Working with your own child is not only a great experience, it can be financially advantageous for both you and your child.

As the owner or husband-and-wife-owner of your business, you may hire your child anytime, for the number of hours per week you deem appropriate. Practically no age is too young - court cases have supported hiring and paying a child as young as 7 years of age.

What are the financial benefits?

If your business is a proprietorship, you pay no payroll taxes on your under-age-18 child's wages.

If your business is a proprietorship, your child pays no payroll taxes and zero income taxes, if the wages do not exceed the 2010 $5,700 standard deduction for single taxpayers.

Records are key.

You will need to be sure to keep a few crucial records in order to make it beneficial to hire your child:

1. Proof that the wage is reasonable (i.e., what you would pay a third-party employee for the same hours and responsibilities)
2. A time sheet showing hours worked and tasks performed
3. Proof of paid wages, preferably a W-2 payroll check

The Recap.

What are the most important things to remember? Keep a time sheet. Pay your child a reasonable wage with W-2 payroll checks. Most of all, enjoy working with your child, and keep the money in the family.