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posted Sep 24, 2022 10:00:32 AM

Paying to Under 18 Kids under LLC

I have a simple question; how much can I pay to my under 18 year kids for their help in my business under "External Labor Wages"? 

 

Also, since it is a startup LLC, so there is no income but I am giving loan (from my w2 salary) to my company which means that there will a lot Negative amount to offset for business expenses, is there any limit to that?

 

Many Thanks for your response.

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1 Best answer
Level 15
Sep 24, 2022 1:11:37 PM

With respect to continuing net losses, you should be aware of the rules (and criteria) for Activities Not Engaged in for Profit (Section 183).

 

See https://www.irs.gov/pub/irs-news/fs-08-23.pdf

 

With respect to paying your minor children, the compensation needs to be reasonable and also for services actually performed. Otherwise, the payments could be recharacterized by the IRS as gifts.

1 Replies
Level 15
Sep 24, 2022 1:11:37 PM

With respect to continuing net losses, you should be aware of the rules (and criteria) for Activities Not Engaged in for Profit (Section 183).

 

See https://www.irs.gov/pub/irs-news/fs-08-23.pdf

 

With respect to paying your minor children, the compensation needs to be reasonable and also for services actually performed. Otherwise, the payments could be recharacterized by the IRS as gifts.