DO NOT Place Your Children on Payroll! Here's Why...
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- Опубликовано: 25 июл 2022
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Hiring your children for your business has certain tax benefits and even deductions that could help you save loads of money. However, simply placing your children on payroll is not going to cut it with the IRS. There are a few extra steps you're going to have to take to get those tax benefits, but we promise, they are WORTH IT. Check out our top 3 reasons to not take this specific tax-write off on today's Taxes Made Simple.
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*Disclaimer: I am not a financial advisor nor am I an attorney. This information is for entertainment purposes only. It is highly recommended that you speak with a tax professional or tax attorney before performing any of the strategies mentioned in this video. Thank you.
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![So You’re an S-Corp...Now What? [Essential Tax Tutorial]](http://i.ytimg.com/vi/x-fhR6kSTa0/mqdefault.jpg)
Make a job description for the position you are hiring them for. Have them go through and interview as well and sign a contract for work to be performed as well as frequency. Also have them fill out time cards, I. The process you are teaching them valuable professional and organizational skills.
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Thanks Grace!
Excellent advice, thanks.
Great advice🥰
You always over deliver on your videos in a clear and concise manner. This is what makes you the GOAT in your field. Thanks and keep up the excellent work.
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Great content boss, eating it all up right now! Very helpful and informative!
Great content. That’s for the knowledge.
The value that you bring to RUclips is immeasurable all I can say is thank you for what you do and your channel.
Super high quality content and charisma.. well done you and your team 💯
Awesome stuff man ! I recently started following you and I’ve learned more stuff this week from your videos than I have this past year
& great great point about being a good stewardship of your money .
Yes it requires a little bit of work but our children get to learn the process of working and we get to spend time with our kiddos so it’s a win win
Thank you !
Thanks for sharing the knowledge that I’m after. I appreciate you! 😊
Karlton you do a good job of presenting the information.
Just found you and never losing you! Thank you UNIVERSE for you and Karla. The way you for the knowledge, diligence, simplicity, and genuine love to help and assist with nothing asked for in return. I mean of course we have to sign up for the courses if we can't quite get it just from the videos. Thanks
Hey Mr Karlton...thku for sharing ur knowledge.
Incredible info! Can’t wait to get started!!!
Man… Keep educating and inspiring! 🙏🏾
You make something so boring so interesting, taxes. I actually enjoy learning watching your videos. You are the master at explaining, I can just easily follow what you are saying even if I am new to the topic. Thank you for taking the time to share and creating such informative videos, the mic is a +++
He is now my favorite RUclipsr and I don't even like Taxes. On serious note the information and content generated from his channel is by far the best I have seen in years.
THANK YOU for that.
Much respect from Florida 😎
Excellent something I am planning to do. It’s good I caught your video. Very informative!!!!
You’ve earned a new subscriber.
Great quality video, audio, clips, and most important, delivery of information.
Thank you for sharing your knowledge sir! Be well and make it a great night!.
Thanks for your comment ⬆️ Reach out to me for consultation and more tips on how to build your finances ✉️.
This is EXACTLY the type of content I needed to hear. Thank you for creating this breakdown.
Thank you for this education!
Wow thank you , this was very helpful!
Great video!! Thank you for the info!
Explanations are so helpful!
Great video, I love all of the knowledge you teach. Your the man, thanks Karlton.
Thanks for your comment ⬆️ Reach out to me for consultation and more tips on how to build your finances ✉️.
Excellent advice, thanks!
First time seeing one of your videos but I’m already hitting the subscribe button and sharing your videos!! Thanks I look forward to watching more!
Awesome information thanks a lot
Wow how informative! Thanks
You are a wealth of information. Thank you!!
I appreciate it!!!
KARLTON! THANK YOU!!!
Thank you for sharing
Sound advice!!
Thank you! Do you have a video on starting the management company you mentioned?
Very informative. Thanks.
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Excellent info
Hey Karlton. Learning lots from your videos. Thank you! Question, does any of this apply to siblings and/or other family members? Perhaps something in relation? 🤔
Thank you for sharing this 🔥 information
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I love, love, love your content. AWESOME!!!! Thank you!
Thank you!!
Very informative and love that you have free consultation and if we need further help you are willing to work with us in depth with an appointment.
You are the man!! Love your videos.
Thanks for your comment ⬆️ Reach out to me for consultation and more tips on how to build your finances ✉️
Thanks for explaining everything so thoroughly 👍🙏
Awesome information!
Thanks for your comment ⬆️ Reach out to me for consultation and more tips on how to build your finances ✉️.
awesome awareness....
Wow. Terrific Advice. Thank you.
I have my mom on payroll and I do exactly what you said, I give her sometimes direct deposits and sometimes paper checks deposited in her account.
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Great video!
Wow I was literally filing my taxes and came across this video.. My daughter actually does work in my business but it's only certain holidays, she does chocolate covered treats and fruit. I always pay her in cash. She only makes about 2k a year. I definitely need help
Good info
Thanks!
very helpful
You are a GENIUS…just like your MOM🫶🏾🫶🏾🫶🏾❤️❤️❤️💕💕💕
I watch at least 1 of your videos daily. Always insightful, educational, and much appreciated! To clarify here, if the Holding Co. is a C-Corp, a child's payroll tax cannot be avoided? This can only be avoided if the Holding Co. is setup as a LLC or S-Corp?
It has to be an LLC because s and c Corp has the payroll tax
Is there a benefit to paying your children via W-2, 10-99 or just as an employee? Can you please explain the differences. Thank you.
EXCELLENT!!!!
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Ty
Somewhere between pitfall #2 and #3, i got lost. For #2, paying your children through a management company rather than putting them on payroll under corporation. I get that. But for #3, how do I properly document tax holding for the children if their salary comes from management company, not the corporation itself? Appreciate your thoughts.
So I own a daycare and I use my children in the ads. Would this count as marketing??
Great video where are you located?
Hi, I tried to schedule a consultation, but there are no appointments available. I have a child-employment question as a result of watching one of your other videos indicating that multi-member LLCs offer better audit protection. I'm divorced with joint legal and 40% physical custody of my daughter (I e. My ex is the custodial parent for the purposes of claiming the dependent). Can I form a M-LLC and make my daughter a 1% member and still pay her up to the standard deduction tax free? Do I also need to pay her 1% of annual distributions and is that also tax free (income and FICA)? Is the pay to my daughter still deductible from my LLCs annual income?
This video was so beneficial and informative! The only other question I still have is, when or at what point in a business owner’s income or tax bracket does putting your children on payroll become beneficial? In other words, do I need to be bringing in a minimum amount of revenue for me to benefit from putting my kids on payroll?
Good morning, Was your question answered? I need to know the answer to that question. Thank you.
Sole proprietor here with a filed County DBA. Can we also hire our children as a sole proprietor or is this only for Corps and LLC’s?
how about the state tax? if you pay your kid under standard deduction your kid also subject for state tax, am I correct?
Hello, I like what you’re talking about and your content. How do I connect with you or a team member of yours?
I have been a W2 employee for several years now, looking to open up my own LLC. while working under the W2, I get paid, what we call, split checks. which means, i get paid by the hour with overtime after 40, my truck gets paid a certain amount per hour (rig pay), which is un taxed, and no overtime. I also get paid a certain amount of Perdiem (untaxed) every day. could you do a video on how employers go about paying their employees. I don't understand how the rig pay and prediem get paid on the business side of things. If i were to offer that to my employees.
Hi ever1 can you still claim your kids as dependents in your income tax?
what happens with there wages? do you need to add to your income?
Nice!
Exactly what I was planning on doing soon but "doing it wrong is exactly why I havent done it." Need help making sure its all done correctly.
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Last ? - I’m sorry…. 😬
How are parents helping kids contribute to the Roth IRA if their w2 is set up as a tax-exempt family employee?
Do they have to be set up for tax deductions, in order to contribute to the Roth IRA?
& then file a return to get a refund?
Thanks in advance. You’re amazing!!! 🙏🏼
I approve of his advice in this video.
Is ADP a management company that can be used?
Instead of tracking hourly work of a child, could it be easier to say we’re paying them a monthly salary, not an hourly wage?
When you discuss documenting payment to your children can it be in the form of things you have purchased directly on their behalf i.e. booking their birthday venue, paying for their tutuoring or sports, etc after X amount of hours worked equivalent to the work conducted at a reasonable salary wage??
So if my S Corp pays the LLC a management fee and I in turn pay the kids 6k each those then become 1099's? And can that go directly into a ROTH for them?
If i have a llc only worker is miself i have to pay 15% taxes on bisness plus mi personal taxes or just the bisness
if you dont do the management company and you have to pay the payroll taxes, what's the downside? the payroll taxes are tax deductible for the biz, correct? are you doing it that way to avoid paying out the taxes on the employee side? or am i missing something? thanks so much! also, can you do this with your parent if they get social security benefits? or will that additional income make them have to file?
If I have a W-2 employee in my S-corp that makes $40k per year, is it advantageous to set them up on a similar plan like you’ve mentioned here (LLC Management Company) to avoid payroll taxes on the first $12,950?
Never heard about any of this~
Looking to use Paychex Payroll to add & pay my kids through my company. They will clean my home office & company vehicle plus marketing, I'm under the impression their salary will be a tax write-off next year am I correct?
Thank you so.much for thr info. I currently have an IRA for my children. Its being deducted monthly out my account. May I use thos as the paper trail? I do have an S corp. Will I still need a check stub showing taxes withheld even though its going into an IRA?
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ALERT ALERT ALERT...WELLLLLL SAID... such a relevant and needed topic ..if you know you know...great intro subject
Could the wages I pay to my child be directly sent to their custodial Roth IRA? Up to $6000?
Genius 😊
Is paying the FMC 100% deductible by the scorp? If so, how does the bookkeeper need to categorize that to get that specific tax benefit?? 🙏🏼
Yes it is true that you must make sure that your children are actually doing something. But what is not true as you do? Not have to file AW2 on them as song is. They are your own children under the age of 18 and you do not have to file holdings.
So can you pay them directly into the IRA?
Do my children need to fill out a w-4? at what age is this required if so, lets say they are not old enough too fill this out can the parents do this? Does payroll tax still get paid if you are a sole proprietor? What is the standard amount for 2023?
How exactly do we prove to the IRS that they’re doing the work? Other than having them log hours… do we need to take photos of them working, etc.?
According to the IRS.gov "If the business is a corporation, a partnership (unless each partner is a parent of the child), or an estate (even if it is the estate of the deceased parent of the child)" Am I reading this incorrectly? does this mean that if an the S corporation is owned by the parents of the child, the S corporation does not have to collect payroll taxes?
Hi, Can you please help me to set up for my Kids Payroll.
Do the kids have to be able to be claimed as dependents? My ex gets to claim both kids on her taxes, (divorce courts is a scam guys). Can I use this strategy if neither can be claimed on my taxes?
Do they have to be on payroll? Can they be hired as contractor 1099 ? Would you need to send a 1099 at the end of the year?
Have then clean the office. There you go lol
When I pay them from the FMC do I need to give them a W2? Or can I just pay them as outside labor? Is there a benefit to either? Are rules same for State (California) and Fed
@karltondennis4259
Thanks for sharing this valuable information. I still have a question. After creating the management company, this company will place the children under payroll to use the exception for the Medicare and Social security tax, or it is another way?
Yeah, the FMC formed through the LLC is the one that employs the kids. The kids work under the FMC doing work for the S-Corp or C-Corp. Your S-Corp or C-Corp pays the FMC. The FMC then takes that money and pays the children.
Annually, the S-Corp or C-Corp writes off the money spent for the FMC services as a business expense. The FMC writes of the money spent paying the children as a business expense as well.
Example:
You own a temp. Service(your FMC). Your kids come in looking for a job. You send them to a warehouse(your S-Corp) to work for 6 months. The warehouse(S-corp) monthly pays the temp service for providing workers. The temp service(FMC), every month, takes that money and pays your kids. Your kids get paid every month by the FMC through their custodial bank account(documentation).
The difference in this vs the real-world temp service is that you OWN all the companies mentioned above just with different EIN #s
One benefit is that your kids can have a custodial roth ira and build wealth overtime now that they are employed.
@@sandersshameka31 does the FMC have to do payroll for the children?
@@sandersshameka31 thank you ! How do the FMC pay the children? By writing a direct check or via W2 to prove that the children has income?
How do I get a consultation?
For California, wouldn't the $800 LLC Tax be more than the payroll taxes. - for 1 child?
Sometimes my 11 year old helps me with IT and editing organization, etc. if I made that a more regular position w/ organized occurrence, is 11 too young? I have an S Corp., is there any snall amount I can pay my child as a vendor without going through Payroll ?
Can someone clarify age restrictions? Can my 9 year old do non-hazardous work in my architecture/real-estate business? (Sort mail, clean office, etc.)
Yuppers
This video really put the "children on payroll" strategy into perspective. Thank you!
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