Kaizen Time: Practical Strategy for Better Business

How to Employ and Pay Your Children in Your Business

Written by The Kaizen Team | · December 15, 2025
 

 

If your kids help in your business or you’re thinking about bringing them in, there’s a right way to do it and a wrong way to do it. In this Kaizen Time conversation, Eric Joern explains how employing your children can be both legitimate and tax-efficient when done correctly.

We cover how business structure affects payroll taxes, what qualifies as age-appropriate work, why W-2s matter, and how documentation protects you if the IRS ever asks questions. This isn’t about cutting corners. It’s about teaching responsibility, exposing kids to entrepreneurship, and following the tax code the way it was written.

Key Takeaways

  • When it does and doesn’t make sense to employ your children in your business
  • How business structure affects payroll taxes for family employees
  • What “age-appropriate” and “reasonable pay” actually mean in practice
  • Why proper payroll setup and documentation matter more than most owners expect
  • How employing your kids can support long-term financial education, not just tax savings