Insureon Blog

What You Need to Know about Hiring Your Kids

15. May 2015 08:26

child wearing a tie and playing on a tablet at a desk

I grew up in a family of small-business owners. My grandfathers, my two uncles, and my dad all operated their own businesses. In the mid 1950s, my dad opened a men’s clothing store with his father in Bayside, Queens, a borough of New York City. From the moment one of us kids was old enough to unfold a box, we were put to work during the store’s busy times – Christmas and the Saturday before Father’s Day.

If you have school-aged children, you’re most likely concerned about keeping them active during the summer months – that includes both their bodies and their brains. Why not have them chip in a few hours a day at your business and give them some lessons in entrepreneurship? It’s never too early to show your kids what your business is really about and why you work so hard.

But are your kids old enough to help with your business? And what do you do about compensation?

Actually, even minors can help out in the family business. In fact, by paying minor children, you can move family income out of a higher tax bracket (yours) and into a lower one (your children’s). It's an easy way to transfer wealth to your dependents without incurring federal estate and gift taxes.

Here’s what the IRS has to say about hiring family members:

Also important: make sure your children are doing real jobs, not just sitting around playing games on the company’s computers. Give them specific job duties and pay them in real money (i.e., not with pizza or movie tickets). Lastly, keep the same records you do for your other employees and track their hours and wages.

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at [email protected], follow her on Google+ and Twitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva's free TrendCast reports.

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Tags:

General | Small Business | Tips for All Small Businesses

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