You should be paying your kid or grandkid to work for your business.
If you have a teenager, you should consider having him or her to work for you. The benefits are great – especially now. The next generation needs our help entering the workforce.
1. Help your child develop a work ethic.
You can teach your child, at a young age, the importance of having a job, a boss and responsibilities. They will learn the value of showing up somewhere on time, doing what is expected and performing tasks under the supervision.
2. Child can earn up to $12,000 per year tax free.
$12,000 is the standard tax deduction, if they’re not earning more…they’ve got no tax liability. They may not even have to file a tax return.
3. You may not have to pay taxes.
Children under 18 and you’re a sole proprietor or LLC, you won’t have to pay any social security or Medicare taxes. If you’re an S-Corp or C-corporation, you will have to withhold these taxes, however your child will likely receive them back as a refund. State’s rules may vary, so talk to your accountant.
4. You can take a deduction.
It’s a legitimate business expense as long as your child is at a reasonable age, performing reasonable work that someone else would be paid to do. You can still claim your child as a dependent or receive the child tax credit if you qualify.
- Filing
- Database work
- Typing
- Cleaning
- Maintenance
- Warehousing, etc.
5. You get to spend more time with your kid.
Your children can see you in action, with other people, being the boss. You’re a real person.
6. Help them invest their money.
When you give them a paycheck, encourage them to deposit in a savings account. Invest into a 529 College Savings Fund so that it can grow tax-free and be used for higher education.
Give your kids an opportunity to spend time with you while learning and saving for their future.
