Starting a business means that for a while, you are wearing many MANY hats and doing everything to keep the business open. This looks like being the CEO, CFO, COO, marketing guru, administrative assistant and the sales arm of the company.
You cannot afford to hire someone yet to do this work, so many businesses turn to finding an intern to help out. This is a great idea but just make sure that you’re doing it correctly. Many of us grew up being interns and working for free in order to gain real world experience during high school and college. Since our days, there have been some restrictions on this type of work. In order to “hire” an intern without having to pay them, you now have a couple of options.
Work through a university or community college to see if they have any students looking for CREDIT in a course. Many business schools use real businesses and provide marketing plans, business plans, social media plans etc. Law schools also have legal fairs that will provide startup business workshops. A few of the potential services include operating agreements (for LLCs), sales contracts or review of legal documents. Visit one of our partner schools for more information:
- Ohio University – Career and Leadership Development Center
- Ohio University Southern
- Ohio University Eastern
- Zane State
- Marietta College
- Shawnee State University
- Hocking College
- Washington State Community College
A perk of owning your business is that you can hire your child to perform services for you. And if you pay them up to their allowed standard deduction (which was $6,300 in 2016), they would pay $0 in taxes. Anything over that amount would be minimally taxed assuming they didn’t have any other jobs. And if your child is under 18, you would not have to withhold and pay FICA tax (Social Security and Medicare, which is about 15.3%).
The catch is that you have to have a standard job description for your child and they actually have to perform the work. Failure to do this could cause the IRS to audit you and take away this standard deduction; as well as fine you.
Their compensation also gets to be reasonable. They are paid the industry standard wage for that work. So, no $100 an hour for answering calls. And they get paid as an employee would; direct deposit or physical check, with a W2 given to them at the end of the tax year.
Of course, reach out to your tax professional to make sure this is set up correctly and to find out what the standard deduction will be for this year. You are already giving your child money anyway, this way, they can earn it themselves, support you in your business and also allow you to deduct it as a business expense.
So get an intern to get your business moving in the right direction until you can afford to hire a “professional.” Although you never know, that intern could end up being your first official employee in the future.
About LIGHTS: Ohio University’s Innovation Center founded the LIGHTS (Leveraging Innovation Gateways and Hubs Toward Sustainability) program in 2016. LIGHTS’ Innovation Network catalyzes the creation of companies to create high-wage jobs, and attract greater private investment in the coal-impacted regions of Ohio, West Virginia, and Kentucky. The Appalachian Regional Commission generously f
unded the program because of its unique way of matching complex problems and opportunities facing corporations, communities, and individuals to a network of two strategically-placed Innovation Hubs and seven Gateways. New marketable products arise from these problems. The Gateways and Hubs are new business incubators and makerspaces serving a 28-county area.