I’m now answering questions from homeschool leaders at my website/blog combination HomeschoolCPA.com
All the posts moved with me, so you can still find the information you need over at HomeschoolCPA.com. See you there!
Carol Topp, CPA
This just released by the IRS. Fees for applying for 501c3 tax exempt status are set to increase January 3, 2010:
User fees will increase for all applications for exemption (Forms 1023, 1024, and 1028) postmarked January 3, 2010:
- $400 for organizations whose gross receipts are $10,000 or less annually over a 4-year period
- $850 for organizations whose gross receipts exceed $10,000 annually over a 4-year period
- $3,000 for group exemption letters.
A complete schedule of all user fees will be published in the annual procedure released in January 2010.
Cyber Assistant, a Web-based software program designed to help 501(c)(3) applicants prepare a complete and accurate Form 1023 appplication, will become available during 2010. Once the IRS announces the availability of Cyber Assistant, the user fees will change again:
- $200 for organizations using Cyber Assistant (regardless of size) to prepare their Form 1023
- $850 for all other organizations not using Cyber Assistant (regardless of size) to prepare their Form 1023.
IRS will announce when Cyber Assistant is available and the effective date of the user fee change. Subscribe to the EO Update to automatically received an alert that Cyber Assistant is available.
So get your 501c3 application (Form 1023) in before January 3rd to save $100. (The current fees are $300 or $750 depending on your gross revenues)
Cyber Assistant sounds like a good tool, but the IRS does not say when Cyber Assistant will be available in 2010, so we have no idea when the lower rate of $200 will be available.
Last time the IRS increased their fees they received a deluge of applications and had a huge backlog for months. Small, new nonprofits try to save a buck wherever they can and will try to take advantage of the lower rate. While I am glad to see the fee will eventually be dropped to $200, I still expect to see an increase in applications before the due date.
Carol Topp, CPA
Faye, a homeschool mom and columnist for the DC Examiner.com, has a list of lessons she learned while being in two homeschool co-ops this year.
When we joined two homeschool co-ops last year, it completely changed our homeschooling life. For one thing, I had to be sure not to plan anything else on co-op days, because we were already busy. Sometimes this made scheduling field trips a little tricky, but the juggling was well worth the effort. Another big change was that on co-op days, we all had to get up at a scheduled (earlier!) time, so that we could be out the door on time. We aren’t big morning people around here, but I think the change did us good. And finally, it brought more friendship and support into our family and into our lives, which was perhaps the biggest blessing of all! There were many other things that I learned, and I thought it would be fun to share a few of them:
1. Kids who are not used to daily “school” may not always have pencils, pens, or paper. Be sure to bring extra!
2. No matter how hard you wish, if your co-op is exactly 18 minutes from your house, you will not be able to get there in 10 minutes. Leave early (or at least on time).
3. Even if you are the “teacher”, sometimes you will be late (refer to #2 for the solution to this problem)
4. A big roll of paper and a box of crayons are indispensable for keeping little ones occupied. The paper may come in handy for other uses (see #1).
5. You probably already know this, but kids NEED time to run around outdoors. If your co-op doesn’t have access to an outdoor space, try to find a way for the kids to take a walk or play some indoor games. Getting the wiggles out is very important.
More of Fay’s lessons learned coming soon.
homeschool co-op, order my book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out.
Carol Topp, CPA
Do small homeschool groups need insurance?
Often they do, especially of their host/landlord requires general liability insurance.
To help you discern your risk and need for insurance, Harvey Mechanic, an attorney that specializes in nonprofit law, lists some potential claim areas:
POTENTIAL CLAIM AREAS:
1. Discrimination (Age, Race, Sex)
2. Wrongful dismissal of employee
4. Financial failure/bankruptcy
5. Poor administration resulting in losses
6. Causing the organization to incur unnecessary tax liability
7. Imprudent investments
8. Misuse of contributions
9. Conflict of interest
10. Unauthorized loans
11. Failure to obtain competitive bids
12. Unwarranted expansion
13. Failure to obtain government funding or lower interest loans
14. Misuse of government funds or grants
How many of these situations could occur in your homeschool organization? Probably some, but not all. Large nonprofits like the Red Cross or a hospital face many of these potential risks and need insurance.
In my article, “Insurance for Homeschool Groups,” discuss the various types in insurance a homeschool group might need and how to lessen your risks to obtain a reasonably priced insurance policy.
Carol Topp, CPA
We have one entity (group) that works outside of our association, this is our Co-op group. This group does take in money – I believe it’s run out of a separate bank account. I know our Co-op group has a board, and bylaws but not an EIN number, which I know is very easy to get. What are they benefits of us staying as one group? My question is: should our Co-op group run their funds separately like this?
Sandy in TX
Your co-op could be organized as under your association or as a separate group. It’s really up to you. Since they have their own separate board and bylaws, perhaps they are really operating as a separate unincorporated association already. You could be officially separate if they obtain their own Employer Identification Number (EIN) from the IRS.
There might be advantages to staying as one group. There are fewer volunteers for the board positions, consolidated financial reports, and shared workload. The co-op could remain a part of your organization, but with a separate checking account and its own budget. It could be self-sustaining financially, but still part of your association. Many church-run schools operate like this, financially self-sufficient, but still under the umbrella of the church.
Carol Topp, CPA
I wrote this article for Step by Step Fund Raising titled
by Carol Topp, CPA
Your nonprofit needs professional accounting help, but a good CPA can be hard to find. You desire someone who is knowledgeable but understandable, experienced but still affordable, and professional yet interested in your mission.
How to find a CPA to help your nonprofit:
Finding a qualified CPA is the just the beginning. You also desire a good working relationship that benefits your nonprofit more than it costs.
When you work with an accountant:
Seek out an accountant that has the ability advise you about the financial side of your nonprofit. You should feel comfortable with him or her and be free to ask questions. A good accountant is not just a bean counter; they are also a business advisor. They should explain issues and financial statements in a language that is accurate, yet understandable. If you leave a meeting with your accountant feeling confused, you should find another accountant.
Ask a potential CPA these questions:
After their first audit, a small, but growing, nonprofit asked their CPA, “ How do we compare to other nonprofits? What can we be doing better?” The CPA was unable to answer their questions. He was good at number crunching, but he could not see the bigger picture and seemed unable to offer advice. The director was quite disappointed. They used the techniques mentioned here and found a qualified, helpful CPA with a reputable firm that guided them through many successful years of expansion.
Carol Topp, CPA //
I am trying to do some research on the non-profit status for our Homeschool group and cannot find a clear answer. We are trying to see if we have hit the $5000 gross receipts limit.
Would money that individual members write to the group, so that the group can write one check to an organization, for instance a field trip, be considered in the gross receipts?
All money that comes in, even if it goes out almost right away like for a field trip, is considered gross income.
Not difficult to get over that $5,000 limit, is it?
To help in your research you might want to read my e-book Tax Exempt 501c3 Status for Homeschool Organizations.
You can find it on my website www.HomeschoolCPA.com/Books.html
Best of success to you,
Carol Topp, CPA