Family Business + Generational Wealth
How to pay your kids, reduce taxes, and build long-term family wealth legally.
Updated by White Wolf CPA | Last reviewed August 2025
Can small business owners pay their kids?
Yes. Paying your kids for real, age-appropriate work can reduce your tax bill and build their financial literacy.
Can I pay my kids from my business tax-free?
If structured correctly, yes. In 2024, you can pay each child up to $14,600 tax-free if they work for your sole proprietorship or family LLC. No FICA tax applies for under-18 children.
At what age can I put my child on payroll?
There’s no minimum legal age, but the child must be doing legitimate, age-appropriate work. Common starting ages range from 7–12, depending on the task.
How much can you pay your child tax-free in 2024?
Up to $14,600 (the standard deduction for 2024). This income is tax-free to them and deductible for your business if properly documented.
How do I pay my kids tax-free?
Create a job description, track hours, pay through payroll or check, and issue a W-2. No 1099 is needed for underage children working for a parent’s sole proprietorship or family LLC.
How much can I pay a family member without a 1099?
If the family member is a W-2 employee, no 1099 is needed. If paid as a contractor and earned over $600, a 1099-NEC is required unless an exception applies.
Do you have to 1099 a family member?
Yes, if they’re a contractor and earned $600 or more—unless it’s your child under age 18 working for your sole proprietorship or family-owned LLC.
What are the tax advantages of a family LLC?
A family LLC offers asset protection, income shifting to lower-tax brackets (such as children), and long-term wealth transfer planning.
How to build generational wealth?
Start with a solid foundation: reduce taxes, invest wisely, and protect your assets. Use trusts, family businesses, and strategic gifting to pass on wealth tax-efficiently.
Family business tax planning—what’s involved?
It includes income shifting, entity structuring, payroll for kids, retirement plans, and legacy planning. A CPA-led plan helps your family maximize benefits legally.