Ask Maxi · Payroll
Can I put my kids on the payroll?
Yes, if they actually do real work for the business at a reasonable rate for that work.
Done properly it shifts income from your bracket to theirs, and in a sole proprietorship or a partnership owned only by the parents, wages to a child under 18 are generally exempt from Social Security and Medicare tax. That exemption does not apply once the business is a corporation.
What makes it real: a job description, hours recorded, pay that matches what you would pay a stranger for the same task, actual payroll with a W-2 at year end, and the money going into the child's own account.
What gets it thrown out: paying a seven-year-old $14,000 to be in a photo, no time records, or the money going straight back into your account.
A side benefit people miss — earned income lets a minor contribute to a Roth IRA. A few summers of that compounds for fifty years.
Want us to handle this for you? Bookkeeping + Tax →