How to Hire Your Kids in Your Business: Tax Benefits & IRS Guidelines (2025 Update)
Kate Stoermer 
Discover how hiring your children can provide tax advantages for your business in 2025. Learn IRS rules, benefits, and tips for compliance
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Hiring Your Children in Your Business: 2025 Tax Benefits & Guidelines
Hiring your kids can be a strategic advantage - as well as a highly practical. My kids first came into the business at ages 10 and 13 - and have remained on payroll since. They still share with others they are employed - and my youngest, having signed the dotted line first, still claims his status as "first employee". Status aside, the practical benefits have been huge - not just in offsetting our taxable income, but in helping build skills in the real world with our kids.
Key Takeaways
In this article, I'm covering
- Hiring your children can provide significant tax benefits in 2025 when done legally and thoughtfully.
- Kids learn real-world skills, build financial literacy, and contribute meaningfully to your STR business.
- Compliance matters: keep proper documentation and assign age-appropriate, legitimate tasks.
- Start with small roles and grow from there—your business (and family bond) can thrive.
- Use traceable payments, like debit cards, and set clear expectations.
Why Consider Hiring Your Children?
Skill Building
Running a short-term rental business involves a plethora of skills—customer service, accounting, property management, and so on. These are valuable life skills, and it gives kids a leg up. (Not to mention my kids were much more enthusiastic to work versus just doing chores around the house!)
Family Bonding
Working together as a family can strengthen bonds. It provides a unique setting to interact, solve problems, and celebrate successes together. They LOVE it when I read them reviews our guests left and feel entitled to contribute to conversations when we are problem-solving.
Financial Literacy
Understanding the value of money at a young age is an invaluable life lesson. Earning their own money through hard work can make kids more financially responsible. I love the fact that if you ask my kids why we are into vacation rentals that they will tell you - without hesitation, 💲"We make our money work for us." 💲
Future Success
Getting a head start in the business world could provide your children with a leg up in their future careers. It's like an internship but with the family. I don't know if my kids will stay in the STR business long term, but I do know since I made the leap into short-term rentals my kids envision a future where they own businesses. My oldest teen old - a highly gifted computer programmer , envisions a tech-focused business and we are already talking about establishing his first business at 18. My new teen - whose current interest is to be a Youtubing blacksmithing scientist (!!) definitely has an entrepreneurial personality so we'll see where life takes him.
Financial Benefits
So the business pays the kids, and the kids 1) make less than the standard IRS deduction so their income is not subject to income tax withholdings 2) are under 18 so their income is not subject to Medicare and social security withholdings and 3) this is earned income so contributions to a Roth IRA are possible (we haven't started this since the kids don't actually work a ton for us, but we will eventually) AND this is a benefit to the business in terms of their work and it is an expense against the business. Frankly, its a way for us to help provide some funds for the kids without it coming out of our personal bank account. Depending on your approach to managing your business profits and your life/work balance, that may be a benefit. Keep in mind, this all depends on your business structure (typically sole proprietorship or LLC with only parents as owners) and circumstances, so please understand your specific situation and how this may or may not benefit your kids and business
⚠️ Always confirm with your tax advisor and understand your business structure.
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How to Involve Your Kids
Assess Their Interests and Skills
I'm sure you appreciate that not every child is suited for every task. Some may excel in social interactions and customer service, while others may have a knack for numbers. Assign tasks based on their strengths and interests. My little guy is more hands on at the properties, although we're working on some data entry. My bigger guy prefers computer based work - he's already great at photo editing and - I'll use the word photo shopping but he'd correct me. We're going to take a dive into SEO together as well. But they both help with some of the basics -- battery changes, light maintenance, assembling furniture. A key fact is the kids need to be hired for age appropriate tasks - this is real pay for real work and as a business you need to demonstrate compliance if asked. As a side note, it truly is easier to get them to work than do chores at home (ha).
Legal Guidelines
Ensure you're aware of child labor laws in your jurisdiction. Typically, family-owned businesses have some leeway, but it's important to keep their age and the nature of work in consideration. This is real work for pay, you need to keep appropriate documentation, and make sure you are compliant with state and federal rules - and maintain records. Each kid completed an I-9 and W-4, which I keep on file. We will issue a W2 at the end of the year and keep that on file as well. Some of the resources I used;
IRS Family Help for Businesses
U.S. Department of Labor - Child Labor Provisions
W-4 (keeping in mind the current standard deduction - which my kids annual income will be under so no withholdings)
I-9 (we have social security number and passports for each kid; we had them sign their forms. I took pictures and to this day my 10 year old loves that he signed his first so he was my first employee - and first isn't something he gets often!)
Set Clear Expectations
Just like with any employee, make sure to set clear expectations about their roles, responsibilities, and work hours. Keep it flexible but structured. We wrote up small descriptions of their jobs and discussed all the aspects with them. We agreed on a pay day, and their salary (see below) and how we would document their efforts.
Financial Compensation
Decide on how you will compensate them. Whether it's an hourly wage, a fixed stipend, or project-based pay, make sure it's fair and complies with labor laws. For my state, we are required to pay at least minimum wage.
My older kiddo started at minimum, but after a year he got a substantial raise due to his specialized expertise - he is entitled to fair wages for the work, so we recognized that as his scope of duties (stemming from his interests and actual contribution) shifted. He's my online guy, tech support, SEO optimizer. My little(r) guy continues - 2 years in, to do the same kind of stuff - mostly labor at the properties so his wage has only changed as the state-required minimums have changed.
In order to maintain a solid paper trail, we got each kid a debit card. We considered a bank account, but it was hard to find one with debit cards for the younger kids so we settled on a savings account and then we got each of them a Greenlight debit card (you can check them out HERE) which is great - it has an app, tons of parental controls, and education. We can limit spending, or even shift funds into a savings account on the card. They even have investing! We went this route vs cash as it was it was strongly recommended to have a paper trail of paying and this was easier - plus the boys tend to buy games or add-on's to games online so they didn't really need cash. Even if they get cash, they are trading it and having us add it to their debit cards. Even if you don't employ your kids, having parent-controlled debit cards allows us to help our kids build good money habit in today's world - and I truly do love Greenlight.
Training and Supervision
Spend time training them, just like you would with any new employee. Keep an eye on their progress, but allow them some autonomy to build confidence and skills. Its a good investment of time and makes our lives easier!
Tasks The Kids Can Take Up
- Property Inspections: Checking the property before and after guest stays.
- Social Media Management: Posting updates, photographs, and engaging with potential customers online.
- Stocking Amenities: Ensuring that the property is well-stocked with toiletries, towels, and other essentials.
- Property Maintenance. My kids help with battery changes, simple repairs, and improvements
- Set-Up. My kids help with furniture assembly and staging at properties. My older also helps with online listing
- Answering Inquiries: Handling emails or direct messages from potential or current guests.
- Accounting Assistance: Help in managing invoices, tracking expenses, etc.
- - Ordering supplies: Keep a list of supplies to restock
The Takeaway
Hiring my kids into my short-term rental business has been a boon for us; Not only has it offered them a valuable introduction to the world of business, but it also allowed us to be even closer as a family while expanding our horizons together.
So, if you're a parent who also happens to be in the short-term rental business, consider bringing your kids on board. You'll be surprised at how much they can contribute and how much they will grow.
Interested in learning more about Short-term Rental Investing - maybe even starting a family business and leaning into to a different life? I have a great getting started guide - check it out HERE
Not finding what you need? I offer 20 minute calls - no strings, to help you answer your trickiest questions. Some folks go on to work with me - sure (hey, I have to make a living) but some folks just need 20 minutes and I'm happy to connect and learn from you, with you, and help you too. Book a time HERE.
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Hey Boss! I'm Kate, owner/founder of The CEO Host. If you are interested in taking a leap into short-term rentals - or have some questions about your existing business, my goal - passion, and career, is to help YOU succeed. I've coached hundreds of folks getting started or looking to optimize, analyzed more deals (and duds) than I could count, completed thousands of hours of education and training, attended conferences... So don't be shy. A good CEO knows to bring in expert help - and that's what I'm here for! Lets HOP ON A CALL and chat!
Categories: : STR finances taxes and risk management