You’ve heard me say it a lot: Keep your head down and focus on what’s actually important – not what’s trending in the fear-focused news headlines.
I’ll be the first to admit, this mantra is easier said than done sometimes. Especially these days, when the grip of clickbait and doomscrolling often feels impossible to resist.
But if you want to build a business that lasts (and protect your sanity), you can’t afford to let every breaking headline or political tremor hijack your time and energy.
Even the biggest players know this. Take Tim Cook, the CEO of Apple (that company with 3 trillion dollars in market value – you might’ve heard of it). When tariff concerns were rising, Cook didn’t let it derail his focus. He protected what he could control – having direct, strategic conversations with policymakers, while keeping Apple’s operational goals front and center.
Now, I’m not saying you should stick your head in the sand. We’re business owners – we need to be aware of the broader landscape. But staying focused on what you can actually control – your family and your Jersey Shore business – is where the real wins are made.
Especially when those two worlds collide.
There are few things that help children grow into maturity faster than work experience (adults, too). Being employed teaches responsibility and promotes critical thinking skills they haven’t had to tap into yet – and it keeps them off their phones for a while too.
As a business owner, it’s incredibly rewarding to pursue the business vision you’ve built with your own family.
There are just a few rules you have to follow to do that the tax-smart (and compliant) way. Let’s hash those out…
“We must teach our children how to dream with their eyes open.” – Harry Edwards
If you’re looking to expand your team this year, allow me to offer some advice on doing it the tax-smart way – because if you hire a certain kind of employee, you could score some significant savings.
Which kind?
I’ll give you a hint: They share your last name. And they’re probably the few who have seen you in your post-Thanksgiving comatose state.
So, before I explain the nitty gritty of hiring family members (and for today’s purposes, I’m speaking primarily about your children), let’s take a look at the benefits involved…
There are two main benefits to hiring family members (more specifically, your children):
The standard deduction for a dependent is the greater of either 1.3K, or their earned income plus 450 dollars, but not more than the regular standard deduction for their filing status – which is 15K for single filers in 2025.
Meaning, if your child is your dependent and has very little earned income from your business but significant unearned income (like from investments), their standard deduction could be much lower than the full 15K.
And be aware that if their wages exceed the standard deduction, the child will owe federal income tax on the excess.
Another bonus for certain business owners: You don’t have to withhold or pay Social Security or Medicare (FICA) taxes on your child’s wages IF…
– They’re under 18.
– You’re operating as a sole proprietorship or a partnership where both partners are the child’s parents.
Note: This bonus does not apply if you own an S-corp, C-corp, an estate, or a non-parent partnership. In those cases, you have to withhold and pay both the employee and employer portions of FICA taxes from dollar one — regardless of your child’s age.
Sole proprietorships and parent partnerships also don’t pay federal unemployment taxes (FUTA) on wages if your child is under 21 — but while they’re younger, those savings add up.
(The same limitations apply here: If your business is an S-corp, C-corp, or a non-family partnership, you’re still on the hook for FUTA taxes. And for LLCs, it depends on how your LLC is taxed – Single-member LLCs taxed as sole proprietorships and multi-member LLCs taxed as partnerships qualify for these bonuses, but those taxed as S-corps or C-corps don’t.)
Now, the IRS does have some guidelines about hiring family that you’ll need to follow. If they think you’re not playing by the rules, they can disallow your deduction. To avoid this, make sure you…
1. Give your child real (age-appropriate) work. The IRS requires that your child perform bona fide work that is ordinary and necessary to your trade or business. Also, their tasks should be the same as is reasonably expected of anyone else in the same role.
In addition, their work has to benefit the business (not the household). That means no lawn mowing, babysitting siblings, or doing your grocery run. Even if it “frees you up” to work more in your business.
Duties like filing, stuffing mailers, assembling kits, cleaning the storefront, taking inventory, and helping with social media, as examples, are all viable, depending on the age of your child, of course.
(Note that there’s no IRS minimum age requirement. But in audit history, age 7 is generally the earliest the IRS accepts employment in court cases.)
2. Pay reasonable wages. Yes, you want to pay your child as much as you can (within the boundaries of the standard deduction) to maximize the tax benefit. But if you’d pay a high school intern 13 dollars per hour to do spreadsheet cleanup, don’t pay your 14-year-old more for the same task. Excessive compensation flags IRS suspicion.
Use fair market wages as a benchmark – what would you pay a non-family employee to do the same job?
Also, check with your state’s regulations here – federal child labor laws don’t require minimum wage for children working for their parents in a non-hazardous business, but your state might.
3. Treat them like any other employee. This is a real employee-employer relationship – so, all the same compliance steps apply.
Pay your child via check/direct deposit from a business account (not cash) on a proper pay schedule, and do all the same paperwork: Filling out a W-4, completing Form I-9, making sure they have a Social Security number, issuing a W-2 at year-end, — the works (even if you’re exempt from certain taxes, like I explained earlier).
4. Keep good records. This is where an audit is won or lost. The IRS needs to see that wages paid to your child were 1) for legitimate business work, 2) properly timed and recorded, and 3) in amounts tied to work performed.
So, meticulously log the hours your child works and the kind of work they perform. Create a timesheet or add them to your time tracking software. I always recommend my clients write up a short employment agreement outlining duties, expectations, and schedule. And, store copies of their paystubs, W-2s, and any training materials or onboarding steps you had them do.
This isn’t just good practice – it’s evidence. The kind the IRS can’t argue with.
If you do this sloppily, hiring family members in your business is an audit magnet. Hiring a family member, especially your own child, should be a move that boosts your production and your bottom line — not one that causes more headaches.
So, if you’re thinking of bringing your kin into your Monmouth Beach business, these guidelines will get you started. But if you want help figuring out if this move makes good business and personal tax sense for you, let’s get something on the calendar to talk that over:
calendly.com/shorefinancialplanning/the-first-step
Supporting you and yours,
Joseph Vecchio