Your teenager wants to earn some money and offers to help with your online store after school. They can update Etsy listings, organize inventory, and photograph products. If you pay them for a few hours each week, you can teach them responsibility while also gaining extra help through this arrangement.
However, hiring your child involves more than agreeing on an hourly rate. Even when a teenager is the only employee, parents running businesses in the United States or Canada must consider employment laws, payroll taxes, and record keeping requirements.
What Work Can Your Teen Legally Do?
With a few exceptions, US federal child labor regulations typically enable children to work in businesses solely owned by their parents. Children under 16 cannot work in manufacturing or mining, and anyone under 18 cannot perform federally classified hazardous jobs.
Location also matters because employment rules vary between countries and, within countries, between states and provinces. For example, a parent running a small retail shop in Scottsdale, Arizona, might want their teenager to help with inventory and customer orders. Before assigning those tasks, they would need to check both federal requirements and Arizona’s youth employment laws. The Industrial Commission of Arizona explains the state’s restrictions on working hours and certain occupations. When federal and state rules differ, the stricter applicable requirement takes precedence.
Canadian parents face a different set of rules. Employment standards are largely governed by provincial and territorial legislation, so the requirements depend on where the family business operates.
In British Columbia, for example, children under 14 generally need permission from the Employment Standards Director to work. Young people aged 14 and 15 can perform certain types of light work with written parental consent, while other work requires a permit. There are exceptions for children working in a family-owned business, provided their duties do not include prohibited tasks. Even then, parents must follow the applicable safety and employment standards.
A 15-year-old in a family-owned online business in Coquitlam, BC, might be able to help photograph products, update Etsy listings, or organize inventory. These tasks are quite different from operating dangerous machinery or undertaking construction work. Parents should check the specific duties against BC’s rules for hiring young people rather than assume that family ownership makes every job permissible.
Working hours also require attention. In BC, children under 15 cannot be required to work during school hours (so a homeschooled child can still only work evenings and weekends). They are also limited to four hours on school days, seven hours on non-school days, and 20 hours in a week when school is in session for five days. These restrictions help ensure that employment doesn’t interfere with education and other responsibilities.
Paying Your Teen Is Different from Giving an Allowance
Money given for household chores isn’t necessarily treated the same as wages earned through a business. When teenagers do genuine work as employees, parents need to set appropriate compensation and keep employment records.
For the Scottsdale shop owner, putting their teenager on the payroll involves more than deciding how much to pay them. A sole proprietorship and a corporation can have different tax obligations when employing an owner’s child. Before issuing the first paycheck, the parent may want to confirm which taxes apply with a Scottsdale Accounting Firm.
Canadian business owners have their own tax considerations when employing their children. For example, a parent operating a sole proprietorship in British Columbia may be able to deduct wages paid to a child as a business expense. The Canada Revenue Agency (CRA) requires that the work be necessary to earn business income, that the child actually receive payment, and that the wages be reasonable for the child’s age and the work performed.
A parent cannot simply transfer money to their teenager and automatically claim it as a business expense. Paying a child a reasonable wage for genuine work, and keeping supporting records, helps establish that the arrangement is legitimate.
According to the US International Revenue Service (IRS), earnings made to children under the age of 18 who work in a parent’s sole proprietorship or a partnership in which every partner is the child’s parent are normally free from Social Security and Medicare taxes. Payments to children under the age of 21 are likewise free from the federal unemployment tax under these agreements.
Those exemptions, however, do not automatically apply to businesses, even when parents own the whole firm. You should also consider the federal income tax withholding rules.
Canadian payroll deductions work differently from the US system. For example, employees generally begin contributing to the Canada Pension Plan (CPP) at age 18, so a younger teenager will not have CPP deductions. Employment Insurance (EI) is more complicated when the employee is a family member. The CRA considers whether the parent and child are dealing with each other at arm’s length when deciding whether the employment is insurable. Income tax withholding and T4 reporting requirements may still apply.
Parents should check the CRA’s guidance on employing a family member before setting up payroll.
Keep Records of their Actual Work
Parents should document what their teenager does, how many hours they work, and how much they receive. These records help establish that payments represent genuine business expenses rather than ordinary family transfers.
A simple system might include:
- A written description of assigned responsibilities.
- Dates and hours worked, recorded in Google Sheets or Excel.
- An agreed pay rate and records of each payment.
- Required payroll forms and tax documents.
A spreadsheet can organize work hours, but it doesn’t replace required payroll reporting. Parents should also ensure wages comply with applicable employment rules and reflect services actually performed.
Parents should also remember that hiring a family member does not eliminate employer responsibilities. In BC, children must work under the direct supervision of someone who is at least 19 years old. Employers must also consider workplace safety requirements, including appropriate training and protection from hazards. Even if a teenager is working from a home office, parents should make sure they understand their responsibilities and know how to use any equipment safely.
Make their First Job a Learning Experience
Earning money is only one advantage of working in a family business. Teenagers may also learn how firms handle consumer orders, why they track spending, and what obligations come with the job.
Parents can use their child’s first paychecks to discuss saving and spending. These conversations complement broader efforts to teach kids everyday financial habits, especially as teenagers begin making more independent financial decisions.
For Canadian teenagers, earning their own money can also be an opportunity to learn about filing an income tax return, understanding a T4 slip, and setting aside money for future goals.
It is equally necessary to set boundaries. Being linked to an employer should not imply being accessible for employment at any time. Set regular working hours, give clear directions, and let your adolescent ask questions if something is unclear.
Their duties can increase as they gain experience, as long as the additional tasks are reasonable and lawful.
Hiring your teenager might be a sensible method to introduce them to the working world while also providing additional help to your business. Clear objectives, appropriate responsibilities, fair remuneration, and proper records help make the experience rewarding while preventing work demands from interfering with family life.
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