Put Your Kids to Work in Your Baby Boomer Business
Hiring your children is a good way to help your Baby Boomer business:
- You can get some needed part-time jobs done that it would be difficult to hire someone else to do
- You can save on taxes
- Your child can spend the money or build up money in a college fund.
If you have children between 7 and 18, you can hire them to do necessary and useful work in your business and you can save money on business and personal taxes. Notice I highlighted “necessary and useful.” The work they do has to be of benefit to your business and it has to be part of the normal business operations. You can’t pay them for vacuuming the floor or dusting; it has to be business-related. You also must keep very good business records, including giving them a real paycheck from the business.
Your child can deposit the paycheck into a savings account (unless you can find a bank that allows children to have checking accounts). Your child can take out money to pay for school supplies, or spending money. You can also leave the money in the account or take some out for a college savings account.
Here is how you can save on taxes by paying your kids:
- You don’t have to withhold FICA taxes (Social Security/Medicare) from your child’s paycheck (if he/she is under 18), and
- The payments are deductible business expenses.
The main things to remember, if you want to save on the taxes:
- Keep everything business-like, with a “paper trail” and real paychecks, etc.
- Make sure the work your child is doing is “necessary and useful.”
If you are interested in learning more about the tax benefits of hiring your children, read this post in my About.com blog (U.S. Business Law and Taxes).
Image source: Newscom