Small Business Owner? 6 Reasons Why You Should Hire Your Child

Gene Marks

Are you paying your kid 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 surgery. But if you have a teenager, you should strongly consider putting him or her to work. The benefits are enormous. Here are six.

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. She can learn the value of showing up somewhere on time, doing what is expected and performing tasks under the supervision of someone else. And she’ll learn how to dress and behave in a professional environment. All of these are valuable life skills.

2. Your child can earn up to $12,000 per year without paying any taxes.

This is assuming that she’s 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 she’s not earning more than that…she’s got no tax liability. It’s quite possible that you won’t even have to file a tax return for her 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 her 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 her around this summer, isn’t it? Time flies so every minute counts. And she 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 her hands. 

Yes, that’s right – out of her hands. As soon as you give her the paycheck, you grab it and immediately stick it in a savings account for her. Because you know she’ll spend that money at the mall or on an Xbox as soon as she 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!

48 Responses to "Small Business Owner? 6 Reasons Why You Should Hire Your Child"

    • J. Stephen Deffner | May 15, 2018 at 6:14 pm

      Good stuff. In my situation and family, I would also get a great employee.

    • pranatee pattanayak | May 15, 2018 at 6:59 pm

      What would be the right age for your teenager to start helping in your Business?

    • Michael Lanuza | May 15, 2018 at 7:40 pm

      Grate advice, I have two teens that are ready to start work during their summer vacation.
      And I just happened to own a business, so I”ll be able to hire them.

      Thanks

    • John | May 15, 2018 at 7:54 pm

      Good article — helpful for the future when the time comes..

    • Adam Carney | May 15, 2018 at 10:09 pm

      Gene, why do you use she when he is proper English for the ambiguous pronoun. Just to show how progressive you are? We’ve really come full circle on this one, haven’t you?

    • John Carroll | May 15, 2018 at 10:15 pm

      What if my son is 18 but still a junior in high school? What kind of rules will affect him?

    • Jacinta | May 15, 2018 at 10:15 pm

      You did not mention that the kid could invest $5500 in a Roth IRA and the benefits of a Roth.

      • Elizabeth Larkin | May 16, 2018 at 8:19 am

        Great point Jacinta!

    • Kathy | May 15, 2018 at 11:10 pm

      There is an error in #2 the heading is correct however the amount in the body is still 2017’s standard deduction

      • Elizabeth Larkin | May 16, 2018 at 8:18 am

        Edited – thank you!

    • Nolan Rodrick | May 15, 2018 at 11:17 pm

      Kid can work

    • Karen | May 15, 2018 at 11:18 pm

      Loved this article. One of the smartest and best employers, I had the pleasure of working for, grew up working in for her parents business doing accounting, scheduling, phones, etc. Although she did not have a college education, she was a savay, smart business woman and ended up being the CFO of a manufacturing company by the time she was 30. She accredits all her experience and knowledge to the outstanding training her parents provided from a young teen up into her early 20’s.

    • Greg | May 15, 2018 at 11:24 pm

      This is all great and all but the day of artificial intelligence is upon us and we as parents need to start teaching our kids and learn a few things ourselves about this historic revelation about to happen. If we teach traditional subjects in schools and college we are doing our next generation a bad service. Things like RFID, AI, Bitcoin, and Blockchain are here to stay and these technologies will evolve into the next type cryptocurrencies of the next generation. Prepare them now because waiting around will be too late.

    • Catherine | May 16, 2018 at 12:17 am

      That’s sounds great. However, they are still only accountable to their parent and that is a whole lot different than someone they don’t have a close relationship with. It can backfire. I’ve seen it. I worked for my parents as a kid, and so have my friends and let me tell you, it’s not the real world. It’s got its pros and cons like everything else. This article is written for the benefit of the parent , not the child. Working for your parents is not the same as working for a non family entity, and that wake up call, is eye opening.

    • Arnold Peterson | May 16, 2018 at 1:16 am

      Great advice! My jerk son at 10 years old demands living wage $15 an hour.
      And wants challenging work. He is learning tooling setup on cnc mills, Has mastered the art of drill sizing with calipers. So as the CEO , I am the janitor…

    • Donald Ratte | May 16, 2018 at 7:29 am

      I believe the new standard deduction for filing single is $12,000 where you state it is $6,300 in item #2.

    • Lee Rainer | May 16, 2018 at 8:01 am

      Does this work for Grand Kids also?

    • Kelly | May 16, 2018 at 8:35 am

      Adam: great take away from the article:-/
      Gene: great info!

    • Ken | May 16, 2018 at 8:38 am

      Jacinta’s point about Roth IRAs is good for anyone who has a child working. As I understand it, a benefit of a standard IRA is you get a tax deduction NOW, and pay taxes on the distributions later; with a Roth IRA, you get no deduction now, but pay no taxes on (correctly-timed) withdrawals. But if a working youngster pays no taxes anyway and so needs no deductions, and contributes to a Roth-IRA, they NEVER pay taxes on that money– not now, not later.

    • Barry | May 16, 2018 at 8:53 am

      This was an excellent tool for my son growing up. He learned what it took to be the last person in line to have to resolve an issue and how to manage and work with his peers. Not only as a future manager or business owner, but to see what it was like to be on the front lines and to experience what any employee experiences on a daily basis. The one drawback he ever experienced was putting his experience on his resume after he graduated from college…he actually made it through a third level interview (final) with a fortune 100 company to have the department manager actually tell him that she felt that working in a family business was not a good work experience and was basically just a filler for the resume and not actual work experience. I don’t know where she got her information from, but I believe my son would say it was exactly opposite. I would not fire him and I would not let him quit when things got tough…LOL Not sure about other parents hiring their children but from my experience we tend to be more direct and expect more from them than we are with any other employee within the company.

    • KT | May 16, 2018 at 9:00 am

      Can I hire my nephew and nieces and get the same benifits?

    • Scott Huffman | May 16, 2018 at 9:06 am

      The gentleman mentions the importance of teaching our kids about the amazing new technologies like “cryptocurrencies” in one of the comments…….. Another point would be to have your kids work for you so that you can teach them about real business with real technology. Teach them that good old fashioned hard work is what creates wealth and jobs, not multi-level pyramid scheme snake oil scams like Bitcoin.

    • Michele S Hewitt-Webster | May 16, 2018 at 9:20 am

      Great Article but you need to take the time to set expectations for your child in the workplace and let them they will be held accountable as an employee. It is never easy working with family!

    • Mark Walker | May 16, 2018 at 10:16 am

      This sounds very interesting. Does this apply only to parents with dependants? What if you are a Step Parent or Grandparent with a Sole Proprietorship and want to employee a step child or step grandchild? Does the Federal Minimum Wage apply?

    • Leslie Nickerson | May 16, 2018 at 11:05 am

      @Adam Carney, language changes to keep pace with the values and popular discourse of the culture; if it didn’t, we’d still be writing like the transcriber of Beowulf (which we all read in translation in high school because the original language is so different from modern English). Most academic and journalistic style manuals (APA, MLA, Chicago, Washington Post, New York Times, Associated Press) now encourage the use of singular “they” as a gender neutral pronoun. Singular “they” was even named 2015’s word of the year by the American Dialect Society, although it is hardly new (c.f. Shakespeare)! Also, if you’re going to nitpick the grammar on a business article when it has nothing to do with the ideas contained therein, the least you can do is ensure that your own comment is grammatically correct.

    • Tom | May 16, 2018 at 11:41 am

      Do kids need to have working papers in order to work in your business?

    • Bill | May 16, 2018 at 11:51 am

      Workers comp will surely go up.,…..

    • Melissa | May 16, 2018 at 12:27 pm

      We have had our kids work in our retail store when they were young (now they are out on their own). Loved having them by our sides, showing them what mom & dad do for work, and they learned a lot.

    • Cricket | May 16, 2018 at 12:35 pm

      Great article! I employed both my daughters doing basic office duties and found that as long as you treat them like “employees” and not your children, you are golden. Working in an office, dealing with clients, and answering phones gave them both confidence in themselves as well as excellent communication and social skills. I do wish I’d have thought about the Roth IRA though – *sigh*

    • Patricia King | May 16, 2018 at 1:30 pm

      If you can also hire a Grandchild, do you have to pay workman’s comp?

    • Tom | May 16, 2018 at 2:29 pm

      Since I have a son and these advises are directed to parents with daughters, they are useless to me.
      And besides, doesn’t every business person know this already?

    • Melissa | May 16, 2018 at 2:39 pm

      Super cool article!

    • cathy turchan | May 16, 2018 at 3:19 pm

      Even better….put their money in a ROTH IRA. I have an 11 year old that puts all her babysitting money and dog sitting money into a ROTH IRA. 50 years of compounded tax free growth!

    • David Mear, CPA | May 16, 2018 at 3:38 pm

      Your statement in #3 implies that SS and Medicare taxes withheld would be refunded to the child on their tax return. Not true. Only the Federal income tax withheld would be refunded. Children hired by an S-corp or C-corp are subject to the same SS/Medicare tax as everyone else, as is the employer corporation.

    • Harri Eloranta | May 16, 2018 at 3:40 pm

      Nice article,

      Note to Lee Rainer,
      Yes it works for the grandchildren too, just make sure that they have a reasonable wage

    • Jeffrey McLaughlin | May 16, 2018 at 4:01 pm

      So I hired my 16 year old. Paid him and direct deposited his net into a Roth IRA. At 21 he had a nice little nest egg made possible by dad. He now talks to his peers about “planning for the future”.

    • Dot | May 16, 2018 at 5:30 pm

      Well written and informative article. Certainly an idea worth considering depending on what your child may need to mature and learn responsibility.

      Adam, I can’t believe your only take away from this article was Gene’s use of the pronoun “she”. Maybe he was giving equal time to the sexes because I think the lump sitting in front of the tv watching sports might be the “he” in the article.

    • Mason | May 16, 2018 at 7:06 pm

      I think this is fun and true

    • CR | May 17, 2018 at 11:26 am

      We have 4 children who, (in their teenage years) have worked in our office off and on- mostly after school or during the summer. Their jobs have included answering phones, greeting clients, organizing files, researching topics, updating and maintaining our website, linking our office to social media, operating video equipment etc. Mostly our kids were able to claim EXEMPT on their w-4’s because they were students and dependents and their wages fell below the taxable limit so their Fed withholding was zero anyway. And the intangibles that everyone speaks of are true! An added benefit: carpooling and not driving 4 teenagers to 4 different summer jobs (or God forbid- giving them my car…!) And the kids got to list office experience on their resumes. That helped them all get a foothold on future job applications and taught them very valuable customer service skills.

    • Gene Marks | May 17, 2018 at 5:07 pm

      Great comments everyone. Remember – although the article was written about your kids, it really applies to anyone. In other words, if you don’t have kids or your kid’s not available, hiring someone else’s kid could give them a tax free income, be a deduction for you and help the next generation too, right? Just please…check with your accountant!

    • NFW | May 18, 2018 at 10:34 am

      GIVE YOUR KID A SUMMER THEY WILL CHERISH FOREVER…………………..

      Let your kid be a kid. Let them work elsewhere for a while and gain some experience. You can always bring them in for part time work at anytime during the school year after school but let your kids enjoy being a kid during the summer!!!!

      Family business is not all it’s cut out to be. It can be very profitable and rewarding but don’t dismiss having your kid flip a burger or mow a lawn. They need these skills. Other work life experiences give children some perspective outside the family dynamics. Also, the family life is better not talking business 24/7 for the kids and the parents.

      The best summer of my life was being fired by my dad when I was 17 in early July after my 3rd summer working for him. I had only summer out of 4 doing something else other than working for him before I went off to college. That year, I went waterskiing every day, hung out with friends in town and I was afforded time to just being a kid. During that timeframe I got a job with little responsibilities and received some praise and discipline from another boss that wasn’t related. It felt good to be independent and do something other than work for mom and dad. Your kid will still be able to get additional schooling regardless of a padded resume and respectable grades in high school. I am living proof.

      As an FYI, I work in the family business currently and have been for over 20+ years. I am now the CEO.

    • Jeff Welch | May 19, 2018 at 1:08 pm

      Great article. I started working for my father at the age of 10. Just wish he would have kept my checks…with the way kids are raised behind a screen having an opportunity to learn work ethic and face to face social skills. We are currently opening a small company for our youngest children. Yes the 8 year old will be the ceo, the 14 year old will be the CFO and mom & dad are on the board. It’s a company to promote our youngest in his skateboarding career but as parents we thought this would be a great low risk opportunity to introduce our kids into the business world. The only suggestion I have to anyone wanting to hire there kids…don’t forget to let the kids be kids.

    • Charlene Phillips | May 20, 2018 at 10:54 am

      Both of our kids worked in our restaurant from the time they were 14. The people skills they learned were invaluable. They also saw first-hand the ups and downs of owning a small business. I would recommend employing your kids to anyone. It’s a win all the way around.

    • Thomas Longwell | May 21, 2018 at 3:50 pm

      If your child is over the age of 18 and you pay them $10,0000.00 for the year and pay them as a self employed contractor form 1099 misc do they need to pay taxes?

    • Mother of Two | May 29, 2018 at 11:56 pm

      I like this article l, although I do not agree with the last paragraph. It should be the child’s choice with what to do with their hard earned money. Some of it should go into a bank account and also some of it should be for fun

    • Jay Young | July 2, 2018 at 9:48 pm

      I see no downside to hiring your kids or other young family members. I also see that someone else was thinking about the Roth IRA aspect as well. Great stuff!

    • Leslie Villalta | July 2, 2018 at 11:12 pm

      I’m a sole proprietor with no employees…until I employed our young daughter in our custom frame shop. She was in her teens when we hired her to work during the summer doing sales, design, and various cleaning. We paid her and filed the right paperwork. Our CPA also made sure that I was able to contribute to my SEP, which meant that our daughter could then have her own SEP funded, based on her earnings, as well. By the time she went off to college, she
      had a pretty nice nest egg.

      The experience taught her about being punctual,polite, and respectful (although she already was), as well as being efficient and productive. She learned about the power of saving her money, and she was an informed consumer with her paycheck, opting to bank much of it.

      The responsibility she exhibited while doing the work was something she could have learned elsewhere with any other employer, I suppose, if only there had been as great an opportunity elsewhere at her young age.

    • JohnB in Atlanta | July 3, 2018 at 10:16 am

      Scott Huffman, you refer to Bitcoin as a multi-level pyramid marketing scheme. It is a currency, not a sales scheme.

      Try replacing {cryptocurrency of your choice} with another conventional currency: perhaps the US dollar.

      “… not multi-level pyramid scheme snake oil scams like the US Dollar.”

      Having said this, I *do* think it’s important to teach our youth that new ideas such as Bitcoin *DO* in fact attract all sorts of scammers (including pyramid schemes) and that it pays to be cautious and do one’s homework first. Perhaps that is what you were trying to say?

      I also heartily agree with your fundamental thesis that it’s more important to teach that good old fashioned [smart AND] hard work is what creates wealth and jobs — an idea that won’t go out of style.

      Real business, yes. Real technologies?

      How about technologies on the near horizon? Those are the ones that blindside many businesses both small and large.

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