Rules for 100% parent-owned businesses
Owners’ children of any age:
- Can work any number of hours or time of day. No one under 16 can do hazardous work (e.g., with lawn mowers, sewing machines), work near flammable or hazardous materials, or where food is cooked.
- If all employees are immediate family, owners’ children need not be paid the minimum wage—but if others are regularly employed, even family must be paid the minimum wage.
Owners’ children under 18:
- No need to withhold FICA if working for sole-owner parents.
- May not do hazardous work.
Owners’ children under 14:
- Can be hired only by a parent/sole owner.
Employment tax rules
- Obtain W-4s from all employees—owners’ children as well as student part-timers and foreign students.
- Withhold FITW from all employees, including the owner’s spouse or child, unless a W-4 claims exempt.
- Withhold FICA from all employees, even high school students and those receiving SS benefits. Exception: Children under 18 working for sole-owner parents.
Always check your state’s laws.
