If you are a small business owner and have one or more teenagers, there are a plethora of reasons why you should hire them to work for you. For clarity's sake, rather than using him/her from this point forward, I have opted to use the female gender. There are a number of jobs she can do, including filing, database work, typing, cleaning, maintenance, warehousing and countless others. What follows are six good reasons why both you and your child can benefit from hiring her.
No. 1: She can develop a great work ethic from the very beginning, and see the importance of having a job, having a boss and having responsibilities. She can learn the value of showing up somewhere on time, doing what is expected and performing tasks under the supervision of someone else. And she will learn how to dress and behave in a professional environment. All of these are valuable life skills.
No. 2: In case you didn't realize, $12,000 is the standard deduction on any tax return, so if she's not earning more than that, she's got no tax liability (this is assuming that she's not doing any other work or earning other income). It's quite possible that you won't even have to file a tax return for her either.
No. 3: As long as she is under 18 (and you're a sole proprietor or LLC) you won't have to pay any Social Security or Medicare taxes. However, if you're an S-Corporation or C-Corporation, you will have to withhold these taxes, but she will likely receive them back as a refund. You will need to talk with your accountant about this. Regardless, make sure you are keeping good documentation of her work hours and the work performed just in case the IRS raises a red flag.
No. 4: You can take a deduction due to the fact that it's a legitimate business expense as long as your child is at a reasonable age and performing reasonable work that someone else would be paid to do. Not only that but you can still claim her as a dependent or receive the child tax credit if you qualify.
No. 5: You get to spend more time with her. It's kind of nice having her around for the summer, isn't it? Time flies, so every minute counts. And she can see you, too, in action, with other people, being the boss. You are not just that lump that sits in front of the TV watching sports. You're a real person, a leader, the head honcho, at least during the day.
And finally, and this is where it gets tricky. No. 6: You get to take the check out of her hands. Yes, that's right -- out of her hands. As soon as you give her the paycheck, you grab it and immediately stick it in a savings account for her, at least most of it. The reason is because you know that she will spend that money at the mall or on an Xbox as soon as she can, right? Put the money in a 529 College Savings Fund so that it can grow tax-free and be used for higher education expenses someday in the future. If you have not heard, college is kind of expensive these days.
In summation, my motto has always been, "Give credit where credit is due." Most of this article was produced by the Hartford Insurance Company and developed by Gene Marks, who works for this company and is an authority on this topic. I just wanted to present this concept that has so many variables that a number of my readers may wish to explore.Editorial on 02/09/2020
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