Is Our Homeschool Group a Church?

Carol,
Our homeschool co-op would like a consultation with you. Our group is classified as a church in our state. Some of us feel that this is not the correct classification. While we have a religious purpose, offer a class in worship arts, and have Bible Studies, we are like more homeschool co-ops. We don’t have worship services, clergy or a theology.
Can you help?

I had a wonderful video call with five members of this homeschool group. Indeed they were formed as a church in their state.

We discussed religious purpose and most importantly their state’s definition of “church” (or in this state “ecclesiastical organization”). This homeschool group just didn’t fit the definition of an ecclesiastical erganization!

Their state’s definition of a church or ecclesiastical organization is (my emphasis added in italics):


The term “church” and/or “church organization” used in this act shall be construed to include any church, denominational unit, or church society as the term is commonly used and understood but shall not apply to such organizations as Sunday schools,…Bible classes and similar societies organized by and affiliated with the parent churches.

My recommendation was to dissolve the organization as is and start a new nonprofit corporation with a religious and educational purpose to run the homeschool activities.


The homeschool group followed that advice is pursuing nonprofit incorporation and 501c3 tax exempt status for a new organization.


At the same time, a Classical Conversations Director asked a tax assessor in North Carolina this question:

“Classical Conversations is Christian education. It aligns with the values and beliefs of the host church. Shouldn’t we be covered under the religious rather than nonprofit educational exemption?”

His rely, with my emphasis added in bold for brevity:

NCGS 105-278.3 defines a religious purpose as “one that pertains to practicing, teaching, and setting forth a religion. Although worship is the most common religious purpose, the term encompasses other activities that demonstrate and further the beliefs and objectives of a given church or religious body.” The Roman Catholic Church has long used a system of education as a method for instilling its particular beliefs and practices in the minds of the youth. Many protestant and other religious schools are operated by churches and church organizations in the hope of bringing the youth into conformity with the organization’s beliefs. In the developing world, Sunday Schools often teach literacy and language skills to attract children and their parents while teaching them using heavily theological materials. Thus, it is not a stretch to associate educational curriculum with organized religions and religious practices.

Problematically, CC Communities are not themselves religious organizations, denominations, or churches. NCGS 105-278.3 defines such as “a congregation, parish, mission, or similar local unit of a church or religious body; or a conference, association, presbytery, diocese, district, synod, or similar unit comprising local units of a church or religious body.”


It speaks of furthering the beliefs and objectives of “a given church or religious body” and extends exemption to “a general or promotional office or headquarters” of a group listed above, along with “residences for clergy, rabbis, priests or nuns assigned to or serving a congregation, parish, mission or similar local unit, or a conference, association, presbytery, diocese, district, synod, province or similar unit of a church or religious body.” Great lengths are taken to clearly describe who may benefit from religious exemption.

For a CC Community to benefit from the religious exemption it must prove that it is one of the above categories. Merely being a ministry, a Christian organization, etc. is insufficient, you must be a church body.

Source: Jeremy K. Akins,
Tax Administrator Alamance County
North Carolina


So although Mr Akin’s reply only applies to his county (based on North Carolina laws), it gives us an understanding that frequently the meaning of “church” for tax purposes (or property tax exemption in this case) is defined in the tax code of the states.

In other words, we as citizens, nonprofit leaders, or business owners cannot define what a church is or when our business or nonprofit group should be eligible to be called a church.

Those definitions are already in place. We just need to do our research.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Summer Special: Business Consultation for CC Directors

Classical Conversations (R) Directors are advised to seek advice from a Certified Public Accountant (CPA) about running their CC business, yet many Directors do not do that for several reasons:

  • It’s too expensive
  • The Director doesn’t know any CPAs
  • The CPA doesn’t understand homeschooling or CC
  • It’s inconvenient (what to do with the kids?)

Here’s a summer special just for CC Directors that solves all those problems!

Get a 50 minute business consultation by phone with Carol Topp, CPA and Stephanie Patrick, a former CC tutor and Director.

The price is only $50
. That’s half the usual rate for Carol’s professional time and expertise and you get Stephanie’s experience as a Director and Tutor as a bonus!

Or gather other Directors and pay $75 for 2 people on the call or $100 for 3 people! All Directors will join in a conference call to practice social distancing!

This is a limited time offer (only two months this summer) with limited availability (four time slots a week on Tuesday afternoons).

During our call we can discuss any of these topics:

  • Is my CC Community a business or a ministry?
  • Should I be paying my tutors as employees or Independent Contractors?
  • How do I pay myself?
  • Paying my church-host: Is it a donation?
  • Giving refunds and discounts (especially because of COVID-19 cancellations)
  • What tax deductions can I take?
  • Should my business be an LLC?
  • Do I pay my CC business for my children’s tuition?

There are so many questions you may have that we may have to limit them to your top four issues.
But there are resources to help you run your CC Community including:

Book your consultation today. This is a limited time offer and there is limited availability (four time slots a week on Tuesday afternoons).

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Telling members about future plans regarding COVID-19

Many homeschool leaders are trying make plans for the fall of 2020 amidst the corona pandemic, social distancing requirements and concerns for member’s health and safety.

Recently one leader, Jennifer, shared on a Facebook group for leaders classical education programs called The Garden: Planting and Tending Classical Homeschool Programs what she has communicated at this point (early May 2020) to her member-families.

Jennifer graciously gave me permission to share this. We both hope it is helpful.


What about Covid?

As of right now, we DO plan to begin our school year on time. The board will be closely monitoring all of the happenings with Covid-19 and will make timely decisions as needed.

However, please know that we will not necessarily make decisions in line with local school systems. We will likely be more in line with local churches and of course we will honor the mandates from our local government.

We will strictly enforce our campus sick-policy which is carefully outlined in our handbook. I am confident that all of our families will be so careful to respect each other by being extra diligent in choosing to keep their family home if in doubt regarding the illness.

Everyone will receive an updated handbook at the Parent Orientation.

We want to be wise and we are eager to meet at (group name)!

Obviously, you may make a different decision from what Jennifer’s group decided, so please feel free to edit Jennifer’s email to your voice and your group.

HomeschoolCPA is planning a webinar for Monday June 1, 2020 at 8 pm ET for homeschool leaders to address how to make decisions about your fall 2020 programs.

Registration is now open (it’s free, but you need to register). There are three homeschool leaders who have agreed to be on a panel to explain how they are making their decisions.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Tax Assessor Clears Confusion on CC Communities Using Churches

There is a lot of confusion about whether Classical Conversations Communities should be using churches for their Community Day activities.

Background: Unlike most homeschool programs and co-ops, Classical Conversations Communities are usually not nonprofit organizations. Instead they are for-profit businesses owned by the Communities’ Directors who have licensing agreements with Classical Conversations, Inc. This may cause problems when a CC Community meets in a church. Many churches avoid hosting businesses on their property for several reasons including:

  1. Jesus chastised the money-changers in the Temple in Mark Chapter 11. Many churches have a policy against business owners conducting their business on church property.
  2. Churches enjoy property tax exemption from their state governments for their religious activities. Hosting a business may threaten that property tax exemption and churches would have to pay property tax. Churches want to avoid violating their property tax exemption and therefore do not typically allow business to be conducted on their property.

I wrote a long FAQ page about homeschool groups using churches here.  

One tax assessor in North Carolina, Jeremy Akins, kindly answered several questions regarding CC use of church property in his county Alamance, NC.

His document “Classical Conversation FAQ” answers several questions including:

  • How authoritative is this document?”
  • My CC Community operates out of a church. Does this put the church at risk of losing its property tax exemption?
  • Classical Conversations is Christian education. It aligns with the values and beliefs of the host church. Shouldn’t we be covered under the religious rather than nonprofit educational exemption?
  • What if my church wants to set up a CC Community operated by the church itself?
  • We only use the fellowship hall and outdoor areas for 6 hours per day, 30 days per year. Isn’t this an incidental use by members of the general public? I’ve heard this doesn’t jeopardize the exemption.
  • What if I want to operate a CC Community with all volunteer staff (no payments to the Director / Tutors, just the cost of the curriculum, license fee and facility fee)?
  • Are you saying that a CC Community cannot be structured as a for-profit business?

You can read Mr. Akins’ response (5 pages) in full here.  Alamance County NC Classical Conversations FAQ.pdf


Although Mr. Akins’ FAQ document is limited to his jurisdiction (Alamance County, NC), he does make his assessment based on state-wide laws. Additionally, his FAQ gives helpful insight into how a property tax assessor thinks and evaluates a for-profit homeschool business using church property to conduct its business.



Nonprofit Status for CC Communities

I would like to expound on one question that Mr. Akins answered:

Does this mean my CC Community must obtain 501(c)(3) status?”

No, although that is something your Community may consider. All that is required for the purpose of the exemption is a North Carolina status as nonprofit.

Let me explain the difference between nonprofit and tax exempt status:

Nonprofit status is granted by your state, usually the Secretary of State’s office. Creating a nonprofit corporation is forming a new legal entity.

501c3 tax exempt status is offered by the IRS to eligible nonprofit organizations.

Think of it like being married: Your state approves marriage licenses and your form a new family entity when you get married. You also are eligible for tax benefits from the IRS (called Married Filing Joint) if you are eligible and want it. Your homeschool group doesn’t have to apply for 501c3 tax exempt status with the IRS. Just like a married couple does not have to file a joint tax return; they can file Married Filing Separately. While that usually costs more in taxes, but it can be done.

The same is true for a nonprofit organization. If a nonprofit does not apply for 501c3 tax exempt status with the IRS, the nonprofit will owe federal income tax on any surplus it has each year. The nonprofit organization will be required to file a federal corporate tax return (Form 1120) to report its income, expenses and profit. The federal corporate tax rate is 21%. So most eligible nonprofits apply for 501 federal tax exempt status and avoid paying 21% of their profit to the IRS.

Please understand that Mr Akins’ FAQ is addressing property tax exemption on churches, not federal income tax exemption, so he is addressing that tax and its tax basis.

Resources for Nonprofit and Tax Exempt Status

I have some resources to explain nonprofit and federal income tax exempt status. I do not make assessments regarding state and county property tax. They are different taxes and different tax agencies. I focus on federal income tax exemption from the IRS.

Difference between nonprofit and tax exempt status (3 minute video)

Do I Have to Be Tax Exempt? (3 minute video)

Is My Homeschool Group Required to Have 501c3 Tax Exempt Status? (13 minute podcast)

Creating a Nonprofit webinar: This webinar recording is helpful for new nonprofits, existing homeschool group, or for a business wanting to convert to a nonprofit organization. The webinar runs about 90 minutes and covers:

  • The difference between a business and a nonprofit organization
  • The advantages and disadvantages of being a nonprofit organization
  • Forming a board: who can be one it, what do they do, etc.


I have helped several CC Communities convert to nonprofit organizations and assisted over 200 organizations apply for 501c3 federal income tax exempt status. If you have questions about the process, start with the resources above. If you have specific questions, we can arrange a phone consultation.


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

If I’m Not a Homeschool Leader, What am I?

The COVID-19 pandemic has meant that many homeschool leaders have no group to lead. Some may enjoy the break from responsibilities, but other feel lost and lonely without their groups.

Carol Topp, the HomechoolCPA, is joined by Doreen Browning, co-moderator of the I am a Homeschool Group Leader Facebook group and Jamie Buckland, Classical Program Consultant.

Listen as Carol, Doreen and Jamie discuss:

  • Leaders without a group can feel lost, lonely and without a purpose
  • Perhaps this is the time to “pour in” instead of the usual pour out
  • Resources to help you pour into yourself or others (see below)
  • Keep up with board meetings.
  • Do some things you never have time to do.
  • You need to be replaceable!

In the podcast, Jamie mentioned some resources she uses to “pour in” to being a better leader. Here’s her list:

Carol Topp has found these resources to be very helpful:

  • Homeschool Organization Board Manual by Carol Topp, CPA- a template to create your own board manual of important documents and a training guide for board members. Read more below…
  • BoardSource.org– lots of good articles for nonprofit board members in their resource library
  • Lessons From The Nonprofit Boardroom: 40 Insights For Better Board Meetings by Dan Busby and John Pearson

Join the Facebook group for homeschool leaders: I am a Homeschool Group Leader. 1200+ homeschool leaders offer ideas, encouragement and respectful exchange of ideas. https://www.facebook.com/groups/72534255742/


Jamie Buckland, the Classical Program Consultant is available for phone consultations regarding starting and running a classical homeschool group. Contact her at https://jamiebuckland.net/


Homeschool Organization Board Manual

Homeschool board members should keep all their organization’s important papers in a safe and accessible place. Usually, a 3-ring binder works well.

Author and homeschool advisor, Carol Topp, CPA, has created a Homeschool Organization Board Manual. It is a template to create a board member binder. It has:

  • A list of important documents to keep in your binder
  • Section dividers so you can organize the important papers
  • Tools to help you run your meetings smoothly including
  • A sample agenda that you can use over and over again
  • A calendar of board meetings

But this is more than just a few cover sheets for your binder. It is also a 55-page board training manual with helpful articles on:

  • Suggested Board Meeting Topic List
  • Board Duties
  • Job Descriptions for Board of Directors
  • What Belongs in the Bylaws?
  • Compensation and Benefits for Board Members
  • Best Financial Practices Checklist
  • How to Read and Understand Financial Statements
  • Developing a Child Protection Policy

Stay Connected with Your Homeschool Group During COVID-19

The COVID-19 pandemic and the requirements to practice social distancing has meant that many homeschool groups can no longer meet face-to-face. How can homeschool groups stay connected during this time?

Carol Topp, the HomechoolCPA is joined on today’s podcast by Doreen Browning, co-moderator of the I am a Homeschool Group Leader Facebook group and Jamie Buckland, Classical Program Consultant.

Listen as Carol, Doreen and Jamie discuss:

  • How we can enjoy and redeem this time of isolation and refocus on homeschooling and our families.
  • How to encourage interactive communication, not just one-way communication.
  • Tools to use to stay connected: some new and some very old school (mail and phones!)
  • While we are having a health emergency, there is no educational emergency.
  • Are we too dependent on our co-op classes and tutors?
  • Encourage parents that they are equipped to homeschool their children without your wonderful group!

Join the Facebook group for homeschool leaders: I am a Homeschool Group Leader. 1200+ homeschool leaders offer ideas, encouragement and respectful exchange of ideas. https://www.facebook.com/groups/72534255742/

Webinar: Starting an Academic Homeschool Program

Are you interested in starting a homeschool program with a classical and academic focus? Jamie Buckland started Appalachian Classical Academy (ACA) after running a for-profit classical community. Now she is the Executive Director of ACA. She explains how ACA is set up with not one but two boards to run the Academy as a nonprofit organization!

Jaime and Carol teamed up to present a webinar on the ABCs of Starting an Academic Homeschool Program. You can benefit from their combined knowledge in this webinar (and you’ll get several helpful resources as well). http://homeschoolcpa.com/how-to-start-an-academic-homeschool-program/


Jamie Buckland, the Classical Program Consultant is available for phone consultations regarding starting and running a classical homeschool group. Contact her at https://jamiebuckland.net/

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

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.

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

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