I started a nonprofit CC Community. Can I pay myself?

Greetings, I’ve started a Classical Conversations Community in Washington state. To be able to host my community at my church, we were asked that we create a non-profit organization so I did. I created a separate non-profit banking account from my personal account, thankfully. Honestly all money that has gone out has been for supplies and Independent Contractor payments. Although, it would appear within the CC framework that I can pay myself, I’m unclear with the non-profit status if I actually should, so I have taken no stipend at all for my work.

Can I actually pay myself a small stipend to help off set my personal expenses?

Thank you for any and all help you might be able to offer. I’m feeling extremely overwhelmed with all of this.

-WA

Dear WA,
Last week I talked with another CC Director in Washington State who formed a nonprofit. Her situation sounds very similar to yours.

Both she and you seem to lack a board or team of leaders. You see, a nonprofit is not owned by anyone (unlike a for profit business which does have an owner). Nonprofit organizations are operated by a board or team of people. This board the hires and pays staff such as you, the Director, or the tutors.

So to answer your question: No, you cannot pay yourself. A board of people unrelated to you by marriage, blood or business relationship, must vote on what all workers get paid. That is how a nonprofit is very different from a for profit business.

Resources

My book Paying Workers in a Homeschool Organization explains how a CC nonprofit should be paying its Director and tutors (i..e, as employees not as Independent Contractors).

The book is available in paperback $9.95 or ebook format $3.99

You’ll find my latest ebook Business Q&A for CC Directors to be full of questions just like yours from CC Directors and my answers. There are so many issues to learn and understand when running a Classical Conversations Community. Get accurate information on running your business from a CPA who has consulted with dozens of CC Directors.

Ebook (pdf) format only: $10.00

I think you will find both books very helpful!


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

End of Year Tasks for Nonprofit Homeschool Groups

Happy New Year! In the new and out with the old.

But wait! Not so fast!

There are several tasks a nonprofit homeschool group needs to do to finish out the prior year before forging ahead.

1. Wage Form W-2 to employees by January 31st:  Your treasurer should furnish Form W-2 to employees who worked for your organization during the past year by Jan 31st.
The cover sheet for the W-2s, called a transmittal form W-3 transmittal form is due the end of January as well.

2. Independent Contractor Form 1099-MISC are also due January 31. Provide a Form 1099-MISC to individuals paid $600 or more in 2019 for performing a service for your nonprofit. Like the W-2s, the 1099s have a cover page, Form 1096 transmittal form that is also due by Jan 31st.

In 2020, the IRS will be replacing the 1099-MISC for non-employee compensation with a separate form called 1099-NEC. It will be used in early 2021 to report 2020 payments to independent contractors. Click here to see the IRS draft.

PaperW-2s and 1099-MISCs are a nuisance to fill in and mail, so do what I do and file online.
I used a service called Yearli.com for years. They are fast, easy and inexpensive.
Check them out! https://mbsy.co/rzrbp
Using this link gets you a 15% discount and (full disclosure) I make a small commission.

The start of a new year is a great time to determine if your workers should be classified as an employee or independent contractor.

Worker misclassification is a serious issue and can cause significant financial hardship and has caused several businesses to close. Penalties for misclassifying a worker as an independent contractor are very stiff and strictly enforced so now is a good of time to make sure every one of your workers are properly classified. Read more here

My book Paying Workers in a Homeschool Organization will help to determine if a worker is an Independent Contractor or employee.

For more specific advice, I offer a Worker Classification Consultation.


3. Contribution statements for donations your nonprofit received in 2019. A donation is recorded when it is received even if you don’t deposit the check until the new year. The only exception to that rule is if you receive a check in the mail and the envelope is dated December 31st or before. You can count that as a donation in 2019.
Your contributions statements to donors should be mailed in January so donors can prepare their tax returns.

Those tasks will keep your treasurer (or hired bookkeeper) pretty busy in January!

If you’re needing bookkeeper, I recommend Mary Musick, CPA (inactive) and current homeschool mom. Mary runs a bookkeeping service and can help your homeschool nonprofit with bookkeeping and payroll. Her email is hfbkkpg@gmail.com.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders