How to hire your children to work in your business, build their resume, portfolios

Potomac Local News: Today we’re going to talk about hiring your children. This is something that business owners can take advantage of, and, “hiring” is not such a dirty word when it comes to your children, correct?

You can actually hire your kids and set them up for success in the future. What is this all about?

Chris Peden: Well, first of all, people see that and they say, “wow, you know, I can pay them and deduct them for doing chores.”

Well, no, actually, they work they do has to do with your business. So if you have a payroll set up with a payroll company, you can actually put them on payroll and have to do taxes.

• As long as the work related to your business, has a business purpose, and they’re capable of actually doing those tasks, you pay them like you regularly would or you’d make a payment to, say, a Roth I.R.A., or to an educational fund to fund your college education or the retirement fund.

What can my child do for my business? 

Potomac Local News: I imagine that this type of thing would work for for for certain businesses, like office locations, and home-based businesses. Can you give us an example of some of the tasks that a business owner may have their child do?

Chris Peden: Yes. Well, I actually have a friend out in California. I work a lot with him about dealing with tax plans and tax savings, and he puts together a little binder. And what he does, he has a son sit down and put the pages in the binder to organize it.

• Or you may have a child in high school who’s into graphic art or graphic arts and likes working with their computer to create images for marketing brochures for your business.
• These tasks are examples of what you can pay your child to do for rather than sending that work out-of-house. Maybe your children have a great knowledge of social media and can help your business in that respect.
• With this approach, you can have a little more control because it’s your child sitting there and you can help them. And this teaches them to learn to work in a business and then feeds their passion for what they’re doing.

Potomac Local News: A few of the questions that could lead to fear is, when it when I get my kid in the business, what about all of the paperwork involved?. Is the IRS going to look down on me for hiring my child? On paper, does it make me look like I am forcing them to do something they don’t want to do?

Walk us through the set-up process? What’s the paperwork? And then what’s the legality of it all?

The paperwork is easy

Chris Peden: The paperwork is basically setting up an employee on your program, on your payroll. I would recommend working with a great payroll company such as Paychex, which will walk you through the legal ramifications.

• When it comes to the amount of pay, make sure that the work you’re paying them a market rate for it. Ask yourself, “What would I pay a normal if someone outside my family to do this work?”
• And you want to pay them a market rate, be sure they do the work. Is the job you’ve hired them for at their skill level? Are you only going to pay someone to do quantum mechanics unless they’re really, really smart, like young Sheldon Cooper?

Potomac Local News: And finally, once you have your kids working in your business, is the work you’re paying them to do “busy” work designed to keep them entertained and out of your hair? Or, are you actually helping to set them up for success and giving them real-world experience?

Chris Peden: Absolutely. If they’re coming, they’re working for you, they’ve worked for you as an employee in your company.

• They can list that experience on a LinkedIn profile. They can put on a resume that they’ve actually done this work and they have experience.
• And if they do things as we’ve mentioned, graphic arts, social media posts, they have samples that have actually been used in a business that could lead them to find a job somewhere else or starting their own company.
• It helps them build a portfolio that they can go out and be working for other outlets for someone else or get clients on their own.

Chris Peden is the principal owner of Peden Accounting Services in Manassas. Contact him today for all of your business accounting needs by calling 703-967-1948.