Today I am a successful entrepreneur and I feel passionate about instilling the value of entrepreneurship into the children of our society. I think every entrepreneur should employ his or her children starting at an early age, as soon as they’re old enough to do so. The way I see it, entrepreneurship was the cornerstone that this country was founded upon and it's what America needs to get ourselves out of the financial turmoil that our country now faces. This article will outline the basic of why you should get your children involved in your business, the pitfalls to avoid, and how it works financially.
How Being a Child Entrepreneur Changed My Life
Most kids want to play sports or be in clubs. When I was a kid I loved all those things but in my heart I wanted to be an entrepreneur. As a teenager, when McDonald’s opened up in town, several of my friends wanted me to work there with them. They didn’t realize I was having success buying and selling baseball cards and running my own community lawn service and maintenance business.
It was such a game changer for me to realize early in life that being paid for my problem solving was more valuable than getting paid by the hour. Being a child entrepreneur was a much faster way of digging my way out of poverty.
Entrepreneurship isn’t a place you go or a thing you do, it’s a mindset. It’s the state of mind of being constantly searching for opportunity and ways to improve the world around you. It’s the condition of being useful, of being practical, of being willing and able to seize the moment and create something valuable for other people out of thin air just by paying attention to the problems that are getting in the way of people getting what they want.
Entrepreneurship Teaches Children Values
The values you learn from being an entrepreneur are numerous and they are game changers.
Being involved business as a child, the impersonal skills you gain are tremendous. You figure out pretty quickly that without the ability to respectfully communicate with other people there is no value to what you do – no matter how good the idea sounds on paper. In that sense it is very humbling. It even teaches kids little things about manners and decorum, for example, sending a handwritten thank you card after a meeting.
Entrepreneurship often entails failure, yes, failure, and that makes it even more worth it for children. Inevitably something won’t go the way it should have gone, and your kids will learn the right way to handle negative feedback, criticism, and disappointment with grace and most of all resilience.
You also gain the understanding that in order to get anywhere you can’t just be a talking head – you have to stand behind what you say with action. The downfall of so many intelligent ideas is lack of commitment. It’s a fallacy in our society, perhaps because of the emphasis that our educational system has placed on rhetoric, that ideas are all you need.
It’s this very entitled notion that is eating into the fabric of our society and our economic system. It’s true that without a genuinely thoughtful and insightful idea you aren’t really creating anything of value, but just putting it forth into the world as an idea isn’t enough. It takes grit, determination, and the willingness to sacrifice your pride and even some of your resources to make the idea into a real thing that lives and breathes. Entrepreneurship, above all, teaches children character.
The real world lessons kids learn from business is the number one reason I wholeheartedly support involving children in business from as early an age as possible.
How to Get Your Kids Involved With Your Business
Every business is different but some easy ways to get your kids involved is by letting them participate in what is second nature to them. Children are natural marketers, by the way, because many times they don’t have the same fear of rejection that we do as adults. Have them go door to door in your neighborhood, or advertise your product at their Little League game.
There are some things that your children may actually be better suited to perform than you. For example, if you have a social media account, lets your kids have at it. My kids know more about YouTube than I ever will! You may say that your product or service doesn’t sell through these media, but they are the fastest growing platforms in the world.
Just because the decision makers who are buying your product aren’t on YouTube (and they probably are, believe it or not!) it doesn’t mean their kids aren’t. Market it well enough and kids will tell their parents about you.
In theory child entrepreneurship is great for all kids, but there are several pitfalls to be aware of. The most important thing to be aware of is the child’s safety. Is your area safe enough for your kid to be prowling around alone? Safety needs also apply to the internet. Make sure you have the parental controls adjusted so that your kids aren’t being contacted by unwanted adults as they work in your business.
Before getting the child involved, make sure that the other parent (your spouse or domestic partner) is onboard and fully understands the scope of what is being undertaken. Any misunderstandings here should be avoided. Gauge the impact on your family before doing this.
Make sure you can document your children’s work (and of course make sure it’s legitimate work). Keep a record of the work performed and the wages you paid them, just in case Uncle Sam wants to look at the records.
How to Pay a Child You Employ
There are several tax advantages to employing your children.
Employing children creates income for them. They only have to pay taxes on the income after so much is earned. Typically the first 6k of income they earn is untaxed. You should always check with your accountant about how tax laws apply to your specific situation, but in general you don’t have to withhold payroll taxes for children under 18. You can also bypass the Worker’s Compensation coverage for them. Just to be safe, check the tax laws and talk to your tax advisor.
Because they have income, kids can put the money into a Roth IRA, or they could start their own college savings plan. Why is that a big deal? The more time you have, the more potential money you can build up over time. We all wish we had started saving money for retirement super early and this is a way to do so. This will give your kids a powerful advantage that they will thank you for when they are older.
The benefits of employing your child in your business are huge. It can teach them life changing lessons about responsibility, ethics, determination, and relating to other people, all the while building their character. However, it all must be done in accordance with the law and in a way that is suitable to your family’s situation.
Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisory, a Registered Investment Adviser. Beacon Wealth operates independently of Cambridge.