If you have employees you must set up payroll and issue a w-2. However, if they are your children under age 18, you do not need to withhold social security or medicare tax (and the LLC doesn't pay the matching amount).
Be aware that you may have to follow other state or federal rules, however. If you have other employees besides your children, you need to be aware that some employee benefits must be "non-discriminatory" meaning you must offer the same benefits to all similarly situated employees. For example, you probably can't offer your children a 401k if you don't offer it to your other employees. And there are some restrictions on employee benefits that can be offered to owners or their family. And you may have state laws about wages and hours that apply to all employees, even your own children. (For example, NYS has a law about what information must be provided on a pay check or pay stub, and the fine is $100 per non-compliant check.).
So do some appropriate research.
