If you’re running a successful agency, chances are you’re missing out on one of the most overlooked tax strategies out there, and it might be sitting across the dinner table.
Yes, you can hire your child.
Yes, it’s legal.
Yes, the IRS approves, if you do it right.
Why This Strategy Works
When structured properly, paying your child through your business allows you to:
Shift income from your high tax bracket to their zero or low bracket
Deduct their wages as a business expense
Pay zero payroll tax if your business is a sole proprietorship or single-member LLC and they’re under 18
Start building their retirement savings early with a Roth IRA (because earned income makes them eligible)
What Counts as “Doing It Right”?
This isn’t about giving your kid $50 for “helping out.” This is about treating them like a real employee. That means:
A real job description and age-appropriate tasks (think: organizing files, social media support, scanning receipts)
Documented hours and timesheets
Reasonable wages aligned with market rates
Payment through payroll, not Venmo or cash
For example, if your 13-year-old earns $6,500 legitimately and puts it into a Roth IRA, that money could grow into over $500,000 by retirement, even if they never contribute again.
Don’t Let Sloppy Execution Blow Up the Strategy
Too many agency owners miss the mark because they skip the paper trail, overpay for simple tasks, or fail to run payroll correctly. That’s how the IRS catches you, and disallows the deduction.
But done right? It’s a power move that builds wealth across generations while reducing your taxable income now.
Want to see how to make this strategy work in your agency without crossing the IRS line?
Watch my video: The Legal Way to Pay Your Kids and Write It Off
And if you’re ready to save on taxes and build generational wealth, schedule a call with me here.