MINORITY BUSINESS REPORT I
Owning a family busi
ness is described by
some entrepreneurs
as the ultimate business experi
ence. They envision working side
by side on a daily basis with fam
ily members, building up the
business, and eventually turning
the business over to sons and
daughters, and future genera
tions of family members. If that
sounds like your dream, start by
letting your children work in the
business at an early age. The
experience will be invaluable.
They will receive guidance and
direction, as well as on-the-job
training that should take them
from basic business practices, all
the way through increasing levels
of responsibility. They will also
learn the purpose of the business,
and the philosophy of why the
business exists; and they will have
many opportunities to decide if
they share the family dream
strong enough to dedicate much
of their working life toward mak
ing the dream a reality.
Aside from the personal satis
faction of doing this, there are
practical advantages to owning a
family business.
Tax Benefits
Children under 14 can work
for their parents in the family
business, performing tasks such
as stuffing and addressing
envelopes, running errands for
the business, or delivering mail.
Under these conditions, the
child's salary is considered
earned income. The maximum
standard deduction for earned
income in 1997 is $4,150. This
means if your child is paid
$4,150, the standard deduction
will eliminate all taxes on his or
her income. Also, if the family
business is not incorporated, all
wages paid to children under the
age of 18 are not subject to
Social Security taxes; therefore,
parents (as owners of the busi
ness) are not required to pay the
employers portion of Social
Security taxes (FICA).
Insurance Benefits
Again, if the business is not
incorporated, children, spouse,
or any relative or next of kin
working in the business, may be
able to receive coverage under the
business's health insurance plan.
The business will receive a tax
deduction for the insurance pre
miums paid for them.
Children working in the fami
ly business can also make contri
butions to an Individual
Retirement Account (IRA). They
can contribute up to $2,000 of
their total earned income each
year. If you combine the IRA
deduction with the standard
deduction of $4,150, the child
could receive as much as $6,150
in annual gross income, and pay
no taxes.
Earned Income for children
can be a significant tax savings
for families. The IRS has a
"Kiddie Tax" that applies to chil
dren under age 14. This tax is
levied on any unearned income
children receive excess of
$ 1,300 each year. The rule applies
to income they received, but did
not earn working on a job, for
example, income from interest on
a savings account in their name,
dividends from stocks and bonds
in their name, or capital gains
resulting from profits made from
sale of property that listed them
as the owner. This income is
completely taxable to the child,
and will be taxed at the parent's
highest income tax rate.
Finally as a precautionary
measure, and to prevent the IRS
from challenging the validity of
wages paid to children in the
family business, 1) Write a job
description for the position the
child holds 2) Document a week
ly work schedule, and make sure
the child works his or her normal
working hours each week all year
long 3) Keep accurate, up-to-_
date, weekly time sheets and pay
roll records for them and 4) Make
the pay scale commensurate to
the work being done. The IRS
might take notice of $50 an hour
being paid for stuffing envelopes,
and could decide to call for an
audit investigation of your busi
ness that could be time consum
ing and very costly.
The family business concept is
Let's Get Down
to Business
fvlyn McMahon
It's a Family Affair ]
popular once again; however, not
all entrepreneurs share the desire
to own one.
This group tells me it's imper
ative to separate family from
business to maintain balance,
and a clear perspective on both.
It really is a family affair that can
only be decided within the family.
The Micro-Enterprise Loan
Program can assist you with
small business loans, business
education, and technical exper
tise.
?
Call 722-9600 for an appoint
ment, and take advantage of the
many services available to help
small business owners in Forsyth
County.
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You Are Invited to Attend
The 6th ANNUAL COMMUNICATIONS CONFERENCE
Sponsored by: Triad Black Media Professionals
Co-Sponsored by: NCA&T Network '90 Communications Group
September 19-20, 1997
North Carolina A&T State University
Greensboro, North Carolina
Susan Kidd, Wile-TV, Washington, DC
(Formerly of WFMY-TV)
Keynote Speaker
rnm? ii??imn "Featured guest panelists**
9:00 am - 9:30 pm 8:00 am - 1 km pm
corbett sports center Greg Lewis, San Francisco Examiner student umon
Job Fair Bonnie Stanley, Richmond Times-Dispatch Proiaaaionai medta worfcaitope
Student Workshop* Bvron Pitts CBS Nnw<t UnderetanrSng the media
Interviewing Up* * Byron Pitts, CBb News Covering race In Mm media
'Reception with live music Door Prizes to be awarded UmdMOn
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AMOUNT ENCLOSED Q^boro, NC 27402
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