Sounds like you have an exciting adventure ahead of yourself by forming a  homeschool nonprofit!

You asked about initial funding. Many homeschool groups get their initial funding from donations (or loans) from the board members. You could also ask friends, family and potential members for donations.

Having a fundraiser or soliciting donations can be tricky because you need a bank account and to get that you need an EIN and you should get an EIN only AFTER you form a nonprofit corporation. But that’s what you need the funds for, so you’re caught in a Catch-22 cycle!

Additionally, some state require organizations to register before conducting a fund raiser or soliciting contributions from the general public. Here’s a source to see what your state requires: https://www.harborcompliance.com/information/nonprofit-compliance-guide

So it seems donations (or temporary loans) from the board members or potential members is your best option.

Helpful Resources

I have three podcast episodes  to explain starting a nonprofit or converting a homeschool business into a nonprofit organization. My podcast can be found at HomeschoolCPA.com/Podcast The episodes are:

  • Episode 168 Part 1 Nonprofit basics
  • Episode 169  Part 2 Nonprofit corporation
  • Episode 170  Part 3 Tax exempt application

Additionally, I have a webinar that goes into much more in-depth on starting a nonprofit organization. Unlike the podcasts which are free, the webinar costs $10.


Get details for Create a Nonprofit for Your Homeschool Community webinar at HomeschoolCPA.com/CreateNP

If you don’t want to be taxed on any surplus, then you’ll need nonprofit AND tax exempt 501c3 status for your new group. The webinar will explain that. 🙂

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Filed Under: 501(c)(3) status, Money & Budgets, Nonprofit status

DIY 501c3 tax exempt status

12/12/2019 by Leave a Comment

In 2019 Carol Topp started an ambitious project. She set out to record 3 webinars to hep homeschool groups form a nonprofit and apply for 501vc3 status.

In this podcast she describes these 3 webinars.

Create a Nonprofit Organization for Your Homeschool Community

501c3 Application for Homeschool Nonprofits

IRS and State Filings for Homeschool Nonprofits

(click each title for details)

The 3-video set plus resources, ebooks, checklists, etc. sells for $50

This 3-webinar set is great for:

  • Brand new start up homeschool groups
  • Existing groups that never formed as a nonprofit
  • Existing groups that never applied for 501c3 tax exempt status
  • Homeschool communities run as a business that want to convert to be a nonprofit organization

Learn more about this 3-webinar set to apply for 501c3 tax exempt status.

Filed Under: 501(c)(3) status, Tax exempt status revoked, Videos Tagged With: , ,

New homeschool co-op wants simplicity. Any taxes due?

12/10/2019 by Leave a Comment

Hi Carol.
I started up a group of a few families last year as a homeschool co-op in our community. As we have grown a little more this year, I would like to start up a checking account.

My question is, after I get an EIN and open the checking account for the co-op, what is required at tax time, if anything, for having that account?

I don’t want to be recognized yet with the IRS as a 501c3, just for sake of simplicity at this time. Am I going to be required to do anything because of having this checking account?

We do not pay teachers, the account is strictly for fees and supply costs.

This semester we will only be taking in about $2,500 at max. and that is stretching it.

Thank you for your advice.
Callie


Callie,

I have answered your questions in some blog posts that you may find helpful:

Will getting an EIN put us on the IRS radar?

Best of: Checking accounts for homeschool organizations

We’re not 501c3 and don’t want to be!

The last blog post explains you have a few choices if you collect money and provide a service:

  1. Stay small and self declare 501c3 tax exempt status. This is the simplest option and the one I recommend for Callie’s organization.

    She will have to call the IRS once to self-declare her 501c3 status and get added to the IRS Exempt Organization database so the group can file their annual IRS Form 990-N.

  2. Consider another tax exempt status such as 501c7 social club. This is applicable to support groups or clubs, but not for Callie’s homeschool co-op.

  3. Apply for 501c3 status, especially if annual revenues exceed $5,000/year. I can help with that.

  4. Pay taxes as a for-profit business. That’s the least simple way to go! I don’t recommend it!


If you are starting or running a tiny homeschool program (usually less than $5,000 in income in a year), then you’ll benefit from my resources and podcast series for Tiny Homeschool Groups.

Tips for Starting a Tiny Homeschool Group

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Filed Under: 501(c)(3) status, Co-ops Tagged With:

Homeschool Teacher Accused Molester: How to Safeguard Children

12/03/2019 by Leave a Comment

The headlines that came proclaimed something we all fear: A homeschool teacher molests 17 year old girl.

Arkansas mom held for sexually abusing teenage girl

As homeschool leaders we never want to read about the horrific things that could happen in a homeschool program.

In this specific case, the events between the accused and victim did not take place during the co-op time.

Take time to assess your risk based on your activities. Develop, communicate, and stick to a plan. The links below will help.

Check with your state to determine who is mandated to report child abuse.

In this case, a parent reported her concerns to the pastor of he church where the homeschool co-op was held. He is a mandatory reporter and the pastor reported the abuse to the police.

Reporting is typically confidential.

Your leadership needs to know what to do if there is a report of suspected abuse. It is never the leadership’s responsibility to investigate, only to report to authorities.

Often, leaders feel they should investigate to see if it really happening – feeling that they need to have the claim substantiated before reporting, but that’s not true.

 

Resources to Safeguard Children

There are lots of websites that offer guidelines on assessing your risk and creating a response plan. Below are two that will get you started.

This important thing is not that you read these sites.

The important thing is that your board create and stick to a plan.

Get educated and act on it.

Managing and reducing risk in your program

Key Principles in Youth Protection

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders…to safeguard children

Filed Under: Boards, Co-ops Tagged With: , ,

Does bank account need to be less than $5,000 to be self declared tax exempt?

11/26/2019 by Leave a Comment

We are a small group (43 families) starting a non-profit. We have used several of your free and purchased resources. Thank you for your work in this space.

Question…does the opening balance of the bank account need to be less than $5,000 to remain self declared?

We will be receiving about $5,000 from a now defunct homeschool group to help us start off.

Our annual income won’t exceeded $5,000, so we plan to self-declare our 501c3 tax exempt status. Will the account balance of over $5,000 be considered income of over $5,000?

Thank you in advance for any information you may provide.

 

 

Thank you for contacting me.  I’m glad my resources have been helpful.

You asked, “..does the opening balance of the bank account need to be less than $5,000 to remain self declared?“
No. The IRS only looks at the annual gross revenues, not bank balances.

If the original groups wants to gift the new organization $5,000, that would be income (a donation) in the year it is received.  So that large donation could mean the new group has over $5,000 in gross revenues in that year.

But the IRS guidance* for self declaring 501c3 tax exempt status says:
“normally not more than $5,000.”

A one time large gift would not be “normal,” so the organization could still self-declare 501c3 tax exempt status if your normal gross revenues are under $5,000/year. 🙂

I hope that helps!

* Source: Instructions for Form 1023 page 1 “Form 1023 not necessary.”

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Filed Under: 501(c)(3) status, Money & Budgets Tagged With: , , ,