I’ve talked to a lot of homeschool (for-profit) program directors over the past few years. These people have a huge heart for homeschooling, but many do not understand that when they start their programs, they began operating a business. They don’t see themselves as business owners (but they are!), and so they neglect getting educated about running a business and make a lot of mistakes.
Here are the top tax mistakes I see homeschool for-profit directors make:
- Giving themselves a 1099-MISC.
- Not understand that they are business owners.
- Paying tutors as Independent Contractors but treat them as employees.
- Not understanding their tax obligations.
- Not being prepared for self-employment tax.
- Not being aware of potential penalties for worker misclassification.
- Not keeping good records.
- Not seeking professional advice before signing an agreement or launching a program.
- Not getting tax advice.
- Asking Independent Contractors or employees to volunteer their time. That is Illegal in most states.
- Not realizing fundraisers are taxable income.
- Thinking they can form a nonprofit by filing a piece of paper but not forming a board or drafting bylaws.
I explain a lot of these tax mistakes in my webinar on Tax Preparation for Homeschool Business Owners. It should be a lot of help to for-profit directors, tutors, co-op teachers and other homeschool business owners! For details visit HomeschoolCPA.com/HSBIZTAXES
Additionally my book on Paying Workers in a Homeschool Organization explains in detail why tutors should be paid as employees and the risk a homeschool business owner is taking if she pays her teachers or tutors as Independent Contractors.
I’m not trying to scare anyone! Sorry if I did, but maybe it will compel you to change your actions.
I’m not trying to talk you out of being a homeschool business owner, director of a for-profit program, or tutor if you love it.
But I am trying to help you stay out of trouble with the IRS and your state government.
The last thing I want is an audit of homeschool programs or businesses by the IRS or state governments! No one wants the reputation of homeschooling tainted in the eyes of our government. We don’t need that!
Carol Topp, CPA
Helping homeschool leaders