This time of year is often all about “back to school, back to work.” Summer is over and it’s time to get back into the swing of business. It’s also the time to start thinking about tax planning for your business, if you haven’t done so already. If you have children that you support (whether at your home or away at school), one of my favorite strategies is to put your kids to work. Then, have them become responsible for some of their ongoing expenses.
There are a lot of benefits that you pick up along the way: your child learns business skills, your child learns budgeting (a big one for us!) and how to delay gratification, and instead of giving them an after tax allowance, you now are getting a before tax deduction.
Some of the things you might think about as tasks for your children could include helping with filing, cleaning your home office, researching on the Internet, helping you with daily blog entries and more. Our son David, now 17 1/2, does our video work at seminars. He puts together video productions after the fact as well. He’s learned a valuable skill and taken classes in the subject. Plus, he’s become responsible for all of his personal expenses. He was broke by the 3rd of the month the first two months that he became responsible. And that meant he had the rest of the month with no money to do things with his friends. I’d much rather have him go broke at 16 then broke at 36, so I was happy for him to get that lesson.
There are three rules I always tell my clients when they employ their children. First, make sure you have a written job description for what your child does. Second, have them keep track of their time or the job that they are doing. Third, pay them a fair price for the work they’re doing. You can’t pay your child $30 per hour to empty the trash, but that is actually a low price to pay for someone who is doing your video work. (Please don’t tell my son that, though)