Regarding this part: "business profits $40,000-$60,000 before paying the kids. If your wife pays the kids $24,000, that leaves $16,000-$36,000 for your wife. If the kids are doing about 1/2 of the work, that is fine. But if your wife is doing 90% of the work, it is not reasonable for her to be paying 1/2 of the profits to the kids. It could easily be viewed as a fraudulent setup."
--> What if you are paying your child as you training them, paid training, an investment in the company, so they can be the future of your company? Let's say I have a single member LLC in bookkeeping business and business profit is 60k and paying two of my kids in total 16k (8k each) that year and, and their time spent is not direct billable to the client as some are flat rate clients, but they are helping out with simple data entry, looking up info and typing into spreadsheet that helps me finish up the clients stuff, sorting and putting receipt together for my llc transactions, shredding, organizing, opening mails, would this trigger anything paying them 8k each and my gross profit is 60k? I am not seeing it as how much of their cost contributes to the gross profit, but taking in the cost as an investment to the company as they learn more and more of excel and data entry, I will be able to take on more clients in the future. As well, if I file and report late on the federal 941/944 and EDD, will that cause any fee? If the payment to them will have zero tax impact since they are minor? Is it too late to report for 2022? Because some tax accountant say no W2 need and just cut them a check payment and deposit to their account. I will have their time document, employment agreement and paying them the CA min wage. As well, per the CA labor law, it states if the child work under parent and parent premises (home office), they are exempt from the CA child labor law requirement, permit requirement, and hour restriction. Do you agree?
See
https://www.dir.ca.gov/dlse/childlaborlawpamphlet.pdf
page 33 or 53:
The only parent or guardian employers who are exempt from California child labor laws
are those who employ their minor children in agriculture, horticulture, viticulture or
domestic labor on or in connection with premises that the parent or guardian owns,
operates or controls. [LC 1394]
Will this trigger anything? Because young kids (age 9-13) these days are computer savvy and it's best to utilized their time to train/work (1-2 each day) doing these spreadsheet, data entry, office work than to play games.
