Should my homeschool group file as an LLC?

Hello, Carol.

I have learned so much from your website. Thank you for your expertise. I am part of a co-op and we need to open a bank account. I am in Texas.

My bank told me that we need the “assumed name certificate” as well as the EIN. We do not have an “owner.” Do I file as a Limited Liability Company?

Jennifer L
Texas

Jennifer,
I’m glad my website was helpful.

Becoming a Limited Liability Company (LLC) is a complicated issue for nonprofits.  Most small nonprofits such as your homeschool co-op do not become LLC’s because the IRS has 12 conditions that must be met for the LLC to be tax exempt. It may be more than you cared to learn, but it is important to understand the complexity of nonprofit LLC status.

Here’s a helpful article discussing LLC status and IRS tax exempt 501(c)(3) status.

https://www.insightcced.org/uploads/publications/legal/LLCs-as-exempt-orgs.pdf

The reason that most for-profit businesses obtain the LLC status is for limited liability. I organized my own sole proprietorship accounting practice as an LLC  because I wanted limited liability and protection of my personal assets.

For a nonprofit organization such as your homeschool co-op, nonprofit corporation status in your state brings similar protections of limited liability.

So if your main reason for seeking LLC structure is for limited liability, nonprofit incorporation in your state is the simpler option.

Read more about nonprofit incorporation here: https://homeschoolcpa.com/leader-tools/articles/ or in my latest book, The IRS and Your Homeschool Organization.

Now my “lawyer” words:

The information contained on this site is designed to provide accurate information in regard to the subject matter covered. However, this site is  not a substitute for legal guidance. This information is provided with the understanding that the author is not engaged in rendering legal advice. If such advice is required, the services of a competent legal professional should be secured.

Carol Topp, CPA