Are you paying your kid (or grandkid) to work for your business? You’re not? You should.
No, I’m not saying you should put your four-year-old behind the receptionist desk to take calls. Or ask your middle-schooler to assist you in business deals. But if you have a teenager, you should strongly consider putting him or her to work. The benefits are enormous – especially during these difficult times. The next generation needs our help entering the workforce.
1. Your child can develop a work ethic.
You can teach your child, from a relatively young age, the importance of having a job, having a boss and having responsibilities. They can learn the value of showing up somewhere on time, doing what is expected and performing tasks under the supervision of someone else.
2. Your child can earn up to $12,000 per year without paying any taxes.
This is assuming that they’re not doing any other work or earning other income. In case you didn’t realize, $12,000 is the standard deduction on any tax return, so if they’re not earning more than that…they’ve got no tax liability. It’s quite possible that you won’t even have to file a tax return either.
3. You may not have to pay taxes.
As long as your child is under 18 (and you’re a sole proprietor or LLC) you won’t have to pay any social security or Medicare taxes. However, if you’re an S-Corp or C-corporation, you will have to withhold these taxes, but your child will likely receive them back as a refund. Your state’s rules may vary, so talk to your accountant. Regardless, make sure you’re keeping good documentation of their work hours and the work performed just in case the IRS raises a red flag.
4. You can take a deduction.
It’s a legitimate business expense as long as your child is at a reasonable age and performing reasonable work that someone else would be paid to do.
- Filing
- Database work
- Typing
- Cleaning
- Maintenance
- Warehousing, etc.
Not only that but you can still claim your child as a dependent or receive the child tax credit if you qualify.
5. You get to spend more time with your kid.
It’s kind of nice having them around this summer, isn’t it? Time flies so every minute counts. And they can see you too – in action, with other people, being the boss. You’re not just that lump that sits in front of the TV watching sports. You’re a real person, a leader, the head honcho. At least during the day.
6. Finally, you get to take the check out of their hands.
Yes, that’s right – out of their hands. As soon as you give them the paycheck, you grab it and immediately stick it in a savings account. Because you know they’ll spend that money as soon as they can, right? Put the money in a 529 College Savings Fund so that it can grow tax-free and be used for higher education expenses some day in the future. College is kind of expensive, did you hear?
Kids today. They’re lazy and don’t respect their elders, right? OK, that’s what my parents said. And what their parents said about my parents. And on and on. Your kids, and their generation, are no better or worse than any generation before. They want to work. They want to earn. And you can give them this opportunity – and use it to save a few bucks for yourself too!
Need general hiring tips? Hiring New Employees for Your Small Business: The Ultimate Guide
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View Comments (134)
I love this article!
We're so glad to hear that, Juliana! Thanks for commenting!
Number 6 is a terrible way of stating that advice.
I would have said, 6. Talk with your teenager about budgeting, saving, and investing. Ask them what they want out of life, show them how to make a plan to get it, and consider what sacrifices might be required to achieve the planned outcome.
Show them that if they spend the money now, they are giving up the earnings potential of that money in an investment account. Ultimately, teens need to learn financial responsibility, and those lessons are best learned as soon as possible.
The worst thing you can do with a teenager is to try to continue to "control" them like when they were a child. That just leads to rebellion and a closed mind unwilling to communicate at a time when they need your experience and advice the most.
Dear Gene,
I love your article with the exception of #6. I employed all 3 of my kids through high school. If you let them keep it, determine how they will spend it, DON'T give them any other spending money or gas money, but let them choose how they will spend what they make, then they will learn to save for their own expenses and make wise choices. Taking it away will require you to feed the open palm when they do ask for gas (or prom dress money) and will feed resentment. One of the big rewards of work is benefiting from your labor in the short term as well as the long! Foster a culture of respect with your kids!!
That’s a very VERY good point. I was just talking to a friend of mine yesterday who has the same point of view as yours. Maybe teaching them to save a little bit though wouldn’t hurt though!
Yes I believe we as adults should save 10 to 20% of our salary. It would be good for them to learn that as well.
Great advice
We're glad you thought so! Thanks for reading SBA!
This was a great article and very timely! I am about to hire my son in college for the summer as a paid intern. I was a little nervous of doing so but I see the definite benefits now. Thank you!
You're welcome! We're happy we could help out.
It seems a little time consuming and like a red flag, red flag, red flag for an audit on your entire business, and the IRS is finding lots of stuff wrong - All bc you hired your kid.
I started working for my mom in her office when I was 10. It was the best experience I could have ever received and I'm still thankful to this day, decades later. Job skills, confidence, work ethic, spending time with my mom, and more!
Thank you for sharing your experiences, Joan! We appreciate the comment.
Great information, I’ll be hiring my 11 1/2 year old daughter this summer to work at our thriving drive through coffee shop to take customer orders and interact with the customer base. Looking forward to having an employee that’s 100% invested in the operation of our shop.
My Grand daughter is 9 years old. Is she too young to be on my payroll?
If she’s doing work that a 9 year old can do then you’ll be fine. It has to be reasonable.
This is great information and I so appreciate your sharing it with your clients. I had no idea about this and it is a great way to put money into our grandchildren's accounts while spending time with them and teaching them values of work, finances but more importantly (to me) how to interact with others with respect and integrity. Thank you so much! Cathi
You're welcome, Cathi! It's great to hear you liked our article.