Ideas of easy fundraisers for homeschool groups

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UPDATE: This podcast episode originally aired in 2014, but it is still very applicable in 2021, except that Box Tops has now gone digital! No more clipping coupons. 🙂



Your homeschool organization probably looks for extra ways to bring in money. Carol Topp, the Homeschool CPA, shares ideas for easy fundraising in this episode of the Dollars And Sense Show podcast.

Listen to the podcast here

Show Notes

Coupon and reward programs
Box Tops for Ed cation. Need 501c3 status
Shopping reward like Kroger Plus program
E Scrip

Food as a fundraiser
Pizza sales, bake sales to members
Candy, popcorn sales to public could impose a reporting to you state’s AG office
Restaurant (Chik-Fil-A) give a percent of proceeds from one night to your organization
Dinners as fundraisers

Donations
Via email, website, crowd funding, etc
Read-a-thon or walk-a-thon
Car washes and bake sales

Sell products
Ideas at TopSchoolFundraisers.com
Used curriculum sale. Charge an entrance fee, or a table fee to the sellers (or both!)

Reporting the Fundraiser income:
The IRS considers fundraisers to be unrelated to your nonprofit purpose and therefore, subject to taxation. Exceptions to the Unrelated Business Income tax:

  • Under $1,000 income from fundraisers in a year
  • All volunteer labor (no hired help to run the fundraiser)
  • Not regularly carried on
  • Selling donated items

State Charity Registration for fundraisers

Your state may require reporting to their Charitable oversight agency (usually the state Attorney General) if you sell to the public or solicit donations from the public. Some exceptions to registering with your state include: only making sales to your members, a dollar threshold ($25,000 is common), using all volunteer labor for your fundraisers. These exceptions vary by state.

Unsure about what reports your state requires or what exceptions you qualify for? HomeschoolCPA offers a service to research your states laws and required reports. IRS and State Filings Research

Here’s a helpful link to start researching what your state requires. Fundraising Compliance Guide

Warning: No Individual fundraising accounts!
See Scouts don’t allow individual fundraising account (and neither should you!)

More information

Money Management in a Homeschool Organization book

Blog posts on fundraising

Article “Easy Fundraisers for Homeschool Groups”

Unsure about what reports your state requires? HomeschoolCPA offers a service to research your states laws and required reports. IRS and State Filings Research

Money Mgmt HS OrgCover

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Paying Workers in a Homeschool Organization Part 2 podcast

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UPDATE: I aired this podcast originally in 2014, seven years ago. It’s still very useful and paying workers is a topic that come up frequently for homeschool group leaders. I’ve updated this blog post with a few changes of IRS forms and links.

Do you pay workers in your homeschool organization?

Do you know what form to to filing with the IRS?

Homeschool CPA, Carol Topp, will share the details of what you need to know about paying workers in a homeschool organization in this 30 minute podcast. Part 2 of a 2 part series.

Listen to the podcast

Be sure to listen to the first part of this podcast (Episode #17) where Carol explains the difference between employees and independent contractors.

Show Notes:

Applying for EIN. Use IRS Form SS-4. Read this helpful article first Getting an EIN from the IRS. (updated link)

IRS forms to give to independent contractors (IC).

  • Use IRS Form W-9 to collect the IC’s legal name and EIN.
  • Read IRS Pub 15A Employers Supplemental Tax Guide.
  • Give Form 1099-MISC (UPDATE: as of Jan 2021, the Form is now 1099-NEC Nonemployee Compensation) to every IC paid more than $600 in a calendar year. Unfortunately Form 1099-MISC (now 1099-NEC) cannot be printed on your home printer. You must order them from the IRS or buy a set at an office supply store. I use FileTaxes.com (now called Yearli.com) to file and mail Form 1099-MISC. Yeali’s fee is now $5.50-$6.50 per 1099-NEC. (2021)

IRS forms to give to employees

  • Collect a W-4 and an I-9 (Immigration) from each employee. Get employment forms at IRS.gov
  • Read IRS Pub 15 Employers Tax Guide
  • Give each employee a W-2 at the end of the year. (I recommend Yearli.com to file and mail the W-2’s to employees)
  • Form 941 or 944 to pay your employer taxes (Social Security and Medicare). Find employment forms at IRS.gov.  I use Yearli.com to prepare and file 941/944.

What to do if you are paid by homeschool organization an receive a 1099-NEC?

  • File Schedule C Profit or Loss from Business of the Form 1040. List all your income and expenses from being a independent contractor.
  • Pay federal income tax and  self-employment tax (same as Social Security and Medicare for self-employed people) using Schedule SE (attached to your Form 1040.

Helpful Resources

Money Management in a Homeschool Organization

Cover Money Mgmt HS Org

Paying Workers in a Homeschool Organization

And if you are a workers in a homeschool organization and receive a 1099-NEC or need to report your earnings even without an 1099-NEC, this ebook will be very helpful:
Taxes for Homeschool Business Owners


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Paying Workers in a Homeschool Organization Part 1 podcast

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UPDATE: I first aired this podcast episode in 2014, 7 years ago! How to pay workers is still a common question and issue faced by homeschool groups leaders, so I am updating this post (mostly about my book Paying Workers in a Homeschool Organization which is now a full fledged 130 page book). The podcast is the original from 2014. An oldie, but a goodie!


Do you pay workers in your homeschool organization?

Are they employees or independent contractors? Do you know the difference?

Homeschool CPA, Carol Topp, will share the details of what you need to know about paying workers in a homeschool organization in this 30 minute podcast. Part 1 of a 2 part series.

Listen to the podcast here.

Be sure to listen to the second part of this podcast when Carol shares what forms you need to be filing with the IRS when you pay workers.

Helpful Resources

Carol mentioned a few helpful resources:

Paying Workers in a Homeschool Organization 

Money Management in a Homeschool Organization


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Is Paypal a good option for a 501c3?

Our homeschool group is currently looking into using Paypal so that we can collect membership dues online. We had a few questions we hoped you could answer.
Is Paypal a good option for a 501c3?
Would using Paypal affect tax paperwork in any way?
Paypal charges a transaction fee. Does it make a difference whether we ask the individual to pay the fee or whether we pay the fee out of our budget?
Is there an online payment method that you would suggest other than Paypal?

Jessica B.

Jessica,

Lots of nonprofits use Paypal. It is a secure, convenient way to collect fees. Using Paypal or other electronic payment system doesn’t affect your “tax paperwork,” the annual IRS Form 990/990-EZ/990-N, reporting in any way. Just treat Paypal like a checking account. Money comes in, fees are paid out, and transfers go out to your bank checking account.

Reduced PayPal fees for 501c3 nonprofits

If you send Paypal your 501c3 determination letter from the IRS, they will reduce the fee from 2.9% to 2.2%.

It doesn’t matter if you increase your fees to cover the Paypal fee or just pay it out of your budget. It’s part of the cost of doing business. What is not allowed is to charge customers who uses Paypal more than those who pay in cash or by check. So you may have to increase the fees to everyone to cover the Paypal fees.

Alternatives to PayPal

I looked into other online payments for nonprofits. Some let you ask the donor/payor to pay the fee, but then they charge 4% or a high monthly fee which is not affordable for most small nonprofits.

I’m the treasurer for a charity (a food pantry). We request donations of $100 or more by by check to avoid giving Paypal too much in fees. One donor gave $1,000 via Paypal and we paid $22 in fees!

In my business I use Quickbooks Merchant Services when I have a large invoice (like $200 or more) to send to a client. I only accept payment by check or ACH (echeck), not credit card with QuickBooks. QuickBooks only charges $1.00 per ACH transaction. That’s a lot less than Paypal’s 2.9%.

I also use Stripe in my business, which is a lot like Paypal. I let clients pay me via Stripe if it’s under $100. I just “eat” the fee. I don’t increase my invoice if they want to pay with a credit card. But I wish more paid by echeck/ACH. Stripe only charges 0.8% for an ACH transaction. A lot less than 2.9%. https://stripe.com/blog/accept-ach-payments
So if your group’s membership fee is high, ask for payment by check or ACH, maybe via Stripe or Paypal. 

Please avoid using platforms like Zelle, Venmo or PayPal Friends and Family to avoid paying fees. These are for non-business money transfers only.

Instead pay the fees and be glad that these services exist. They allow for a convenient way to get paid securely and we shouldn’t expect a service like Paypal to be free all the time.

If you have more questions about managing money in a homeschool organization my book may be very helpful.
Money Management in a Homeschool Organization

I hope that helps.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Former CC Director explains the liability that she carried as a Director

Colleen Eubanks shares a video review of Classical Conversations. She was a tutor and Classical Conversations Licensed Director for two years.

About the 13:30 mark (roughly half way), she clearly explains some of the liability that she carried as a Licensed CC Director. Her concerns include:

  • Paying tutors as employees or Independent Contractor
  • Not being hired as an employee when a Director
  • Securing a facility to meet and being responsible to the building
  • Potentially jeopardizing the church’s property tax exemption by operating her for-profit business in a church

Since Collen owned another business in addition to directing a CC Community, she knew about employees and Independent Contractors. She also consulted her CPA in running her CC Community business. Smart woman!

She explains her concerns clearly and factually. All CC Directors should be aware of the liability they carry so they enter into a licensing agreement fully aware of these issues.

I hate to hear stories of CC Directors not being aware of the fact they are running a business! And it’s very unfortunate when a church learns that a business has been operating on their property and asks the CC Community to leave. That gives homeschool groups a bad reputation with churches.

Listen to her comments at the 22:20-23:16 minute mark. She encourages CC Directors to fully understand the kind of business they are setting up and that just because it is a low-profit (or no profit) business does not make it a legitimate, nonprofit organization.


Are you considering converting your CC Community from a business to a legitimate nonprofit organization?

My webinar on Create A Nonprofit for Your Homeschool Community can help. It’s only $10 and runs 90 minutes. Typically you would pay $150 for an hour and a half of my time, so the webinar is a bargain.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Do Articles of Incorporation have to be submitted if we’re not a nonprofit/501c3?

We are a group of families that came together last year to work collectively in sharing the role of teaching each other’s children one day a week. We have lots of interested families that want to join us next year. I’m thinking Co-Op is the way to go, but I’m still not sure of the road ahead. We have 5 Board members and are working on Bylaws now.

The Articles of Incorporation are not clear to me. Do they have to be submitted outside the Co-Op if we are not Non-Profit/501c3?

As soon as you have a board, mission, and bylaws your organization IS a nonprofit organization! Congratulations! It is an unincorporated association, but it is still a nonprofit organization.

Filing to be a nonprofit corporation in your state is another, more formal step that I highly recommend to homeschool co-ops (who are high risk operations) for all its benefits, mainly limited liability for your board and all members. Unincorporated associations have no such liability protection for their members or leaders.

These articles from my website should help:
Do we need to Incorporate?

5 Great Reasons to Incorporate

Like many people, you are mixing the concepts of nonprofit status and tax exempt status. It can be confusing! This short video should help: Is my homeschool group a nonprofit? short video





To be clear:

  • unincorporated association status and nonprofit corporate status are defined and granted at the state level. They are legal entities.
  • 501c3 is a tax status granted by the IRS to qualified unincorporated associations and nonprofit corporations.
  • The co-op is a program operated by the unincorporated association or nonprofit corporation.

So when you ask, “do they (Articles of Incorporation) have to be submitted outside the Co-Op if we are not Non-Profit/501c3,” it would really better be asked like this:

“When should the nonprofit organization we just started consider filing Articles of Incorporation? We run a high risk program: a homeschool co-op with lots of children and families and are worried about potential liabilities. We also want to know the advantages of 501c3 tax exempt status for our nonprofit organization.”

See the difference the word choice makes? Words are important and using the correct terminology helps you understand these confusing concepts. 🙂


I am very careful with my terminology; I am careful to say “nonprofit organization” or “501c3 tax exempt status” when I mean different concepts.


I think my Homeschool Co-ops book would be helpful at this point.

And perhaps my webpage of Articles and some podcast episodes.

Or my webinar on Create a Nonprofit for your Homeschool Community would be helpful at this stage as well.

If you still have questions (and you probably will!) I would be happy to arrange a phone consultation with you. Contact me.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Operating a homeschool group in multiple states

A homeschool group leader contacted me recently. She ran a homeschool group that was established in Kentucky as a nonprofit corporation, but now operated from a location in Ohio (just across the Ohio River). She was wondering what she needed to do in Ohio to be compliant with any reports Ohio required.

It is pretty rare for a homeschool group to operate or exist in multiple states, but it can happen when a group is located near a state line.

I found some helpful information from Floyd Green a nonprofit CPA.

Operating in Different States


Nonprofit organizations can operate nationwide, even though they are legally registered in one specific state as a domestic entity. Generally, charities incorporate in the state either where their headquarters are located in or where the majority of their activities take place. As your 501c3 organization grows and evolves, a need to operate in more than one state might often arise.

If you decide to expand your operations outside your state, you must keep in mind that you will have to comply with each specific state’s requirements where you choose to conduct your programs.   The federal/IRS part of the compliance standards will not change if operating in additional states. 

To be recognized as operating in another state, your nonprofit must be actively conducting its tax exempt program(s) outside its state of domicile. For instance, if you have a transitional housing facility in Georgia and you open another transitional housing location in Florida, you will be considered as operating in two states. In this case, you would have to register your Florida branch as a foreign corporation (here term “foreign” means “outside the state of domicile”). In some states, however, you will be required to file a “Certificate of Authority” to transact business in a particular state.

Please note that once you are registered as a foreign entity in a particular state, you are then required to do annual filings and reporting in the second state of operations, in addition to the filings you must do in your home state.

http://floydgreencpa.com/index.php/501c3/nonprofit-501c3-articles/101-operating-in-different-states



If you need help knowing what reports your state requires, HomeschoolCPA has two resources to help you:

Webinar: IRS and State Filings. This 60 minute recorded webinar equips to file on your own the IRS Form 990-N and state forms saving you hundreds of dollars in professional fees. The cost of the webinar is $10.

Service: Research your state filings and reports and send you a customized letter for your organization. The cost for this service is $100.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Homeschool group has victory with the IRS!

In a previous blog post I explained that the the IRS was going to deny 501c3 tax exempt status to a homeschool group, Sursum Corda in Southern California. The IRS employee claimed that this group of 35 families is only serving themselves and not serving a “public interest.”

I am happy to announce that after several weeks, the homeschool group received a letter stating that the IRS has determined they are tax exempt under 501c3 of the IRS Code! Yeah!

Victory for them and for all homeschool groups.

What helped convince the IRS that this homeschool group served a public interest?
In my 5 page fax to the IRS I outlined several key points:

  • Sursum Corda Community serves a public interest with activities that serve any and all homeschool families in three large counties, it primarily benefits children, a “charitable class,” and Sursum Corda serves the community at large in two ways: service projects and community-wide educational events (I think their service to the broader community was a very important factor with the IRS)
  • Sursum Corda is not exclusive; there is no significant private benefit; there is no inurement
  • Rev Ruling 69-175 is not applicable to Sursum Corda because they are not seeking 501(c)(3) status for parents’ personal expenses; Sursum Corda’s expenses are for the organization’s activities, not for the parents’ personal homeschool expenses.
  • Other cases of 501c3 status denied to charter schools is not applicable to Sursum Corda
  • Hundreds of homeschool organizations have 501c3 status

I concluded with this:

Sursum Corda Community, Inc. has an exempt purpose that serves a public interest, the education of children and parents and service to the larger community, and does not give significant private benefit to individuals. It is eligible for 501(c)(3) status and we look forward to the IRS determination letter.

Letter to IRS by Carol Topp, CPA

It’s hard to say what points changed the IRS’s mind, but I am grateful that HomeschoolCPA made a successful argument on behalf of Sursum Corda and all homeschool groups!

A special thanks to several nonprofit experts and several attorneys with Christian Home Educators Assoc of California (CHEA) and Home School Legal Defense Assoc (HSLDA) for their time in reviewing my response to the IRS. I greatly appreciate it!


HomeschoolCPA has two resources to help your homeschool organization apply for 501c3 tax exempt status
The IRS and Your Homeschool Organization book and the 501c3 Application webinar.


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Microschool

Is your program a micro school or a homeschool group? It can be hard to tell the difference! This page of resources and links may be helpful to you.

Can my micro school be a homeschool group (and avoid some headaches)?

Here is the handout and slides from a 30 minute presentation titled Can my micro school be a homeschool group? I (Carol Topp, CPA) did for the Meridian Learning Micro School Mini Conference in 2021.

Slides
Handout

Podcast episodes about micro schools

Pandemic Podschooling:Is it Homeschooling? epidsode 195

What’s the Difference between Pod schools and Homeschools? Episode 196

Blog posts about micro schools

Can a Micro School be a Homeschool Group (and avoid some headaches)?

Meridian Learning (www.meridian-learning.org) is hosting a Grassroots Microschools Online Conference

Wednesday June 30, 2021 10 am -1 pm ET

It will be hosted on their Grassroots Microschools Facebook page. Details here: https://fb.me/e/SsS86E05

This conference is free for the live event. The recording will be available to Galaxy and Constellation members of Meridian Learning in their member resource library. Follow their Facebook page for session previews, and RSVP via PM or email for event link: join@Meridian-Learning.org.

I pre-recorded a session titled: “Can a Micro School be a Homeschool Group (and avoid some headaches)?

In the session, I explain the difference between homeschool groups and micro schools. I also share a litmus test I use to determine of a micro school can call themselves a homeschool group (legally).

During and since the COVID-19 pandemic, I have heard from more and more groups that call themselves homeschool groups, but I wonder if they are really micro schools or something in between!

For example, I have heard from:

  • A group for 7 special education students that will meet 5 days a week and hire 2 qualified instructors.
  • A pandemic pod leader who wishes to continue her pod composed of her two children and five additional children meeting in her home four days a week.
  • A group that started homeschooling during the pandemic and now has has 15 pre-schoolers and 20 1st-3rd graders with one hired teacher operating Monday-Friday 8:30-3:30 pm.
  • A group of 1st and 2nd graders that will meet three days a week, 9:30 am -2:00 pm and charge $5,000 in tuition per year.

Is it legal for some of these groups to call themselves homeschool groups? Or are they micro schools?


Join the Grassroots Microschools Online Conference on June 30, 2021 and listen into my session on “Can a Micro School be a Homeschool Group (and avoid some headaches)?”

Event details at https://fb.me/e/3PX81wbbA

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders