Dollars and Sense

Is My Homeschool Group Required to Have 501c3 Tax Exempt Status?

Is My Homeschool Group Required to Have 501c3 Tax Exempt Status?Some homeschool groups are very small and are not interested in the benefits of tax exemption such as accepting donations or doing fundraising.

Do these small homeschool groups really need 501c3 tax exempt status?

No. They don’t.

They can run their activities without the benefits of 501c3 tax exempt status.

But then how does the IRS or their state view this group? Will they owe taxes on any surplus? Yes, they will owe tax because they do not have tax exempt status.  If they have a surplus, how do they go about filing a tax return and paying taxes?

There are a few possibilities. The IRS could view these homeschool groups as:

  • A 501(c )(7) social club with self-declared tax exempt status
  • An educational organization that could be so small* they can self-declare tax exempt status (or should apply for 501c3 status) and be filing an annual information return, most likely the 990-N ePostcard
  • A gathering of friends simply pooling money for a group activity. But then they probably need to operate in cash (or Venmo payments) without a checking account, official name, EIN, etc.
  • A business who should be paying taxes!

*under $5,000 of annual gross revenues

Can you guess which one the IRS prefers? Yep, it’s the last one! That means your homeschool group who hasn’t applied for tax exempt status should be paying taxes!

Listen to Carol Topp as she explains these options.

 

Featured Resource

In the podcast I mentioned my book:

The IRS and Your Homeschool Organization

Should your homeschool group be paying taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?

I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

When Applying for an EIN, They Want my Social Security Number!

When Applying for an EIN for my homeschool group, They Want my Social Security Number! Should I be concerned?When Applying for an EIN, They Want my Social Security Number!

Homeschool leader, Paula, was applying for an EIN (Employer Identification Number) online, but the IRS website asked for her SSN (Social Security Number). She is reluctant to give it out. Should she be concerned?

Someone (the “responsible party”) must give their Social Security Number (SSN) so that the IRS can always trace leadership of a nonprofit (or a business) to a human being. The IRS wants the name and Social Security Number of a specific individual it can contact if needed. Requesting a name and SSN is also meant to prevent people from setting up dummy or scam organizations.

Why does a homeschool group need an EIN?

1.     The homeschool group is brand new and needs an EIN to open a checking account in the group’s name.

2.     The organization needs a new EIN after it incorporates as a nonprofit corporation in their state.

Who is the Responsible Party?

  1. In general, the Responsible Party is an individual who has direct or indirect authority over the organization and its assets.
  2. The instructions to Form SS-4 give the definition of a Responsible Party as:
  3. “responsible party” is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.

Can I change the Responsible Party?

You can request the IRS remove your name from the EIN when you step down from being treasurer.
When that time comes, fill out IRS Form 8822-B and change the “responsible party” to the new leader.

Also listen to podcast #81 How can we change the contact name on our EIN?

If you have questions about applying for an EIN or the Form SS-4, read the chapter on “Checking Accounts Done Right” in my book Money Management in a Homeschool Organization

 

Featured Product:

Money Management in a Homeschool Organization

  • Does your homeschool group manage their money well?
  • Do you have a budget and know where the money is spent?
  • Do you know how to prevent fraud?

This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement, and hire workers. Sample forms and examples of financial statements in clear English are provided.

Should Your Homeschool Group Be An LLC?

Should Your Homeschool Group Be An LLC?Have you heard of LLC status? It stands for Limited Liability Company status. Sounds like a good things, right? Doesn’t everyone want to limit their liabilities? Yes, they do! So maybe your homeschool group should be an LLC! Or maybe not!

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.

Becoming a Limited Liability Company (LLC) is a more complicated issue for nonprofit organizations. Most small nonprofits such as a 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. For a nonprofit organization such as a homeschool co-op, nonprofit corporation status in your state brings similar protections of limited liability.

In this episode of the HomeschoolCPA podcast, Carol Topp will share:

  • What does LLC mean?
  • What is limited liability?
  • How nonprofit corporation offers limited liability
  • Becoming a Limited Liability Company (LLC) is a complicated issue for nonprofits.
  • How the IRS views nonprofit LLCs

Read more about LLC status for homeschool groups:
Can a nonprofit homeschool co-op be an LLC?

Should my homeschool group file as an LLC?

Should your homeschool group be an LLC?

 

FEATURED PRODUCT

The IRS and Your Homeschool Organization

Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group? I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:

  • The benefits of 501c3 status
  • The disadvantages too!
  • What it takes to make the IRS happy
  • What your state requires
  • Why your organization should consider becoming a nonprofit corporation
  • What is the difference between nonprofit incorporation and tax exemption
  • IRS requirements after you are tax exempt

Click Here to request more information!

Should a Homeschool Nonprofit Let Members Vote?

Should a Homeschool Non-Profit Group Let Members Vote?Should your homeschool nonprofit group let its members vote? There are many nonprofit groups that do not give their members a vote, but some do! What are the pros and cons or each arrangement?

In this episode of the HomeschoolCPA podcast, Carol Topp will share:

  • Is it okay to not allow members a vote?
  • Sample bylaws can be found at HomeschoolCPA.com/Samples
  • Can a board chose its own replacements?
  • How can a board get input from the membership?

In the podcast Carol mentioned the duties of the board:

Duty of Care

  • Read and understand your group’s mission, vision, and governing documents. I recommend a board binder for important documents.
  • Attend board and committee meetings.
  • Be informed and be prepared to participate in decision-making.

Duty of Loyalty

  • Be prepared to put the organization’s goals above your own.
  • Create and follow a conflict of interest policy. See a sample Conflict of Interest policy.
  • Disclose personal financial interests when needed/excuse yourself from voting.

Duty of Management

  • Develop policies about the financial management of the organization. My book Money Management in a Homeschool Organization has a checklist.
  • Keep accurate and complete records of income and expenses and minutes.
  • Develop a budget for your plans and your spending.
  • Develop fundraising goals.

Duty of Compliance

  • Understand and comply with governing documents, including bylaws. Sample bylaws.
  • Know and comply with state and federal laws governing non-profit organizations, including registration and reporting requirements. If you’re unsure about what your filings requirements are, my book, The IRS and Your Homeschool Organization, will be helpful.

 

FEATURED PRODUCT

Homeschool Organization Board Manual

Sometimes current group leaders have none of the important paperwork for their organizations. 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

Click Here for more information!

Does My Homeschool Group Need Directors and Officers Insurance?

Does my homeschool group or homeschool co-op need Directors and Operators Insurance?Does your homeschool group need to protect your leaders? Sure you do, so you may consider purchasing Directors and Officers (D&O) insurance.

D&O insurance is sometimes called “legal defense insurance.” It covers lawsuits filed against nonprofit board members, most which are related to employees. If your homeschool organization does not hire employees (and many do not), your risk is low and D&O insurance may not be necessary.

In this episode of the HomeschoolCPA podcast, Carol Topp will explain:

  • What is D&O insurance?
  • What does D&O insurance protect?
  • When to buy D&O insurance?
  • How does being a nonprofit corporation help?
  • Article on Insurance for Homeschool Groups.

In the podcast, Carol mentioned Ultimate Homeschool Radio Network (UHRN) has several podcasts for homeschoolers by homeschoolers. You might enjoy these podcasts:

Homeschool High School,

Making Biblical Family Life Practical

Vintage Homeschool Moms

Interested in hosting your own podcast?

If you have a great idea for a podcast, contact Felice Gerwitz (felice (at) mediaangels.com) and pitch your idea. UHRN is looking for talented podcasters especially in the following areas: Mommy Entrepreneurs, Family Entrepreneurs, Cooking with Kids, Podcasts for Kids, Music, Art, History, Science.

 

FEATURED PRODUCT

Money Management in a Homeschool Organization

 

Money Management in a Homeschool Organization

Does your homeschool group manage their money well? Do you have a budget and know where the money is spent? Do you know how to prevent fraud? This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement and hire workers. Sample forms and examples of financial statements in clear English are provided.

Click Here to request more information!

Blurring Lines of What is Homeschooling

Blurring Lines of What is Homeschooling with Carol Topp, CPAOn the I Am a Homeschool Group Leader Facebook page, a question was asked about being an inclusive group (open at all) or exclusive group (limiting membership). Many homeschool leaders contributed their experiences and reason for their group’s decision. Carol shared those views in Episodes # 129 and #130 which you can find here:

Reasons to be an Inclusive Homeschool Group

Reasons to be an Exclusive Homeschool Group

 

In this episode of the HomeschoolCPA podcast, Carol Topp will share some of the reasons that some groups are exclusive (they do not allow public school students into their homeschool group) but it comes from a few people who are active in legislation or in their state homeschool groups. They have a different viewpoint that you may find insightful and interesting.

These state homeschool leaders mentioned:

  • The lines of what is legally homeschooling are blurring and state legislators may not understand the difference between traditional/independent homeschooling and public-school-at-home.
  • There is a concern of government control and oversight (as seen in some states like Alaska and Kentucky)
  • There is a concern of being grouped with charter schools or public school funding and therefore be subject to more government oversight (as proposed in Indiana and Hawaii)

 

In the podcast Carol mentioned the Facebook  group for homeschool leaders I am a Homeschool Group Leader. Join 400+ homeschool leaders for ideas, encouragement and respective exchange of ideas. https://www.facebook.com/groups/72534255742/

 

 

FEATURED PRODUCT from HomeschoolCPA:

Phone Consultation with Carol Topp, CPA

You can learn a lot about running your homeschool group from the HomeschoolCPA podcast and website (and books) , but sometimes you just need to TALK to someone who understands homeschooling, running a group and the laws surrounding the finances and operations of homeschool groups. Why not call Carol Topp, the Homeschool CPA, to set up a personal call?

 Carol is happy to set up a conference call so several of your leaders can join in from their own homes. The call can be recorded or future reference or for those who are unavailable. This is Carol’s most popular service for homeschool leaders. It’s like having your own homeschool expert CPA on the phone!

Cost: $75/hour to nonprofit organizations.  $100/hour to for-profit businesses. $60 minimum.

Contact HomeschoolCPA, Carol Topp, CPA, to arrange a telephone consultation.

Click Here to request more information!


Special Thanks to Our Network Sponsor – Well Planned Gal

Rebecca from the Well Planned Gal understands the challenges of working within a budget, managing multiple children, and trying to keep up with a variety of information. That is why she created popular planner bundles!

Combine organizational tools with year long encouragement by bundling Well Planned Day planners with the popular Family Magazine. For a limited time, Save 30% with one of her popular planner bundles. Each bundle contains 2 planner products with a one-year subscription to Family Magazine.

Click Here to Go to Well Planned Gal


Reasons to be an Exclusive Homeschool Group

Should public-school-at-home parents be joining your homeschool group? Or perhaps your group desires to be more exclusive and have all members be “independent” or “traditionally” homeschooling.

 

On the I Am a Homeschool Group Leader Facebook page, a question was asked about the pros and cons of mixing homeschool and public-school-at-home students in your group-or, put differently, being inclusive (open at all) or exclusive (limiting membership). Many homeschool leaders contributed their experiences and reason for their group’s decision. In this episode of the HomeschoolCPA podcast, Carol Topp will share some of the reasons that some groups are exclusive and do not allow public school students into their homeschool group including:

 

  • Leaders cannot serve everyone!
  • Overcrowding pre-schools or other activities in the homeschool group
  • Public school students have their own groups and support networks
  • It’s easier to be exclusive. There were too many disagreements in inclusive group
  • The group could lose a place in homeschool sports competitions if public school students are included

 

In the podcast Carol mentioned the Facebook  group for homeschool leaders I am a Homeschool Group Leader. Join 400+ homeschool leaders for ideas, encouragement and respective exchange of ideas. https://www.facebook.com/groups/72534255742/

 

 

FEATURED PRODUCT from HomeschoolCPA:

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

Need more information on how to start and run a homeschool co-op? Carol Topp’s book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out  is packed with helpful tips and advice from other homeschool leaders.

Starting a homeschool co-op can be easy! This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Click Here to request more information!


Special Thanks to Our Network Sponsor – Well Planned Gal

Rebecca from the Well Planned Gal understands the challenges of working within a budget, managing multiple children, and trying to keep up with a variety of information. That is why she created popular planner bundles!

Combine organizational tools with year long encouragement by bundling Well Planned Day planners with the popular Family Magazine. For a limited time, Save 30% with one of her popular planner bundles. Each bundle contains 2 planner products with a one-year subscription to Family Magazine.

Click Here to Go to Well Planned Gal


Reasons to Be an Inclusive Homeschool Group

Reasons to Be an Inclusive Homeschool Group with the Homeschool CPAAn inclusive homeschool group allows everyone to join regardless of their method of homeschooling and that includes students that are doing public school at home. Is public school-at-home really homeschooling or not? Should public school-at-home parents be joining your homeschool group? Some leaders grapple with the question of whether their group should be inclusive or more exclusive.

 

A question was asked about the pros and cons of mixing homeschool and public-school-at-home students in your group at I Am a Homeschool Group Leader Facebook page. The discussion had many homeschool leaders contributing their experiences and reason for their group’s decision. In this episode of the HomeschoolCPA podcast, Carol Topp will share some of the reasons that leaders gave to allow public-school-at-home students in your group:

 

  • Openness to all regardless of their choice of homeschool methods
  • A desire to help everyone concerned about their children’s education
  • The parents feel like they are homeschooling and still need support
  • Public-school-at-home parents see the freedom that traditional homeschoolers have and many switch to traditional homeschooling.
  • Stronger together

 

In the podcast Carol mentioned the Facebook  group for homeschool leaders: I am a Homeschool Group Leader. Join 400+ homeschool leaders for ideas, encouragement and respective exchange of ideas. https://www.facebook.com/groups/72534255742/

 

FEATURED PRODUCT from HomeschoolCPA:

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

Need more information on how to start and run a homeschool co-op? Carol Topp’s book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out  is packed with helpful tips and advice from other homeschool leaders.

Starting a homeschool co-op can be easy! This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Click Here to request more information!

 

 


Special Thanks to Our Network Sponsor – Well Planned Gal

Rebecca from the Well Planned Gal understands the challenges of working within a budget, managing multiple children, and trying to keep up with a variety of information. That is why she created popular planner bundles!

Combine organizational tools with year long encouragement by bundling Well Planned Day planners with the popular Family Magazine. For a limited time, Save 30% with one of her popular planner bundles. Each bundle contains 2 planner products with a one-year subscription to Family Magazine.

Click Here to Go to Well Planned Gal


No Parental Involvement. Is That a Good Thing?

No Parental Involvement - is that a good thing for Homeschool Co-ops?A homeschool curriculum touted the benefit of their program to be “No parental involvement needed.” Is that a good feature or not? Listen as Carol Topp, CPA warns homeschool leaders of the trap they can fall into if they don’t include parents in their homeschool program.

Visit Carol’s website here!

 

 

 

 

 

 

 

 

 

 

 

 

 

FEATURED PRODUCT from HomeschoolCPA:

 

 

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

 

Have you ever thought about starting a homeschool co-op? Are you afraid it will be too much work? Do you think you’ll have to do it all by yourself? Starting a homeschool co-op can be easy! This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Click Here to request more information!

 


Special Thanks to Our Network Sponsor – Well Planned Gal

Rebecca from the Well Planned Gal understands the challenges of working within a budget, managing multiple children, and trying to keep up with a variety of information. That is why she created popular planner bundles!

Combine organizational tools with year long encouragement by bundling Well Planned Day planners with the popular Family Magazine. For a limited time, Save 30% with one of her  popular planner bundles. Each bundle contains 2 planner products with a one-year subscription to Family Magazine.  

Click Here to Go to Well Planned Gal


Accountability: Do you need it?

Accountability: Do you need it?“I’m looking at a homeschool program that meets twice a week because it will hold me accountable,” explained a mother of preschoolers interested in homeschooling. My question to her was, “Do you need accountability?” Maybe not! Listen as Carol Topp explains her reply to this new mom considering a homeschool program for a very young child.

Visit Carol’s website here!

 

 

 

 

 

 

 

 

 

 

 

 

 

FEATURED PRODUCT from HomeschoolCPA:

 

 

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

 

Have you ever thought about starting a homeschool co-op? Are you afraid it will be too much work? Do you think you’ll have to do it all by yourself? Starting a homeschool co-op can be easy! This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Click Here to request more information!