Employing your kids provides many benefits, including:
- Allowing your children to learn the value of work
Giving them insight into the family business
Training them in entrepreneurship
Providing you with a tax deduction while simultaneously giving your family another source of tax free income
Here’s How It Works: each child earns up to the standard deduction allowed by the IRS, therefore no tax is owed. Currently you can pay any child under the age of 18 and 100% of that income can be tax-free for them.
And since you get to take that as a deduction on your business, you will get a tax break according to your highest marginal rate.
Employment Ideas:
Office Management including making coffee, tea, preparing snacks for employees and meetings
Actor or model for your website or marketing materials
Competitive research on the internet
Product testing and feedback
Office building cleaning or simple repairs
Ways to Enhance This Strategy: Since you have to pay your child for the work performed (and not just say that you do!), set up a separate bank account for each child to have their paychecks deposited. Then have the children use this money to pay for the things you would normally pay out of your own pocket. I added mine to the payroll with auto-deposit.
Sports fees or music lessons
Airfare on your next family vacation
Clothes, computers, cells phones