Missing your homeschool group because of COVD-19? Join other leaders on Facebook

COVID-19 probably means your homeschool group has cancelled meeting for several week.

It gets lonely without our regular homeschool groups, doesn’t it?

Well, now might be the time to meet other homeschool group leaders who know how you feel.

I moderate a Facebook group called

I am a Homeschool Group Leader

Come join us at https://www.facebook.com/groups/72534255742/

We are about 1200 homeschool leaders from across the USA (and a few foreign countries) who share tips, information, and offer encouragement and support.

We talk about all kinds of things from problem parents, finding volunteers, managing activities, and cancelling groups because of the corona virus.

Now more than ever, we need each other and technology can help us get through this very difficult time.

Thanks for all you do in running your organizations! You’re my heroes!
See you on Facebook!

Carol Topp, CPA
HomeschoolCPA.com

Conflict of Interest: Paid Teachers as Board Members in a Homeschool Group

A homeschool leader is concerned about a conflict of interest if she wants to be a board member and paid teacher.

Jessica, who wants to start a homeschool co-op emailed HomeschoolCPA Carol Topp this situation:

“I have a question about the conflict of interest issue. Three ladies and I would like to incorporate to teach classes together and form a co-op. If we are the three board members, then does that mean we cannot profit by also teaching? Do you have any article that clarifies that?”

Listen as Carol explains:

  • The conflict of interest between being on the board and being paid by a nonprofit
  • Inurement and self-dealing
  • Why it is not a good practice for nonprofit to have paid staff also serve as board members.
  • Three options Jessica has:
    • Form a 3-way partnership (a for-profit business)
    • Have a separate, independent board that hires teachers as staff
    • Grow the board so the majority is not paid teachers

Featured Product

In the podcast I mentioned my webinar Create a Nonprofit for Your Homeschool Community

What are the advantages and disadvantages of being a nonprofit?

Forming a board: who can be one it and what do they do?

How hard is it?
What are the steps to take?
How fast can it get it done?
How much will it cost?

I have recorded a webinar to answer all these questions and more!

Create a Nonprofit Organization for Your Homeschool Community

Paying Volunteer Teachers

A homeschool leader asks if the way her group pays volunteer teacher is legal.

Holly, a homeschool group leader emailed HomeschoolCPA Carol Topp this situation:

“I need guidance on the method with which our organization’s volunteers are paid teacher fees. We are collecting cash from all the members for their children’s class fees, and redistributing it to the teachers for their class payment.

Apparently this is being done to simply the process and so members do not have to write checks. I am concerned this is an illegal practice.”

Listen as Carol explains:

  • Whether this is legal
  • Are these teachers really volunteers?
  • Should the teachers be employees or Independent Contractors?
  • What Holly’s organization needs to do regarding paying teachers
  • A simpler option

Featured Product

In the podcast I mentioned my book

Paying Workers in a Homeschool Organization

Are you paying workers in your homeschool organization?

  • Can a volunteer be paid?
  • Should a worker be treated as an employee or independent contractor?
  • Do you know the difference?

Homeschool leader and CPA, Carol Topp, has the answers to your questions in her book Paying Workers in a Homeschool Organization.

This 130 page book covers paying workers as employees or independent contractors. There are also chapters on paying volunteers and board members. 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.

San Antonio, Austin and Houston: Q&A with HomeschoolCPA this week

San Antonio, Austin and Houston, Texas will all be getting live Q&A time this week with Carol Topp, CPA, the Homeschool CPA!

San Antonio: Tuesday February 25, 2020
from 7:00 to 8:30 pm
on the lovely grounds of
Family Educators Alliance of South Texas (FEAST)
7735 Mockingbird Lane • San Antonio, TX • 78229
Register here for San Antonio

Austin: Wednesday February 26, 2020
from 6:30-9:15 pm
at
Calvary Worship Center (North Austin, close to TX 45 & N Mopac Expy)
14901 Burnet Road
Austin, TX 78728 
More information and to RSVP for Austin

Houston: Thursday February 27, 2020
from 6:30-9:15 pm
at
University Baptist Church  (Chapel area)
16106 Middlebrook Dr
Houston, TX 77059  
More information and to RSVP for Houston

Each event is free, but the organizers would appreciate you register so they have a head count.

The San Antonio event is sponsored by Family Educators Alliance of South Texas and the Austin and Houston events are sponsored by Texas Homeschool Coalition with much appreciation!


Each event will have:

  • A brief session presented by Carol Topp, CPA, the HomeschoolCPA on “Topp Tips for Running a Homeschool Organization”
  • A Town Hall session for you to ask question and get advice from other homeschool leaders
  • Q&A time with Carol Topp, CPA
  • Professional advice on finances, legal structures, taxes, employees, insurance, etc.
  • A chance to look at HomeschoolCPA’s books
  • An opportunity to be encouraged by other leaders who understand you!

I hope to see you in San Antonio, Austin or Houston!

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Set Up Homeschool Family as a Charity

Carol Topp, the Homeschool CPA is sometimes asked if a homeschool family can be a charity.  Sometimes a homeschool spouse wants to set up a business and hire their spouse to homeschool their children.

Can this be done?

Are there tax breaks for doing this?

R.A. writes, “I would like some preliminary information on setting up a 501(c)(7). I would like to set up my homeschool (my wife and 3 kids) up as a charitable organization. We have been homeschooling for 12 years.”

Here’s Carol’s reply to these situations on today’s episode of the Homeschool Leader podcast.

  • Can R.A. set up his family as a charitable organization?
  • What’s a 501c3?
  • What’s a 501c7?
  • What’s the difference between a 501c3 and a 501c7?
  • Why your family cannot be a nonprofit
  • Why you shouldn’t hire your spouse to homeschool your children.

In the podcast, Carol referenced a few sources from the IRS:

A nonprofit tax exempt organization must serve a public good, not the private interests of the founder or his family. The IRS is very clear on this point. https://www.irs.gov/charities-non-profits/charitable-organizations/exemption-requirements-section-501c3-organizations

501c7 Social clubs must be formed for exempt purposes. Serving only your family is not an exempt purpose. See: https://www.irs.gov/charities-non-profits/other-non-profits/social-clubs

Carol has a few blog posts on this idea:

Incorporate yourself and write off homeschool expenses

Can my family’s homeschool be a nonprofit?

Is my homeschool a nonprofit?

Featured Product

In the podcast I mentioned my book

The IRS and Your Homeschool Organization

Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?

I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

The webinar Create a Nonprofit for Your Homeschool Community is also helpful.

Homeschool theater program has income from advertising. Do they owe taxes?

Dear Mrs. Topp,

Our homeschool co-op has a yearly theater production that costs $35 per student to participate in the production. The theater teacher collects and uses all funds for the production. We now have local businesses that would like to advertise (by giving a donation) in the theater program. I understand that the business can use the donation as an advertisement write off, but what does the co-op or teacher do with the income, regarding the IRS?
Thank you for your time.

G.W.

Dear G.W.,

Good for your co-op for staging a theatrical production. I was in theater in high school and my daughter was in several homeschool theater productions too! It builds confidence!

The co-op teacher should turn over the funds to the co-op’s treasurer and he/she should deposit the money into a bank account that is established in the co-op’s name. A bank or credit union should open a nonprofit or a “club” account for the co-op.

They will want your EIN (Employer Identification Number) letter from the IRS. They may also want some official document like bylaws. My credit union wanted a letter signed by two officers stating that I, as the treasurer, had authorization to open an account for the nonprofit. Call your bank or credit union to see what they will require to open a nonprofit or club checking account.

You might find this podcast helpful: Tiny Homeschool Groups: Do We Need a Bank Account?

Income from advertising is NOT a donation from the donor. Do not give the donor a donation receipt. He received something or value (advertising) in exchange. He can deduct the cost of the ad in your theater program as advertising expense.

By the way, many nonprofits don’t accept ads, but rather “qualified sponsorships” and simply acknowledge their sponsors with a “thank you” in their programs. These are different from ads. Typically only the company name or logo is presented. No inducements to buy or product information is given in a sponsor thank you. Here’s a helpful explanation http://www.nonprofitlawblog.com/ubit-advertisements-vs-qualified-sponsorship-payments/

Advertising income is called unrelated business income for the nonprofit. Fundraisers and any income not related to your educational purpose is unrelated business income and and you must report it and pay tax on it.

Fortunately, the IRS has several ways to avoid paying the unrelated business income tax (UBIT):

  1.  The first $1,000 in income from an unrelated business will not be taxed.
  2.  If the fundraiser (or unrelated business) is run substantially by volunteers (i.e., no paid staff) then the proceeds are not taxed.
  3. If the fundraiser is not regularly carried on, such as a once-a-year event or bake sale, then the proceeds are not subject to UBIT.
  4.  If you are selling donated items, like in a garage sale, the income raised is not taxed.
  5. Qualified sponsorship payments are not unrelated business income.

Usually exception #1 or #2 will apply to small homeschool nonprofits, so your co-op should be able to receive income from advertising without worrying about paying tax on it.

It’s a good idea to create a line item in your record keeping labeled “Advertising Income” so it’s clearly differentiated from other income.

I hope that helps.

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

Meet Carol Topp, CPA in South Texas Feb 25-27, 2020

I’m excited to visit south Texas in February 2020 and get to meet and speak to homeschool leaders in San Antonio, Austin and Houston!

San Antonio: Tuesday February 25, 2020
from 7:00 to 8:30 pm
on the lovely grounds of
Family Educators Alliance of South Texas (FEAST)
7735 Mockingbird Lane • San Antonio, TX • 78229
Register here for San Antonio

Austin: Wednesday February 26, 2020
from 6:30-9:15 pm
at
Calvary Worship Center (North Austin, close to TX 45 & N Mopac Expy)
14901 Burnet Road
Austin, TX 78728 
More information and to RSVP for Austin

Houston: Thursday February 27, 2020
from 6:30-9:15 pm
at
University Baptist Church  (Chapel area)
16106 Middlebrook Dr
Houston, TX 77059  
More information and to RSVP for Houston

The San Antonio event is sponsored by Family Educators Alliance of South Texas and the Austin and Houston events are sponsored by Texas Homeschool Coalition with much appreciation!


Each event will have:

  • A brief session presented by Carol Topp, CPA, the HomeschoolCPA on “Topp Tips for Running a Homeschool Organization”
  • A Town Hall session for you to ask question and get advice from other homeschool leaders
  • Q&A time with Carol Topp, CPA
  • A chance to look at HomeschoolCPA’s books
  • An opportunity to be encouraged by other leaders who understand you!
  • A shot in the arm much needed at this point in the year
  • Professional advice on finances, legal structures, taxes, employees, insurance, etc.

I hope to see you in San Antonio, Austin or Houston!

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Flowchart for Starting a Nonprofit

While helping a homeschool organization in Washington, I found a nice 44 page book from WA state on forming a nonprofit.

https://www.sos.wa.gov/_assets/charities/training/starting-a-nonprofit-pdf.pdf

I really liked the flowchart on page 5. It has steps to take at the State level, the Federal level, with people, planning milestones and operations milestones.
Many tasks can be some simultaneously. Some must come after another. The flowchart shows all that!

It’s a lot to digest, but it puts all the important steps in one flowchart!

I created a checklist to apply for 501c3 tax exempt status. It is sequential; it doesn’t show that many tasks can be simultaneous, but it should still be very helpful.

If you’d like helping starting a nonprofit or apply for 501c3 tax exempt status, my webinars will help !

I have several services to help homeschool groups apply for 501c3 status.

Or you can arrange a phone consultation with me.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Only two more days to get Taxes for Homeschool Business Owners for free

Taxes for running your tutoring business, homeschool business or CC Community can be so confusing!  I have a book that can help.

Taxes for Homeschool Business Owners

Over 700 tutors, directors and teachers have downloaded the ebook so far. Here’s what they say:

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

This ebook is a great resource for:

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

The ebook was FREE in January 2020. Now the ebook is available for $10.

The ebook is 60 pages long and contains information on

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

I hope you find the ebook helpful!

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Do we file 1099s for teachers before we are a 501c3?

We board members just want to clarify something about issuing the 1099 to our five paid teachers. Do we need to wait until we have our 501(3)(c) status before we issue them?

In your book Paying Workers in a Homeschool Organization,  Chapter 3, you wrote about the difference between an independent contractor and a worker. I had a hard time trying to classify which one it would be for our teachers. Three of our teachers are former homeschool moms, one is a former homeschool student, and one is a single lady who has taught a variety of classes over the years. They really don’t have any expenses, but if they do, they get reimbursed for them. Is this enough information for you to tell me which category they fall under?

Thank you for taking the time to answer my questions,
Lisa

Dear Lisa,
You should not wait until your organization has 501c3 tax exempt status to issue the 1099-MISCs.

As soon as it formed as a nonprofit corporation, your homeschool group could legally start running your program, paying workers, etc.

As a matter of fact, your homeschool group is REQUIRED to file the 1099-MISC if it paid any individual more than $600 for their services in 2019.

That’s a requirement whether an organization has 501c3 tax exempt status or not.


To prepare your IRS Form 1099-MISC, I recommend Yearli.com. I’ve used them for years. It’s fast, easy, inexpensive ($4.99 per 1099-MISC) and all online, so there are no paper forms to mail!

If you use my Yearli referral link, you receive a 15% discount and I get a small referral fee. https://mbsy.co/rzrbp

Making a worker determination can be confusing. Unfortunately, I cannot determine if your teachers are Independent Contractors or employees from what you explained.

Since you have my book, Paying Workers in a Homeschool Organization, look at Chapter 3 and pay close attention to page 44 where I discuss workers who provide the key activity of the business.  It is a key factor that the IRS (and now states like California) uses in determining that your homeschool teachers are probably employees.

This blog post may help as well: Why I think most homeschool teachers should be paid as employees

I do offer a phone consultations to help you determine if your homeschool organization’s workers are employee or independent contractors. Worker Classification Consultation.
The phone call will be followed up with an email containing a fact-based determination and information to help you take the next steps. My fee for this consultation is $100/hour. Typically 1-1.5 hours. 

Please contact me to schedule a phone consultation.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders