Are you thinking about hiring your child as an employee to your business? Perhaps you have always wanted them to work as part of the family business. Maybe they just need to get their feet wet with some work experience, and you have the opportunity to get them started. Whatever the case, there are many things to consider. Working with family can be challenging. However, it can also be wonderful. There are actually many benefits to hiring your child as an employee to your business.
10 Benefits of Hiring Your Child as an Employee to Your Business
You might be surprised by some of the benefits of hiring your child as an employee to your business. There are personal benefits to each of you. Moreover, there may be financial benefits to both of you as well. And, if things go well, it’s good for business. Here are ten benefits:
1. Giving The Gift of Good Work Experience
If your children are just starting out in the workplace, then they need to get experience. Of course, as all know, having been there ourselves, it’s tough to get hired before you have the experience. Therefore, it benefits your child a lot when you hire them. They get to build their resumes, and you get to feel good about helping them to do so.
Although this is more of a benefit to them, it’s also good for you. After all, don’t you feel proud about being able to give them this opportunity? Think of how proud you’ll be when they take that chance and run with it.
2. It’s a New Opportunity to Teach Values
Throughout your child’s life, you’ve instilled values within them. When they come to work alongside you, the opportunity opens up to instill more of those values. Oftentimes teenagers spend a lot of time away from home. They’re learning from other people in life. That’s absolutely an important part of development as well. However, if you can get the chance to continue to teach them work ethics and life values through working together, then this can be invaluable for them.
3. They’ll Have Their Own Money
Putting it simply, giving your child a job gives them their own money. Therefore, they can contribute to the household. Perhaps they’ll pay their own phone plan if they’re young. Or maybe you want to hire an adult child who still lives at home and this will enable them to move out on their own. You get help at work and the whole family benefits as they earn an income.
4. You Might Get a Great New Employee
Obviously, there are pros and cons to working with just about anyone. And hiring family in business can certainly be complicated. However, there are a lot of times it works out wonderfully. Your kids might have seen the family business develop over the years from afar, so they’re committed to helping you keep growing it. They might be willing to sacrifice more than the average employee simply because they’re family. Moreover, just the fact that you know each other so well can make certain tasks run more smoothly, depending on the work you’re offering them.
5. Tax Benefit #1
There are a few tax benefits to hiring your child as an employee to your business. The first is that you’re able to deduct their salary as a business expense. The money still stays in the family. However, you get the tax benefit. If you are a small business that wasn’t necessarily looking to hire, but you want to give your child a job, then this is a good reason to do so.
6. Tax Benefit #2
The other tax benefits apply if your child is under age 18. For example, you generally don’t have to withhold tax on their salary. As a result, this moves a portion of your business income to your child’s tax bracket. Therefore, you might pay less in taxes.
But don’t worry, you can still claim your child as a dependent on your taxes (assuming they are.)
7. Tax Benefit #3
Your child doesn’t have to pay taxes on the first $12,000 that you pay them. That’s the standard tax deduction as of 2021. Therefore, you get the opportunity to use your money well within the family. You pay less in taxes as a combined unit, because the $12,000 you pay your child isn’t taxed.
8. You Can Help Them Start Saving For Retirement
As Mark J. Kohler points out, hiring your child as an employee to your business affords you a unique opportunity to help them start saving for retirement. You can assist them in starting their Roth IRA through your business. In some instances, you might even be able to get them started with their 401(K), although notably there are limitations on that until they’re age 21.
9. It’s a Bonding Experience
As aforementioned, hiring your child allows you to continue passing on your values to them. But that’s not the only reason it helps grow your bonds. You also get to see them in a new way. As they take on a professional persona, you get to see them becoming adults in their own right. You’ll get a chance to really notice their strengths. Moreover, you’ll go through a variety of different experiences together that simply wouldn’t occur if you weren’t working together. All of this helps strengthen your family bond.
10. You Might Be Able to Pass on the Family Business
We never know how the future will go. However, if you’ve always envisioned passing on the family business to your child, then it’s good to get them in the door early. They can always go out into the world for awhile, to college and other jobs, of course. However, they might always remember those early days with the business. As you get older and closer to retirement, they may want to come back and help you run the whole thing. And who knows, they may not leave at all. Some people hire their children at a young age and they shift through different roles in the business for years until eventually it’s time to take it over themselves.
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