I've been considering starting a small online business selling homemade goods like soap, candles, and jewelry. What makes this endeavor even more special is my plan to involve my two kids in the production process. Not only will they help create these items, but I'm also intending to pay them as employees for their contribution. This is really exciting for myself and my little one is pretty excited herself. What im sharing belowe is what I understand to be the case as of now, but Im always doing research in case anything changes with the IRS pertaining to this endevour, with that said, I am not a financial expert of any sort...im just some guy on the internet with a cool alias so please consult a financial expert if what im going to talk about below interests you.
We are going to be focusing on products the girls can make so we will be selling necklaces, soap bars, bath bombs, bracelets and many other products of the sorts.
One of the exciting aspects is that I can pay each of my kids up to $12,000 annually for their work, and deduct their salaries from the business income meaning we wont pay taxes on this money. Plus if they make under the standard tax deduction, they wont get taxed on this income either. This opens a great opportunity to introduce them to the concept of earning, saving, and responsible money management from a young age.
A significant part of this plan involves setting up Roth IRAs for each of my kids and maximizing their contributions. By starting retirement savings early through these accounts, I hope to teach them about the power of compounding interest and the value of long-term financial planning. It's important that I pay my kids what the market value for what ever job they are doing. I cant just pay them 6k for making a bar of soap, the compensation must match the work they do.
Moreover, this isn't just about the financial aspect. I'm eager to use this experience as a platform to teach my kids essential entrepreneurial skills and impart valuable lessons about work ethics, responsibility, and commitment. Through this, I believe they'll gain insights into running a business and the importance of teamwork and dedication.
Of course, beyond the exciting entrepreneurial journey, there are practical considerations. I'll need to ensure the business is properly set up, including registration and acquiring any necessary permits. Keeping meticulous records of income, expenses, and employee payments will also be crucial for tax purposes and maintaining a transparent business operation.
Looking ahead, I envision this venture not only as a way to generate income but also as a means of family bonding and learning. I aim to provide my kids with an educational opportunity that goes beyond the classroom, instilling in them valuable skills and fostering a deeper understanding of financial responsibility and entrepreneurship. I am also looking forward to bonding with my kids through this process and learning as much as i can from them.
I'm excited about this venture and hope it serves as an inspiration for other parents seeking innovative ways to teach financial literacy and entrepreneurial spirit to their kids. This journey isn't just about starting a business; it's about nurturing a mindset and providing an invaluable learning experience for my children that will benefit them for years to come.
Keep an eye out on here for future updates on our business journey.
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