Should You Hire Your Children in Your Business?

For many parents, the decision to involve their children in their business ventures is a complex one. While there are potential advantages, such as financial benefits and early exposure to professional skills, there are also significant challenges and considerations. In this article, we’ll explore the pros and cons of hiring your children and provide insights from real-world experiences.

Real-Life Experience: Volunteering Children in the Business

One of the earliest examples of involving children in a family business comes from a personal experience I had when my children were young adults. They were hired to work at a business my wife and I owned, and they were met with a mixed reaction. While customers appreciated their likability and sales abilities, they themselves were skeptical and unhappy with the work environment and the rationale behind our ownership of the business.

Personal Experience: Hiring a Son for Graphic Design

Before establishing our own business, I worked for a large corporation where I managed a division. Here, I had a unique opportunity to hire my 14-year-old son for a part-time role creating a newsletter. Leveraging his natural aptitude for graphics, he proved to be a valuable asset. However, the decision to list his employment as a conflict of interest to the company required me to navigate a layer of legal scrutiny. Thankfully, the legal department confirmed that he was legally allowed to work and was already handling another part-time job.

Advantages of Hiring Your Children

Hiring your children can bring several benefits to your business. One of the primary advantages is the ability to save on payroll taxes and contribute to their future education by directly depositing their earnings in a college savings account. Additionally, there is a tax benefit for the business to employ a family member. Furthermore, children working in a family business can make early contributions to Social Security, providing them with additional financial security in the long run. While labor law typically does not require children to perform any specific tasks, this can be challenging in business contexts where family needs to be a key stakeholder or investor.

Challenges of Hiring Your Children

While there are benefits, hiring your children also comes with numerous challenges. One of the most significant issues is the potential for conflict of interest, especially as they grow older. As seen in my past experience, my children became disenchanted with the business and the work environment. This can lead to a decline in productivity and morale. Additionally, legal and administrative hurdles can arise, including ensuring compliance with labor laws and maintaining a formal structure for their employment. It’s crucial to establish clear boundaries and roles to prevent any misunderstandings or resentment.

When and How to Hire Your Children

The decision to hire your children should not be taken lightly. Children under 16 may not be legally allowed to work in many jurisdictions, and even if they are, the work they can do is likely to be limited. For example, during my experience at a large corporation, I found that a 16 or 17-year-old would have been less helpful than someone with a few years of college behind them. Therefore, it’s advisable to consider your children’s age, skills, and the nature of the work they can realistically handle.

Conclusion

While hiring your children can be a strategic decision for a family business, it’s important to weigh the benefits against the potential drawbacks. Whether you choose to hire them or not, it’s crucial to approach the situation with careful planning, open communication, and a clear understanding of the expectations and responsibilities involved. Remember, the ultimate goal is to create a supportive and respectful work environment that fosters growth for everyone involved.