- The advantages and risks of hiring family members to work in your startup
- For those starting a business and wanting to save time and effort to find job candidates
- Suggestions for creating a good work relationship with your family members
When you’re launching a business, it’s natural for a sibling, child, or other family member to want to pitch in. For some small business owners, it is a rewarding experience; for others, it can cause irreparable damage.
Carefully weigh the pros and cons of bringing on relatives when considering hires. And if you do decide to hire a family, make sure that you do so in a way that clearly establishes your expectations.
Advantages
Any hire comes with some risk, as an employee who seems suitable for the job might not work out after they begin their duties. When hiring a family member, you’ll be more familiar with their skills, work ethic, and other qualities.
Hiring family members comes with certain tax advantages. For example, children under the age of 18 are not subject to Medicare or Social Security taxes if working for a sole proprietorship or partnership owned by their parents. Consulting with an accountant can help you identify all of the tax advantages involved in hiring a family member.
Family members may also have more interest in your business, or more motivated due to their desire to see you succeed. Hiring your children can help them develop pride in the company, and potentially prepare them to take over the business later on.
Disadvantages
While familiarity with family members can be an advantage, it can also create problems. A family member may believe they’ll have special privileges or be held to lower standards. Conversely, tension may arise if you believe that a family member should work longer hours or accept less pay.
A family member on the payroll can potentially cause difficulties with other workers. If you have a more casual management style with your relative, it can lead to authority issues if the rest of your staff believes they should have the same relationship. Other employees may also believe you are giving preferential treatment to a family member, especially if they are granted a promotion or other perks.
With immediate family members, there is the potential for the work-life balance to be eroded. Private issues can bleed over into the workplace, creating awkward situations for the entire workforce.
Family relationships can also suffer if your relative does not live up to expectations. Disciplinary action, up to and including termination, can easily lead to acrimony between family members.
Tips for hiring a family member
The best way to hire a family member is to treat them like any other employee. This includes only hiring them if they have the skills and experience for the job, establishing an employee agreement to set clear expectations, and conducting performance reviews. You can also consider hiring a relative on a trial basis to make sure they’re a good fit.
Family members are also subject to the same employment laws as any other hire. You’ll need to withhold applicable taxes and provide any applicable benefits. Make sure you follow all necessary regulations for hiring your children, including the minimum working age of 14 and older ages for certain tasks.
