Pros and Cons of employing your kids

Hey if you were a farmer or had some skill like a farrier or a blacksmith in olden days your kids did not really have a choice they had to work on the farm or in your business and like it because they did not really have a lot of other options.

After steadily falling for decades, the rate of Americans moving for work fell to a record low of just 1.6% in the first three months of the year, according to Challenger, Gray & Christmas. May 19, 2023 although almost 7 million Americans moving over 500 miles for a job per year is still a lot. When it comes to your kids it is nice if they stay close. So giving them a job at your local place of business helps keep families together.

Parents love to teach their kids in the hope that their kids can build on what they know or found out in the school of hard knocks. It is horrible for a parent to see their kids make mistakes that could have been avoided, or even that the parent made themselves get repeated. So bringing your kids into your business makes sense on a lot of levels as you know what works and what doesn't and you can give them a head start.

Since owning your own business is one of the better ways to benefit from tax laws then paying your kids is one of the top ways to benefit within that tax code. A deduction for you and an income for them helps spread the families business income into better tax brackets and allows your kids to save for retirement and college when most kids are just a family expense.

This one is a mixed dynamic. For you it is an obvious succession plan if you teach your kids everything you know then they can take over the business when you retire. The only problem is they are not you. Most likely they have different dreams and goals. There might be some resentment from the other employees. The kids might be taking advantage of the status they were given without the need to earn it like other members of the team.

For your kids getting a good salary with a generous boss sounds great. But is it? They may not be evaluated or promoted based on performance in the same way as the other employees. The parent can at the same time be more and less demanding of them compared to the other team members. A parent can have unrealistic expectations, that can affect the kids own perception of their ego and self worth.

Part of growing up and becoming an adult is learning to take care of yourself and your family. If the kids are never really challenged with facing the big outside world on their own, then, employing them is a disservice to helping them find themselves and who they are and what they want?

The playboy son of the successful business person is a cliche' that rings true in so many families. As my uncle used to say "I would rather be a rich man's son than the rich man." So many kids come into money they never earned. It has to affect their perception of the value of money and a hard days work.

The business owners may get on well with their siblings but it is very common that kids of the business owner can build up deep resentments about one another. Parents tend to divide their wealth and attention equally among their kids. However, the kids will know if one of them is not pulling their weight or heaven forbid left the "farm" to pursue other interests so then resentments brew. How much easier the family life would be if the parent had never given any of the kids a job in the parent's business.

The wonderful part of having your kids work in your business is that you still get to see a lot of them even when they become adults. The good part is that you know they have a good job that pays well in a secure environment so they are essentially set for life. The bad parts are did you interrupt their development as independent human beings destined to win and lose based on their own decisions.