Should I start a homeschool co-op with volunteers or an academy with hired teachers?

I’m considering starting a homeschool group. How did you decide on a co-op with all volunteer teachers versus an academy with hired teachers? I think I have some moms who would be interested in participating, but I really don’t know yet.

I have briefly looked at your information and will continue to dive deeper, but would certainly love to hear your personal experiences, particularly if there is anything you would do differently.

Becky Abrams, a homeschool group leader in Oregon, and a consultant to other group leaders, has run both an all-volunteer co-op and an academy (she calls it a “hybrid homeschool program”) with hired teachers.

She has several blog posts at on paying employees.

Becky would be happy to do a phone consultation with you to sort through this decision. Contact Becky

Here’s a podcast interview I did with Becky about how she launched her all volunteer co-op.

Additionally, my friend Jamie Buckland, of Classical Program Consultant has both hired teachers and used volunteers.

Jamie explained, “We, Appalachian Classical Academy (ACA), are a nonprofit organization with 501c3 tax exempt status and we employed teachers for three years and then went to all volunteers largely due to financial constraints. There are pros and cons to having volunteers. There are pros and cons to hiring employees!”

Here’s link to a podcast HomeschoolCPA did Jamie about why ACA employed teachers for 3 years.

Tips and Advice

From the experience of both these leaders, I have some tips to help you make this decision:

What experience do you have in running a homeschool group? Have you been on the leadership board of a homeschool group? If you are not very experienced (at least 3 years as a leader of a group) I would stick to the all volunteer co-op. Running a hybrid/academy with paid staff if significantly more work and responsibility that a co-op.

Do you have any experience in hiring and paying employees? If not, start with the all volunteer co-op. Then work at finding a payroll company and a good Treasurer and bookkeeper. You’ll need all three if you run an academy with hired teachers.

What are the ages of your children? If they are young (elementary age), stick with the all volunteer co-op. Don’t sacrifice your own children in attempting to homeschool other peoples’ children! As your children grow older consider adding a few paid instructors and grow into a full fledged academy as your experience grows.

Do you have the time, mental, and emotional capacity to research daycare licensing, employer laws, payroll companies, background checks, increased bookkeeping and cash management that come with an academy?

Are you doing this alone or do you have a strong board? Without a strong, active board, you will not succeed in launching a hybrid/academy. You may not even pull off a small volunteer co-op with out a strong board.
So get a board! They will help you make this decision. If you lack their full support and availability to take on an academy with hired teachers, don’t do it! Wait. Grow slowly.

Are you paying workers in your homeschool organization?
Carol Topp, CPA ‘s book Paying Workers in a Homeschool Organization. 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.

Carol Topp, CPA
Helping Homeschool Leaders

What is a microschool?

Teacher smiling as she supervises students during academic testing.

US News contributor Andrew Bauld interviewed me about micro school or his article “What is a microschool?”

My contribution to the article was to offer my advice as a CPA to approach the endeavor of launching a micro school with caution.

Carol Topp has worked for years as an accountant for homeschool groups, and began seeing interest in microschools even before COVID-19. She advises interested parties to realize that they aren’t just starting a school but a business. And while the schools’ small size might make them initially attractive, that can also be their downfall.

“Microschools aren’t cheap. There are fewer students to spread the overheard,” she says, adding that many microschools fail because “they are too dependent on one or two families who have a few kids, and then a family moves and the school can’t afford their rent. It can be tenuous.”

The same is true of homeschool groups, isn’t it? It can be quite an undertaking!

There is a lot to consider when launching a homeschool co-op, hybrid, tutorial or other homeschool program. That’s why I launched and offer blog posts, books, and webinars.

Carol Topp, CPA
Helping Homeschool Leaders

IRS asks if homeschool groups gives scholarships

I am helping my homeschool co-op apply for 501c3 tax exempt status with the IRS.On the application form (Form 1023), the IRS asks about scholarships. We provide scholarships for our members that cannot pay their $30 membership fee.  Should we check “yes”?
Tricia from TX


The IRS is asking about “real” scholarships like the kind a high school graduate is given to go to college.

What your group offers is a fee discount, specifically a benevolent discount to a needy family. I find that co-ops frequently call these fee discounts “scholarships.” That is the wrong word to use when dealing with the IRS.

I wish I could wave a magic wand and get homeschool groups to stop calling a fee discount a “scholarship.” But I’ve been trying for about 15 years with no success!

I recommend that you change your wording in your co-op and especially change the word on your application to the IRS.

I think you should check the box NO. Your homeschool group does not provide scholarships as the IRS is using the word. Your group gives a benevolent discount.

By the way, your discount of $30 seems insignificant and it’s for benevolence.

But some homeschool groups give rather large discounts to super volunteers, teachers, board members, etc. One homeschool group was giving a board member $4,000 in discounts every year!  These large discounts may be taxable income to the volunteer or paid worker!

I recommend you get a copy of Paying Workers in a Homeschool Organization to help you stay legal and compliant with compensation reporting.

Carol Topp, CPA
Helping Homeschool Leaders

Parents pay teachers directly in a homeschool group: Is that a good practice?

I know there have been some recent changes to classification and in most cases paid teachers in a homeschool group should be classified as employees. What if parents pay the teachers directly? Is that allowed? Is it a good practice?

Homeschool Leader in CT

Dear Homeschool Leader,

I have been hearing more and more groups switch to a plan where the parents pay their teachers directly, rather than the homeschool group itself paying the teacher.

Vendor Hall approach

I compare this parents-pay-the-teachers-directly model to a vendor hall at a convention. Have you ever been to a homeschool convention? I’ve been to conventions both as an attendee and as a vendor. Each vendor sets up their booth and sells product or gives demonstrations to the convention attendees. Each vendor is an independent business owner. The convention organizer has no say in how the vendor runs their businesses. The vendor and the convention organizer may have an agreement that covers set up time, fees the vendor pays to the convention coordinator, and general rules like a booth must be manned at all times.
The vendor then collects money from each attendee who buys product from them. The convention doesn’t get involved in that relationship between the vendor and her customers.

Reasons to use a vendor hall model:

Here are the reasons why a homeschool organization might adopt a vendor hall model where the parents pay the teachers directly:

1. To avoid paying the teachers as employees. This avoids the cost and paperwork of running payroll. There are no W-2s to file and no quarterly payroll taxes to pay.

2. To avoid having Independent Contractors. These teachers paid by the parents are not independent contractors of the homeschool group, because the homeschool group does not pay them. This means the homeschool group doesn’t give the teachers a 1099-NEC at the end of the year. The teachers are business owners conducting their business (classes) that the homeschool program set up. Fro details on Independent Contractor status read this blog post on Is a homeschool co-op teacher an independent contractor if paid by the parents?

3. Keeps the homeschool group’s income low. This is advantageous for many reasons. Smaller revenues make the bookkeeping easier. Smaller revenues mean a nonprofit homeschool group qualifies for the simpler IRS information returns, Form 990-EZ or 990-N instead of the longer, more complex Form 990.

4. Easier on the treasurer who is usually a volunteer. If the parents pay the teachers directly the treasurer is not invoicing parents, receiving payments, depositing checks and not creating checks to the teachers. There is a lot less work to do!

Problems with parents paying teachers directly:

And here are the problems with the plan for parents to pay the teachers directly:

  1. The group’s leaders must stay of of the relationship. The homeschool group should not set the teachers’ fees, not touch their money, and not get involved in how or when parents pay the teachers. The homeschool group must be careful about negotiating prices with the teachers. The group should not give the appearance that the teachers are working for your homeschool group.

    Nor can the homeschool group get involved in any complaints from parents. The homeschool leaders must stay out of the financial and inter-personal relationship between the vendor (oops, I meant teacher!) and her customer (meaning the family).

  2. The homeschool group must have NO control or direction over the teachers. That means the homeschool group cannot evaluate the teachers’ abilities in the classroom. The group cannot have the teacher sign a statement of faith (although you may be able to withhold an offer of a booth space-a classroom-to someone you fear will not uphold your statement of faith). The group should not train the teachers in any way.

  3. The teachers are all separate business owners. Do the teachers want to be business owners? Do they understand that that may mean registering as business in your state. Do they understand the tax implications and extra record keeping and reporting involved in running a business?

    If your group meets in a church, library of other facility, does the church understand that several businesses are operating on their property? Have they notified their local property tax assessor about this change in building use? The property tax assessor may determine the church host must pay property tax since the building is used for business purpose.

  4. The “vendor hall” arrangement can affect the unity or sense of community of the program. Do the parents really want an impersonal transaction with the teachers? Or does your group see themselves as a community with a friendly, warm family-like vibe? Your relationship with the teachers affects the culture and the way your group feels to the families.

When the Vendor Hall model may work

Here is when the vendor hall model may work:

  • When the students are older (junior and senior high) and can be dropped off and the teachers don’t mind running a business and the landlord/church has complied with property tax laws.
  • When the parents want only classes for their students, not comradely and not a sense of community and the teachers don’t mind running a business and the landlord/church has complied with property tax laws..
  • When the homeschool group leaders can stay out of the financial and personal relationship between the teacher and parents. Personally, I think that is nearly impossible.
  • When your landlord is a church and has gotten approval from the local country tax assessor that 1. teachers operating their business will not cause the church to pay property tax or 2. the church will pay property tax and charge your homeschool group appropriate rent.
  • The homeschool group is running a one-day homeschool fair or convention.

When the vendor hall model doesn’t work

The vendor hall model doesn’t work if your group needs to or wants to direct and control the teacher (even a little bit). This is very important especially when you are dealing with younger students and the teacher MUST be (somewhat) directed and controlled, because you are dealing with children! The children need to be safe and protected from harm, therefore your homeschool group has the responsibility to control and direct the adults teaching them. It is part of your fiduciary duty of care to manage and care for the program and its participants.

  • Do you realize that if your group adopts a vendor hall model and a parent complains of inappropriate comments or behaviors by a teacher, you group CAN DO NOTHING?! You cannot fire this teacher because he or she doesn’t work for your group; they work for the parents. Your group is just a landlord or vendor hall coordinator.
  • Do you realize when a parent complains about a teacher, that your group can do nothing? How do you think your parents will feel when you say to them, “You have a business relationship with that vendor-teacher. Discuss your complaint with them.” That will not go over well and you should be prepared for a lawsuit claiming negligence or lack of management.

Additionally, the vendor hall model doesn’t work well if the parents complain about paying several teachers monthly for all their children’s classes. They may pressure your group to collect one fee from the families (like colleges or private schools do) and they pay the teachers. But when your organization collects the money, you have entered into an Independent Contractor or employee arrangement with the teachers. That may be exactly what you were trying to avoid!

Conclusion: Vendor Hall Model for homeschool groups

In conclusion, I see many problems with the vendor hall model as a way to operate a homeschool program.

I think your best choices are:

Run an all volunteer program. A “pure” co-op where everyone volunteers and cooperatively teaches each other’s children. No one gets paid. My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will help!
Pay teachers as employees of the homeschool program. My book Paying Workers in a Homeschool Organization will be very helpful.

Carol Topp, CPA
Helping Homeschool Leaders

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

Shelly wants to offer a homeschool program that is 1. high quality, 2. low cost and 3. convenient for working parents; Shelly’s program doesn’t require parents to stay onsite or 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 (low price, convenience), but not all three.

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

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 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 or hybrid 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, high quality 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 that they should get drop-off classes at a low fee was so entrenched that 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.

Carol Topp, CPA
Helping Homeschool Leaders

Are my homeschool co-op fees tax deductible?

I’m a homeschool parent and member of a homeschool co-operative that weeks weekly. I have to pay tuition to this group for the classes my children take there. Can my children’s tuition for the co-op be a tax deduction?


I assume you mean deductible as a charitable donation.

Co-op fees are not a tax deductible charitable donation because services (co-op classes for your children) were received in return for the tuition payments. Tuition payments are not a tax deductible donations.They are personal expenses and are not tax deductible.

But if a parent makes a charitable gift to the homeschool group (assuming it has 501c3 tax exempt status from the IRS) above and beyond the tuition and fee payments, then this amount would be a tax deductible donation.

Some homeschool parents ask if co-op fees can be deducted as childcare expenses. My reply is “usually not” and here are the details: Are homeschool co-op fees child care tax deductions?


Did you get paid for teaching at a homeschool program? You may have questions about your taxes? I offer webinar to help you understand the tax implications of being a paid homeschool co-op teacher or tutor:

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 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 hope that helps!

Carol Topp, CPA

Helping homeschool leaders

Non-profit or for-profit for a homeschool co-op?

I am planning to start a homeschool nature-based co-op, where the parents will stay on-site, and we will meet 1-2 days per week. I believe we would be a for-profit organization. Is there some reason to choose non-profit status versus for-profit, in the case of a homeschool co-op? Any insight on how to get started would be very helpful. I have been a small-business owner for many years, but have never been in the non-profit administration world.


Let’s start by addressing the word “co-op.” A homeschool co-op is a group of parents voluntarily cooperating to teach each others’ children. The word voluntarily is important. Co-ops depend on volunteer labor. So most co-ops are formed as nonprofits. A business cannot have volunteers working for it. That’s a violation of the Fair Labor Standards Act. So if you run the group as your business, you cannot have volunteers. Everyone must get paid if they work for the business.

But maybe you meant “co-op” in a broader sense to mean a group of homeschoolers. Your business can sell a service to a group of homeschool families. But that’s not a co-op and you shouldn’t call it a co-op. It confutes the customers.

There are many reasons why homeschool co-ops form and operate as nonprofit organizations rather than businesses. I already explained the first reason: volunteers. Here’s the more of reasons:

  1. Volunteers: a businesses cannot have volunteers working for it. A nonprofit can have volunteer labor. So homeschool co-ops that depend on volunteer labor are formed as nonprofit organizations.

  2. Ownership and Control: A nonprofit is not owned by anyone; the volunteer board runs the group and decides what everyone will get paid. The board can fire any staff including the Executive Director (the head honcho) and hire another Executive Director. The board can also vote to remove other board members including the founder. So if you want to remain in control, then you may chose to operate this homeschool group as a business. Don’t call it a co-op and don’t expect the parents to help out. Call it a homeschool service.

    This issue of ownership and control is a big stumbling block for many. Some homeschool leaders want so much to remain in control that they run their groups as a business owned by them. That’s perfectly legitimate. But then they miss out on tax benefits, donations, volunteer labor and the support of a board.

    I had a phone consultation with two women, former teachers, who wanted to start a homeschool program. Their lawyer joined in on the call. They said they were considering forming as a nonprofit and wanted 501c3 status as an educational organization. I explained that as the founders, they would have to surrender control to a board. They could serve on the board as volunteers. If they wanted to be paid, they would no longer be voting members on the board. They didn’t like the sound of that. They politely but firmly said they wanted to remain in control. So I advised them to operate as a for-profit businesses, likely a partnership. The call ended after 5 minutes. I never got to explain the rest of this list! Ownership and control was the tipping point for them.

    Many leaders, especially the founders, ask how they can remain in control and still lead a nonprofit group. I explain they cannot be in control, but they can influence who is on the board. Nonprofits can have the board replace itself with like-minded individuals. That keeps their vision and mission where they want it. This is mostly what they care about: keeping the vision and mission pure.

  3. A team/board helps carry the responsibility: When you run a business, all the responsibility is on your shoulders. All the profit is yours as well, but you don’t have anyone else to help shoulder the responsibility. It’s all on you. I frequently have this conversation with homeschool leaders. I explain the liability they carry for things like record keeping, taxes, background checks, rental leases, safety, insurance, hiring, firing and paying workers. Here’s a list of liabilities and responsibilities you carry as a business owner using a Classical Conversations Director in this case: Liabilities CC Directors Carry.

    In a nonprofit these responsibilities are carried by a group of people: the board. The workload is spread out. The treasurer handles the finances. The officers sign the leases. The board as a whole makes decisions.

  4. Tax exemption and tax deductible donations. Nonprofits who apply for 501(c)(3) tax exempt status with the IRS will be tax free on their surplus and can receive tax-deductible donations. Businesses cannot get tax exemption nor accept tax deductible donations. Any fundraisers belong to the owner and she must report it on her taxes as taxable income. So if you want and expect to get donation or grants, you should form as a nonprofit, not a business.

  5. Profit motive. Nonprofits have a mission other than profit. The purpose of a homeschool nonprofit is primarily education, but faith-based homeschool groups have an religious purpose as well. For-profits are presumed to have profit as their primary motivation. While many business owners are also motivated by an educational or even religious purposes, at the end of the day the general public, your customers, and federal, state and local governments all assume you are in business to make a profit.

  6. Other perks including Use of property-tax-exempt facilities such as churches, parks and libraries. Most churches, public parks, and libraries limit the use of their buildings to nonprofit organizations, so they can avoid paying property tax. A bushiness should notify the church, park or library that they are not a nonprofit homeschool group, but are a business.

Does that help you sort though the differences between running a homeschool group as a nonprofit or as you for-profit business?

I would estimate that probably 80-90% of homeschool groups are run as nonprofit organizations, primarily for reasons 1,3,4 and 6 (volunteers, teamwork, tax exemption, and use of tax-exempt property). For-profit business owners are swayed by reason # 2 (control) and #5 (profit).

For more information on forming your homeschool group as a nonprofit my books may be very helpful particularly:

Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out

The IRS and Your Homeschool Organization

Carol Topp, CPA
Helping Homeschool Leaders

How the IRS sees homeschool groups (podcast)

IRS and homeschool groups

UPDATE: This podcast episode originally aired in 2015. But it is still accurate and helpful in 2021, 6 years later!

In this episode of the Dollars and Sense Show podcast, host Carol Topp continues her topic “Who’s Afraid of the IRS?” and discusses how the IRS sees homeschool co-ops, nonprofit incorporation, for-profit homeschool groups, and what happen when a nonporift loses its 501(c)(3) tax exempt status.

Listen to the podcast

Listen to the first part of this presentation where Carol discussed homeschool support groups as IRS 501(c)(7) Social Clubs and co-ops as 501c3 Educational organizations.

Get a copy of the handout.

More information

Carol mentioned the article “Do You Know About IRS Required Filings for Homeschool Organizations?” Get it here.

Carol’s book, The IRS and Your Homeschool Organization, is available here.

The IRS and Your Homeschool Organization

Carol Topp, CPA
Helping Homeschool Leaders

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

Meridian Learning ( 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:

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:

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

Carol Topp, CPA
Helping Homeschool Leaders

IRS threatens to deny 501c3 status to homeschool group

UPDATE: The IRS sent the homeschool group their 501c3 tax determination latter on July 19, 2021! Victory! Read more to learn what HomeschoolCPA wrote to the IRS to change their mind.

It’s my worst nightmare: The IRS denying one of my homeschool clients 501c3 status.

As a CPA who has helped over 200 homeschool organizations apply for 501c3 tax exempt status over the past 20 years, I have never had a client be denied tax exempt status by the IRS. Until May 2021.

An IRS employee is considering denying 501c3 status to my client, a small homeschool co-op in California. She is claiming that this group of 35 families is only serving themselves and not serving a “public interest.”

This could set a very bad precedent if homeschool nonprofits are denied 501c3 tax exempt status.

While on a phone call with the IRS specialist, I explained that homeschool groups are a lot like private schools, offering classes, etc and that some private schools are smaller than 35 families.

She said,
“Yes, but you homeschoolers want a tax break.”

IRS Exempt Organization employee on phone call on May 17, 2021

Wait! What? Did I hear her correctly? I informed the IRS that there are no federal tax breaks for homeschool families.

She then went on to explain that I needed to read Rev Ruling 69-175 because that is her basis for denying 501c3 tax exempt status to a homeschool group.

I contacted HSLDA and CHEA of California for their assistance. Then I got to work researching, reading, studying and writing. I had four attorneys and three other experts in nonprofit tax exempt status read my document.

I faxed the IRS a 5-page document with facts and details how a homeschool co-op is broadly serving the community and not just private interests. I also explained why Rev Rul 69-175 does not apply to this client’s situation.

As of June 17, 2021 we have not received the IRS determination.

I’ll update this post when we hear back.

I’d like to ask for prayers for clarity of thinking for the IRS and a favorable reply for this homeschool co-op and all homeschool groups applying for 501c3 tax exempt status.

Carol Topp, CPA
Helping Homeschool Leaders