Perrilee, one of our most active students in the ProVision School of Tax Strategy and a recent participant in the Rich Dad Education Tax and Asset Protection course in Seattle, asks the following question about paying her son.

Q: My 12 year old son does filing and yard maintainance for my investment business. How am I to keep track of his time and pay so I can file for him with the IRS. Both his paper work and mine. Thanks, Perrilee

A: If he has regular hours and you control his work, he is an employee and you should give him a paycheck and file quarterly payroll tax returns. So long as your business is owned solely by you and it is taxed as a sole proprietorship (which it should be), then you won't have to pay any payroll taxes other than his withholding. Children of business owners under the age of 18 are not subject to payroll taxes.

If he only works odd jobs, you are probably ok just treating him as an independent contractor and then no payroll tax returns are due and you simply have to issue a 1099-misc to him at the end of the year.

Best bet right now for doing the accounting for all of this is to use Quickbooks Pro.

Warmest regards,

Tom