How Business Owners Can Leverage Their Children to Maximize Tax Savings and Boost Revenue
Mario J. Payne, CFP?
Certified Financial Planner? | Investment Management | Dave Ramsey SmartVestor | Executive Board Member | Veteran
If you're a business owner with children, you have a unique opportunity to improve your financial strategy. It doesn't mean you're doing anything wrong now, but there's a simple way to save on taxes, boost your revenue, and prepare your child for the future—all while maintaining your current income. The key? Utilizing your children in your business effectively. Here's how it works.
Increase Revenue with Child Engagement
Using children in your social media marketing or advertisements can directly impact your business success. According to research, 28% of individuals are more likely to buy a product when they see children featured in the ad. That means if you run 100 ads or posts, 28 additional people are likely to buy your product simply because your child is included.
By incorporating your children in your TikTok, Instagram, YouTube, or other media campaigns, you not only boost your visibility but also enhance your justification for tax write-offs. It’s a strategic win for your business and marketing.
Child Write-Offs: Legal and Justified
The IRS allows business owners to pay their children for legitimate work, such as acting, modeling, or promotional tasks. To avoid any IRS scrutiny, you must ensure you pay your child a reasonable, market-based wage. Two websites provide credible benchmarks for child compensation:
These platforms help you determine an appropriate wage, so your write-off is fully justified and compliant with IRS standards.
The $13,800 Tax-Free Opportunity
The magic number here is $13,800 per year. As of current tax laws, you can pay your child up to this amount without any federal taxes. Here’s why this matters:
For example, if you pay your child $10,000 and your business earns $100,000 annually, your taxable income drops to $90,000. If you're in the 25% tax bracket, this lowers your tax liability by $2,500. That’s real money saved without changing your income.
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The Hidden Benefit: Keeping Money in the Family
Here’s the best part: When you pay your child, that money often stays in your household. Whether it goes into a savings account, college fund, or helps cover expenses, you’re essentially shifting income within the family while saving on taxes. It’s a win-win situation—you keep more money, boost your revenue, and help your child build financial discipline early.
Conclusion Utilizing your children in your business is a smart strategy that combines tax savings, revenue growth, and long-term benefits for your child. By featuring them in your marketing, leveraging legal write-offs, and paying them a tax-free wage, you create a financial system that works for your entire family. As a business owner, it’s not just about how much you make—it’s about how much you keep.
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