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Ever wondered how hiring your kids in your business could save you money and teach them invaluable life lessons?
In this episode, Mike Jesowshek addresses common myths about hiring your children in your business. He outlines the potential tax benefits, the necessary legal steps, and the educational value for the children involved. Mike emphasizes that proper implementation and documentation are key to ensuring the strategy's legality and effectiveness. He also discusses the benefits of setting up a family management company and the possibility of hiring older children as 1099 contractors.
[00:00 - 04:45] Introduction
- Mike discusses the strategy of hiring children, focusing on tax benefits, and moving after-tax spending to pre-tax spending.
- He gives an overview of legal requirements, such as not withholding FICA taxes if the business is a sole proprietorship or partnership, and age considerations.
- It is important to pay children a reasonable wage for actual work performed and the necessity of proper documentation.
[04:45 - 13:07] Myths about Hiring Children and S Corporation Considerations
- Mike debunks myths such as hiring children being illegal or a form of tax evasion, and the importance of proper implementation.
- He discusses the benefits of teaching children about work ethics and preparing them for future roles in the business.
- What are the differences and additional requirements when hiring children under an S corporation?
[13:07 - 23:14] Hiring Children Over 18 and Finding Suitable Work Them
- Mike explores the strategy for children over 18, including hiring them as W2 employees or 1099 contractors.
- He addresses the concerns about finding appropriate tasks for children in the business and provides examples.
Direct Quotes:
"Hiring your children is legal, and it's not a form of tax evasion." - Mike Jesowshek, CPA
"When we hire our children at a young age, we're teaching them the invaluable lesson of working for a living." - Mike Jesowshek, CPA
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
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