With summer around the corner, it is not uncommon for many small businesses to put their high school and college-age kids to work in the family business. However, if you do hire young summer or temporary help, be sure that you do not fail to deduct the appropriate taxes.
It’s not uncommon for many to mistakenly believe that taxes are not due because these temporary employees/summer help are “just kids”. Yet, nothing can be further from the truth.
The American Institute of Professional Bookkeepers (AIPB) acknowledges that some rules regarding summer help are tricky. For example, if parents are the 100% owner of a business, they do not need to pay immediate family members the miniumum wage. However, if they regularly hire nonfamily members, they must pay their children the minimum wage.
Or, if you hire your children and own 100% of your sole proprietorship or partnership, you don’t have to pay Social Security taxes for the kids, but you do have to withhold federal income tax and provide your kids with a W-2 at the end of the year.
To assist small businesses in navigating these tricky rules and regulations, the AIPB has written a free report called, “Rules for Hiring and Paying Summer Help,” available by e- mailing firstname.lastname@example.org.