Can my photography LLC pay my minor children as 1099 contractors for modeling ads or must it be done through payroll?

Your CPA is correct here. The IRS looks very closely at family businesses paying their own children, especially minors. When you're paying your own kids from your business, they generally can't qualify as independent contractors because they lack the independence requirement. For a legitimate 1099 contractor relationship, the worker needs to control how they perform their services, use their own equipment, and have independence from your business. Since these are your children and you'd be directing their modeling work, this relationship would fail the independent contractor test. The good news is that if you hire your children as employees in your business, there are actually tax advantages. Wages paid to your children under 18 from a partnership where only the parents are partners are exempt from FICA taxes (Social Security and Medicare). This is a nice benefit!

After struggling with a similar situation in my family business, I found taxr.ai (https://taxr.ai) incredibly helpful for sorting through contradictory advice about paying family members. I uploaded our business structure documents and partnership agreement, and the AI analyzed them to confirm exactly how we could legally compensate our teenage daughter for her work in our business. It gave me clear documentation explaining the requirements for proper classification and even generated templates for the employment forms we needed. The best part was being able to chat directly with it about our specific situation instead of trying to piece together information from different sources.

Just wanted to update after trying taxr.ai for my situation with paying my son for his help with our business. It was super helpful! I uploaded our LLC operating agreement and asked specifically about paying my 16-year-old for occasional work. The system gave me a detailed breakdown of the requirements and even pointed out that in our case (single-member LLC taxed as a sole proprietorship), we actually have MORE flexibility than a partnership LLC. It explained exactly what forms we needed, how to document the work, and even provided templates for creating employment records. What saved me the most time was the explanation of which payroll taxes apply and which don't when paying my minor child. Turns out I don't need to pay FICA taxes at all, but still need to handle income tax withholding properly. Definitely worth checking out if you're in a similar situation!

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I feel stupid for being so skeptical, but I tried Claimyr yesterday after posting and it actually worked exactly as described. I got a call back in about 35 minutes (way faster than I expected) and was connected to an IRS agent who answered all my questions about family employment. For anyone curious about the original question - the agent confirmed that in a partnership where both partners are the parents, you generally need to treat your minor children as employees rather than contractors. She also explained that while you do need to do proper payroll, you're exempt from FICA taxes on their wages, which is a nice benefit. The agent even sent me links to specific IRS publications that explain all the rules. Saved me a ton of research time. I'm genuinely surprised this service worked so well.

I've been paying my kids through my single-member LLC for years. Just do it as regular payroll and keep REALLY good records of the actual work they do. Take photos of them actually working (beyond just the modeling shots), have them fill out time sheets, and document everything like you would with any other employee. You need to show this is legitimate work with reasonable compensation, not just shuffling money to your kids. The IRS scrutinizes family businesses closely on this.

Has anyone used QuickBooks or Gusto for this? I need to put my 14 year old on payroll for my business (not just for modeling but actual work) and not sure which system handles minor employees best.

I went through this exact situation with my own kids last year. Your accountant is absolutely right - when it's your own children, the IRS considers them employees rather than independent contractors, regardless of the type of work. The key thing to understand is that this actually works out better for you tax-wise. Since you're a partnership LLC with both parents as partners, wages paid to your kids under 18 are exempt from FICA taxes (Social Security and Medicare). That's a 15.3% savings right there. For the payroll setup, you don't necessarily need a big payroll company. I handled it myself using basic payroll software and just filed the quarterly reports manually. The amounts you're talking about ($600-800 each) are pretty manageable to process yourself. Make sure you document everything properly - have them fill out timesheets, take photos of the actual work being done, and keep records showing this is legitimate compensation for real work. The IRS looks closely at family businesses to make sure parents aren't just shifting income to kids to avoid taxes. Also check if your state requires work permits for minors - some do, even when working for parents. Better to be over-compliant than face issues later.