Parent entrepreneurs—if you’re not hiring your kids in your business, you’re missing one of the best legal tax strategies available. It’s not just about saving money on taxes (though you’ll do that too). It’s about teaching them financial responsibility, creating a family legacy, and setting them up for long-term wealth.
Let’s break down how it works and how to do it the right way.
💰 Why Hire Your Kids?
Hiring your children isn’t about cutting corners or playing the system. The IRS actually allows it—when done correctly. In 2025, you can pay your child up to $15,000 without them owing federal income tax, thanks to the standard deduction.
And your business? Gets to deduct that expense.
That’s income shifted from your taxed business to your tax-free child. Genius, right?
👩💼 What Jobs Can Kids Do?
Depending on their age and abilities, here are legit tasks your child can help with:
- Stuffing envelopes or packaging orders
- Shredding or filing papers
- Social media content help (they know it better than we do!)
- Product photography or modeling
- Video editing (for tech-savvy teens)
- Cleaning or organizing your home office
As long as it’s real work that a business might otherwise pay someone else to do, it counts.
📝 What You Need to Keep It Legal
Here’s what the IRS wants to see:
- Age-Appropriate Work
No made-up roles. Your 4-year-old probably isn’t your executive assistant—but they could be your brand model for a kids’ product. - Job Descriptions & Time Sheets
Keep records just like you would for any other employee. - Actual Payment
Write a check or use payroll. Don’t just move money around. - Fair Wages
Pay market rate for the work. No $1,000-a-day TikTok interns (unless they’re really that good 😅). - File Proper Forms
If your business is a sole prop or LLC taxed as a sole prop, and your child is under 18, you don’t need to withhold payroll taxes. But if you’re an S-Corp or C-Corp, you’ll need to withhold just like any other employee.
🔄 What Can Your Kids Do With That Money?
Here’s where the strategy gets really exciting.
That tax-free income can be used to:
- Fund a Roth IRA (hello, tax-free retirement growth!)
- Save for college or a first car
- Start a small business of their own
- Learn budgeting, investing, and how money actually works
You’re not just lowering your tax bill—you’re teaching your kids how to manage money from day one.
🧠 Real-Life Example
Let’s say you pay your 12-year-old $500/month to help with shipping and content for your Etsy store. That’s $6,000/year:
→ Your biz deducts $6K
→ Your child pays $0 in federal income taxes
→ You shift income tax-free into your household
→ They now have money to save, invest, or even donate
It’s a tax move and a life lesson.
💡 Bonus: Open a Roth IRA
Earned income opens the door to contribute to a Roth IRA. Imagine your 13-year-old investing $3,000 a year for just five years—and never adding another dime. With compound growth over decades, that could grow into six figures, tax-free.
That’s how you Retire the Kids.
📌 Final Thoughts
Hiring your kids isn’t a loophole—it’s a wealth strategy. It’s about building a family business that actually benefits the whole family. If you’re ready to stop giving your kids allowance and start giving them a financial head start, this is the move.
Need help setting this up? For just $97 you can get the entire process here >>
