Pay your Children a Salary Instead of an Allowance

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Pay your Children a Salary Instead of an Allowance

Encourager-In-Chief: March 16th, 2016

Why it’s better to pay your children a salary than an allowance.

Paying your children under age 18 a salary instead of an allowance is a tax write off.

I don’t envy any entrepreneur’s children. Most business owners I know don’t even pay themselves. Where they ever get money to pay their children, I’ll never know. However, I recommend you pay your children under 18 years of age a salary in lieu of an allowance.

Most entrepreneurs need all the help they can get and if some of that help is related to them, so much the better. If you have children living at home and they’re helping you out with your business, pay them a salary instead of an allowance. If your kids are under 18, you do not have to pay payroll taxes on them. It’s a write off.

This is another lesson I learned from Sandy Botkin of the Tax Education Institute. He has an intricate knowledge of what the Internal Revenue Service will and will not allow. This is an easy way for a struggling entrepreneur to get a tax break and some help from his or her children.

Who knows? Perhaps your children may want to follow in your footsteps after they get a taste of making money working in your business.

If it’s worth making, it’s worth keeping.
- Dave Romeo

This excerpt is taken from my Survive and Thrive in Your Own Business seminar.

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