There is no federal minimum age for putting your child on payroll if you fully own the business as a sole proprietorship or as a partnership with the child’s other parent, so long as the work is not hazardous. A seven-year-old can legitimately be paid to shred documents or organize inventory at a parent’s shop. What age you can put your child on payroll matters less than three other things: the kind of work you’re paying for, how your business is structured, and whether your records would survive an audit.
Why There’s No Age Floor in a Parent-Owned Business
The Fair Labor Standards Act carves out an exception for parent-owned businesses. Children of any age may work for a business entirely owned by their parents, provided the work is not in mining, not in manufacturing (for those under 16), and not on the Department of Labor’s hazardous-occupations list (for those under 18).1U.S. Department of Labor. Fact Sheet 43 – Child Labor Provisions of the Fair Labor Standards Act for Nonagricultural Occupations
The exemption only applies to businesses the parent fully owns. Co-own with a non-parent, or run the business as a corporation, and the standard federal floor kicks in: 14 for most non-agricultural work, with hour restrictions until 16 and hazardous-work bans until 18.
What Work Is Age-Appropriate
Even where federal law allows a very young child to be paid, the IRS and state regulators expect the tasks to match the age. A payroll entry for a nine-year-old operating heavy equipment reads as fraud, whether or not a technical exemption exists.
- Under 14: limited to a parent’s sole proprietorship (non-hazardous), performing, delivering newspapers, and casual work like babysitting.
- Ages 14 to 15: office, retail, and food service roles are permitted. Hours are capped at 3 per school day, 18 per school week, 8 per non-school day, and 40 per non-school week. Work must fall between 7 a.m. and 7 p.m., extended to 9 p.m. from June 1 through Labor Day.1U.S. Department of Labor. Fact Sheet 43 – Child Labor Provisions of the Fair Labor Standards Act for Nonagricultural Occupations
- Ages 16 to 17: federal hour restrictions drop away for non-hazardous work. Some states still cap hours or require night cutoffs.
- Age 18: all federal child labor restrictions end.
Fit the job to real capacity. Filing, data entry, sorting inventory, cleaning, simple bookkeeping tasks, running a social media account, and modeling for the business’s marketing materials all read as plausible work for a child.
The Hazardous-Work Ban Doesn’t Bend
Even inside a parent-owned business, no one under 18 may perform work the Department of Labor has designated as particularly hazardous. That list includes operating power-driven woodworking machines, chain saws, circular saws, band saws, and hoisting equipment such as cranes, derricks, and forklifts.2eCFR. Subpart E – Occupations Particularly Hazardous for the Employment of Minors Between 16 and 18 Years of Age or Detrimental to Their Health or Well-Being If your business is construction, roofing, excavation, logging, or meatpacking, most hands-on tasks are off-limits until your child turns 18. Office work in the same business is fine.
Your Business Structure Decides the Tax Break
The tax advantages that make this worth doing depend entirely on how the business is organized.
Wages paid to a child under 18 by a sole proprietorship, or by a partnership in which both partners are the child’s parents, are exempt from Social Security and Medicare taxes. That’s a combined 15.3% savings on the wages paid. Wages paid to a child under 21 by the same qualifying business are also exempt from federal unemployment (FUTA) tax.3Internal Revenue Service. Tax Treatment for Family Members Working in the Family Business4Internal Revenue Service. Family Employees
If the business is a C-corporation or S-corporation, none of that applies. Wages to your child are subject to Social Security, Medicare, and FUTA tax like any other employee’s, even if you own 100% of the shares. The same is true for a partnership that includes any partner who isn’t the child’s parent.
Single-member LLCs sit in an uncertain middle. The IRS generally treats a single-member LLC as a disregarded entity for income tax, which suggests the FICA exemption should follow, but for employment tax purposes the IRS has at times treated the LLC itself as the employer, which can undercut the exemption. Ask a tax professional about your specific setup before assuming the savings apply.
The wages are also deductible as a business expense. At a 24% marginal rate, paying your child $12,000 reduces your income tax by $2,880. And your child gets their own standard deduction: for the 2026 tax year, a single filer can earn up to $16,100 before owing federal income tax.5Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments from the One, Big, Beautiful Bill State income tax treatment varies, so check separately.
Setting Up Payroll
Hiring your own child requires the same paperwork as hiring anyone else. Your child fills out a Form W-4 so you can withhold federal income tax correctly.6Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate You complete a Form I-9 to verify identity and work authorization, even for your own child.
Roughly 38 states require minors to obtain a work permit or employment certificate before starting a job.7U.S. Department of Labor. Employment/Age Certificate Some states issue permits through the school district, others through the state labor department, and a few have replaced individual permits with employer registration. Check your state labor department’s site.
Wages must meet at least the federal minimum wage, or your state’s if it’s higher. Federal law allows a training rate of $4.25 per hour for workers under 20 during their first 90 consecutive days, but paying that low tends to attract scrutiny about whether the arrangement is real.8U.S. Department of Labor. Fair Labor Standards Act Advisor – Wages for Youth Pay a rate that’s reasonable for the actual work. If you’d pay a neighbor’s kid $15 an hour to do the same job, that’s the right rate. Inflating wages beyond market rates to shift more income is exactly what draws audit attention.
Documentation That Survives an Audit
The IRS sees family payroll arrangements abused often and scrutinizes them more closely than an unrelated W-2. The difference between a legitimate strategy and a disallowed deduction comes down to records.
Keep contemporaneous time records showing when your child worked and what they did. Employers must maintain records of hours worked each day, total hours each week, and the basis for wages paid. For workers under 19, record the employee’s birth date.9U.S. Department of Labor. Fact Sheet 21 – Recordkeeping Requirements Under the Fair Labor Standards Act A time clock, a spreadsheet, or a handwritten log all work if they’re complete and accurate.
Log task descriptions too. “Filed invoices and organized supply closet for 3 hours” holds up. “Helped out at the office” doesn’t. Pay by check or direct deposit rather than cash so there’s a paper trail. Issue a W-2 at year-end. Retain payroll records for at least three years from the date taxes were paid, with supporting documents like time cards for at least two.
Turning Wages Into a Roth IRA
Once your child has earned income, they can contribute to a Roth IRA. For 2026, the annual limit is $7,500 or total earned income, whichever is less.10Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 A child earning $5,000 from the family business can contribute up to $5,000.
Most brokerages offer custodial Roth IRAs that a parent manages until the child reaches 18 or 21, depending on the state. The child doesn’t have to fund the account personally. You can gift the contribution amount as long as the child actually earned at least that much during the year. Contributions grow tax-free and can be withdrawn tax-free in retirement.
Workers’ Compensation
Most states require workers’ compensation coverage for employees, and your child usually isn’t an exception. A few states carve out narrow family-member exemptions, but coverage is generally worth carrying: if your child is hurt at work, workers’ comp pays the medical bills and shields you from liability for an uninsured workplace injury. Requirements and costs vary by state and industry, so check with your state’s workers’ compensation board and your insurance carrier before adding a minor to payroll.