For many of you, hiring the kids to work in the family business might not sound all that appealing initially, (teens, especially your own can be difficult to work with) but hiring the kids really offers some significant benefits for everyone.
For children under 19 years old or dependent full-time students under 24 years old, the income they earn from the family business isn’t subject to the “kiddie tax” which means that the child can earn up to $6,300 before owing any tax on their income and the next $9,225 they earn working for the family business is only taxed at 10%! That is a great deal from a tax perspective.
In order to reap these benefits, you need to treat your kids just like any other employee, including:
By hiring the children to work in the business and asking them to earn the money they would otherwise be given, you are also giving the children valuable life skills and helping them boost their resume. Talk about setting the kids up for success!
Having the kids work in the family business is also extremely helpful when one or more of the children may ultimately take over the family business. Knowing what they are getting into can make legacy planning much easier for both the parents and the kids.