The American Institute of Professional Bookkeepers recently provided the following tax tips for employers of sole proprietorships and partnerships 100%-owned by parents who are hiring their children for the summer:
- Children of the owner can work any number of hours or time of day, regardless of their age. If under 16, they cannot do any hazardous work (e.g., work with lawn mowers, sewing machines), work near flammable or hazardous materials, or where food is cooked.
- If a 100% parent-owned sole proprietorship's or partnership's only employees are immediate family, the owners' children need not be paid the minimum wage: but if others are regularly employed, even family must be paid minimum wage.
- If the owner's children are under 21: Wages are exempt from FUTA.
- Any children (i.e., not just the owners' children) who are under 18: If the business is 100% parent-owned, the children under 18 are exempt from FICA. If not an owners' child, obtain an age certificate recognized by the DOL and your state Wage and Hour Division (WHD). DOL often accepts state age certificates, but ask your WHD to be sure. Return it to the worker at termination. The workers may not do hazardous work.
- Workers of 14-15 years of age who are not the owners' children can work 8 hrs./day, 40 hrs./wk., June 1-Labor Day, between 7 a.m.-9 p.m. if school is not in session.Exceptions: Limits do not apply to news carriers or children employed exclusively by a parent/sole proprietor. For agricultural jobs, contact the DOL.
- Other children under 14 cannot be hired unless they work for a parent/sole owner.
Source: American Institute of Professional Bookkeepers