Money Matters

As reported on Business Wire: :.--(BUSINESS WIRE)---"California is one of the few states that require paid tax preparers to be licensed or registered. Each professional has varying levels of skills and not all of them necessarily deal with preparing tax returns."

If you have a family-owned business, chances are you have likely hired (or are planning to hire) an easily accessible hiring pool: members of your own family. Doing so has its pros and cons; only you know if employing those closest to you will be advantageous to your business. While we cannot tell you whether you should hire your family, we can advise you on how you need to treat them with respect to wages and specifically payroll taxes.

One of the advantages of hiring family members is the exclusion of some payroll taxes on their wages. Depending on what type of business you have (corporation, partnership, or sole proprietorship) and depending on which family member you employ (child, parent, or spouse), you may not need to pay:

• Federal Unemployment taxes (FUTA)
• Social Security and Medicare taxes (FICA)
• State Unemployment Insurance (UI), Employment Training Tax (ETT), and State Disability Insurance (SDI)

The rules for each of these taxes varies, so we advise you to contact your tax preparer to ensure you are paying your family employees correctly and to ensure you are reporting wages and taxes correctly. You can then make a well thought-out decision as to whether these tax breaks will be worthwhile to you and to your family./p>