How to Hire Your Kids

How to Hire Your Kids in Your Home-Based Business

Hey hey hey, what's poppin' my fabulous peeps? Today we're talking about how to hire your children in your home-based business and the amazing tax breaks that come along with it. If you're ready to get into it, let's go ahead and get busy!

First, let me welcome you to our community! If this is your first time here, welcome! If you're coming back, welcome back! Don't forget to like, subscribe, and share. Now, let's dive into how you can make your home-based business a family affair and keep more money in your pocket.

Why Hire Your Kids?

In this day and age, it's important to find ways to save money and pay fewer taxes. One way to do this is by hiring your children in your home-based business. This isn't just a smart move for your wallet; it's also a great way to teach your kids valuable life skills.

Step 1: Know the Rules

First things first, you need to understand the rules. The age of your child doesn't matter much as long as the work is appropriate for their age and necessary for your business. For example, younger kids can help with filing papers or simple tasks, while older kids can help with social media or more complex jobs.

Make sure you follow child labor laws, which can be different from state to state. It's important to check the rules in your state to make sure you're complying with the law.

Step 2: Create a Real Job

Don't just hire your kids for the sake of hiring them. The job needs to be real and necessary for your business. This means you should write a job description, set work hours, and make everything official. This helps show that the job is legitimate and not just a way to get tax breaks.

I have templates you can use to help with documentation, so you’ll be covered. These templates include job descriptions, time sheets, and more.

Step 3: Pay a Fair Wage

It’s important to pay your kids a fair wage for the work they do. You can’t pay your 10-year-old $200 an hour to take out the trash! Look at what the typical wage is for the job they’re doing. If you would pay a social media manager $50 an hour, you might pay your child half of that.

Being reasonable about wages is crucial because the IRS will check to make sure everything is fair and square.

Step 4: Keep Good Records

Keeping good records is the most tedious part, but it’s necessary. You need to track the hours your kids work, keep time sheets, and have a payroll system in place. This could be as simple as paying them through their bank account or even setting up a custodial Roth IRA for them.

Documenting everything will help you stay compliant with IRS rules and teach your kids about the importance of keeping good records.

Step 5: Understand the Tax Benefits

Here’s where it gets really interesting! If you’re a sole proprietor, you can hire your kids and not pay Social Security or Medicare taxes on their earnings under certain conditions. Plus, their salary is a business expense for you, which lowers your taxable income.

Always consult with a tax professional to make sure you’re maximizing your benefits. I have someone who can help with bookkeeping and taxes if you need it.

Step 6: Paying and Reporting Taxes

Even though there are tax breaks, you still need to handle taxes correctly. If your kids earn enough, they might need to file a tax return. If their earnings stay under the standard deduction amount, they won’t owe taxes. This amount is around $12,500, so if you keep their earnings below that, they won't have to pay taxes.

Using a payroll service or software can make this process easier and help you stay in compliance.

Educational Benefits

While saving on taxes and boosting your business, you're also giving your kids an incredible learning experience. They learn the value of money, work ethics, and gain skills they won't learn anywhere else. This has been a game-changer for my kids, helping them understand money management, saving, and investing.

So, there you have it, folks! Hiring your kids can be beneficial in so many ways, from tax breaks to invaluable life lessons. Remember to keep it legal, fair, and fun. Like I always say, don’t forget to like, subscribe, and ring the bell so you know when I upload new videos.

Drop a comment below if you have any questions or share your own experience hiring your mini-mes in your business. I can't wait to catch you in the next video. And remember to pray, plan, and believe because God is still in the business of doing miracles. Make it a great day, fabulous peeps! Bye!