Start A Business To Save On Taxes And Help Take Care Of Your Family

Do you daydream about being your own boss? It's not easy to start a business that's successful quickly. But, if you're great at what you do, there are many benefits of entrepreneurship.

If you start a business, you can use it to save on taxes and help take care of your family. When you decide to start a business, however, is totally up to you. You might be a young buck, a middle aged parent, or a retiree looking to shake things up.

Start A Business In Retirement

They say that retirement ruins people who don't know how to keep busy. After spending most of our adult lives working, to suddenly stop doing what we're so familiar doing feels odd. There were plenty moments of loneliness and doubt the first year after I left Corporate America.

For many years I feared retirement spoiling my parent's lives as well. Everybody needs to have a sense of purpose, and I couldn't really tell whether my parents found new purpose in retirement.

They no longer had to take care of their adult children, nor were they keeping physically or socially busy as they once were. Perhaps I was simply imprinting my own fears onto them.

Keeping Busy In Retirement

I think about my parents often because they live a five-hour flight away. If they hurt themselves, I can't just drive over in a jiffy to help them out. I wonder what they're up to all the time. I hope they're keeping happy and busy.

In addition, I also look to my parents to see what my future might be like. I often wonder at what age I'll stop playing tennis because my knees hurt too bad. I wonder when I'll accidentally fall down a set of stairs and break my collarbone. I'm also beginning to wonder more about my mortality.

Related: What Are The Benefits Of Life Insurance?

To help keep in touch with my parents, I started Financial Samurai in 2009 so that they could check in whenever they wanted to see what I was thinking.

Over the years, I realized that not only could this website be a third form of communication, Financial Samurai could also become a business that could be used to help keep my father engaged. Let me explain.

Start A Business

Making the decision to start a business is full of emotions. Excitement, uncertainty, fear, happiness, exhaustion, etc. Ultimately, there is nothing as fulfilling as creating a successful company with your own hands.

There are a lot of important decisions you have to make as a business owner. For example, when you own a business, you have to decide how to allocate expenses.

I would much rather expend money on a family member than on a stranger. There's nobody I trust more than my parents and spouse. Surely you feel the same way. Things can go wrong with family, but family will always be #1.

All retirees inevitability lose some sense of purpose once they no longer have a job. I know because I've interacted with thousands of retirees over the past seven years, and I've chronicled my own feelings through countless posts since retiring in 2012.

I do not believe people want a handout. Instead, people want to feel useful, whether it's teaching a child right from wrong, to doing something as simple as maintaining a lovely garden. People want to earn their worth. I believe losing a sense of purpose is the main reason why some studies show that some early retirees tend to die sooner.

So I thought to myself, what better way to stay connected with family and provide them greater purpose in retirement than hire my father as a contractor?

Not only could I stay more connected with my faraway parents, I'd also provide him and my mother an additional income stream while reducing my taxable income as well!

Dad The Editor

Start A Business To Save On Taxes And Take Care Of Family

If I want to get technical, I'm in the business of producing content. Articles are my product that can be infinitely consumed thanks to the internet.

Given a high quality product is the most important aspect for growing a business, I should therefore spend as much time and money delivering a quality product if I want to grow.

Related: Why You Need To Start Your Website Today

I've always been jealous of journalists who get to leverage huge brand names like The Wall Street Journal, Yahoo, and Forbes to garner a lot of readership. All they've got to do is fill the seat, and BAM, they'll get millions of readers just like that.

Meanwhile, here I am trying to build the Financial Samurai brand from the ground up as the marketer, writer, CFO, CEO, designer, and technical support.

I believe in my own skills. And I do believe there is a huge market for consuming financial articles written by a finance veteran as opposed to a journalist or freelance writer with less experience. That said, it's damn hard work making your vision come true from nothing.

Keeping It In The Family

Given the challenge I face to consistently produce good content, I thought why not hire my dad? Here are some of his qualifications.

  • He has over 30 years of experience writing extensive documents to foreign dignitaries as an American diplomat,
  • A deep understanding of the government,
  • 40 years of experience investing in the stock market,
  • A very keen attention to details,
  • And is the man who first introduced me to investing as a high school freshman.

Such a decorated person would surely cost over $100,000 to be my editor!

So, after discussing the editor role after eating some Korean BBQ with my father, he decided to come aboard for a good price. Beforehand, my father had been running a small international consulting business as a side hobby. Now I'm his business's main client.

For the past several years, my father has edited over 60% of my posts on Financial Samurai. He's also acted as a sounding board for some of my wackier posts to make sure I'm not missing something obvious.

Through this process, we've stayed in touch, grown closer with extensive discussions on the topics I write about, and discussed touchy subject matters such as inheritance and estate planning.

Start A Business To Pass On To Your Kids

Now that I'm a father of two kids, there's nothing I want more than to pass my business down to my kids when they're grown. I plan on teaching them everything there is to know about running a website if they're willing to learn.

It's super competitive in the job market these days and it would be my honor to hire my children. If they want to branch off and do something on their own, I'll show my support. And if they want to work with me, my wife and I will jump for joy.

They are already involved in simple ways like modeling, providing post ideas, and adding sound bites to the Financial Samurai podcast. I plan on getting them more and more involved each year in new capacities.

Tax And Income Implications When You Start A Business

Everybody should start a business of their own because there's so much more flexibility with your finances when you are the CEO. As an employee, you have to take and like what's given to you. If not, you improve your resume and find a new job.

By the way, if your business is a pass-through entity, be sure to read up on the PTE tax Salt Cap Workaround. Take any chance you can get to save on taxes!

Now let me illustrate from a financial perspective how hiring someone you care about can optimize your finances:

Case study #1

Your mother runs a retail business that is having a rough year. Her business is likely going to lose $30,000 from + $70,000 the year before. Your S-Corp is having a banner year and your marginal federal tax rate is 39.6% as a result ($415,000+ operating profits).

Solution: Hire your mother as a contractor and pay her at least $30,000. You save ~$12,000 in federal income taxes ($30,000 X 39.6%), while your mother gets to earn $30,000 tax free because she has $30,000 in losses.

You can fine tune the results by waiting until the last week of the year to pay her, presuming she doesn't need the money to survive before then.

Case study #2

Your retired father has his own part-time consulting business that brings in $10,000 a year. He also has a $40,000 a year pension after 20 years serving in the army.

With a combined income of $50,000, he's in the 15% marginal federal income tax bracket and has an effective federal income tax rate of about 12% since he is married.

Given your business earns $250,000 a year pre-tax, you're in the 33% marginal federal income tax bracket, and pay an effective tax rate of roughly 26%.

Solution: Pay your dad up to $25,300 (his $50,000 current income + $25,300 from you = $75,300 is the income threshold where the marginal tax rate for married joint filers jumps to 25%), which will reduce the tax payable by $4,554 ($25,300 X (33% tax – 15% tax).

You can pay your dad and mom up to around $180,000 until the tax benefits dissipate. It's up to them to figure out their deductions.

Case study #3

Your sister just got out of a divorce and has been out of the workforce for 13 years as a stay at home mom to her two daughters. Although she's receiving alimony to live now, the alimony runs out in five years.

With no mortgage-free property to live in, your sister needs to figure out a way to make money on her own now so that in five years, she'll be completely independent.

Worst case, she can get a minimum wage job or hustle through the gig economy. But she wants to see if she can make it as an artist first. She's got some wins, but they've only amounted to about $10,000 after a year, and she needs to make at least $70,000 a year to support her family as a single mother.

You fear that your sister won't be able to make it in five years, but you also don't want to just give her money since she already has alimony. It takes financial suffering in order to create tremendous financial hustle.

Solution: Hire her as a freelance artist by commissioning several paintings for your office or website. Since she is living comfortably now with her alimony, the goal is not to pay her a lot of money.

Instead, help her go through the motions of working with customers, highlighting her work to potentially other buyers, and get her comfortable with business negotiations.

By the time her alimony runs out, she'll have five good years of experience producing quality work for more customers. This is when you can really start to pay her if needed as her tax bracket will be lower.

Case study #4

Your single mother-in-law just retired from her university administration job that paid her ~$38,000 a year. Her university pension pays $1,800 a month, which is unfortunately not enough to live a comfortable retirement life because she still has a lot of mortgage debt from doing a cash out refinance years ago.

She also has $25,000 in revolving credit card debt at 11% thanks to a couple major dental surgeries. She's never been great with her finances because nobody ever sat down to talk her through everything.

At the same time, she is too proud to ask for any financial assistance, and also a little embarrassed to talk her financial problems with you.

Solution: The most important thing to do is sit down with your mother-in-law and tally up her net worth, expenses, and income. Make her financial picture as clear as possible. Instead of giving her money, create a job that she will enjoy doing for you, that will also pay her enough to cover her expense gap.

A job can be as simple as cataloguing your baby pictures to be used in a product launch one day. She could help clean and organize your office every week.

Or she can simply act as a strategic consultant, which is a catch all. The bottom line is for you to make her feel useful, while helping solve her financial problems. Once again, since she is in the 15% marginal tax bracket and you are in a much higher tax bracket, you end up saving a lot on taxes by hiring her.

Eyeball this latest federal income tax bracket chart to get a good idea of what you're shooting for.

2023 federal income tax brackets for singles, married
2023 Federal Income Tax Rates

Hiring Family When You Start A Business

The only way this process will work is if you truly love and trust the people you hire. It's important to remind yourself that it's much better to pay people you love, than pay people you don't love, or pay the government more taxes rather. The money paid out must be viewed as all part of the family.

Hiring your loved ones to do valuable work is an honor. It's sometimes very difficult for our parents to share with their adult children their finances, especially if they have financial problems. A child isn't supposed to die before their parents. Just like how parents aren't supposed to be worse off than their children.

If you can build deeper relationships with your parents, while giving them a greater sense of purpose in retirement, and provide an extra stream of income, I am absolutely sure they will appreciate it.

It makes perfect sense to utilize people with 20+ more years of experience than you to help your business grow. And as a society, we should be doing more to mobilize the wisest generation!

Finally, you must discover how much annual income is enough for you. Once you've found the annual income that makes you happy, consider allocating any income above that threshold to helping your parents and loved ones. Family first, and then charities.

I hope this article explains how you can achieve at least a trifecta of goodness when you start a business

  1. Better relationships
  2. More income for those you care about
  3. And less taxes.

Who knows, you might even be able to create more happiness and longer lives as well!

Start A Business Online

I decided to start a business in 2009 and launched Financial Samurai. Now, my online income is consistently greater than the income I made as an Executive Director at a major financial firm.

If you want to start a business, an online business is the cheapest and easiest route to take. You can leverage your platform to not only sell your products and great products other people have created, you can also brand yourself to find lucrative consulting gigs as well. 

If you enjoy writing, creating, connecting with people online, and your freedom, see how you can set up a WordPress blog in 15 minutes with Bluehost.

An online business is the best because it's cheap to start and maintain, and has a 3 billion person potential demand curve. You never know where the journey will take you! Here's my step-by-step tutorial guide on how to set up your own site. 

Blogging For A Living Income Example: $300,000+
Here's a real example of how much you can make blogging from a blogging friend.

Get The Best Rewards When You Start A Business

If you're going to have a business, it's important to have one of the best business rewards credit card. The benefits are so good it's foolish not to have one. A business credit card helps you separate all your business expenses from personal.

Business credit cards also provide buyer protection and give you a healthy amount of rewards.

Many small business cards have no annual fee and come with cash back rewards on everything you purchase. Plus, you can get a great sign on cash bonus.

Check out the benefits of credit cards for small businesses today.

For further suggestions on saving money and growing wealth, check out my Top Financial Products page.

In addition, if you enjoyed this article and want to get more personal finance insights and tips, please sign up for the free Financial Samurai newsletter. You’ll get access to exclusive content only available to subscribers.

53 thoughts on “Start A Business To Save On Taxes And Help Take Care Of Your Family”

  1. Hi Sam,
    I like your articles ,so I read them often. I’m a college student and I starting late with the savings plan etc., I saw your link about franchising ,but I can’t seem to find it. Also I like the fact that your here to help. Would you purchase a home first or start a franchise first after college? Are you still meeting people to consult one on one ?

  2. Hi Sam,
    I like your articles ,so I follow them by trying to decipher the stock portions. I’m starting late in terms of saving.,ect. I’m a college student. I plan to max out my 401k once I start working on a permanent basis. I saw your link about franchising at 100k and I can’t find it. Does it makes sense to get a franchise first or purchase a home first ?


  3. I think it’s usually the DOL or the State Unemployment office that will come knocking on your door if you hire people who should be classified as employees but you are paying them as contractors. There are guidelines to follow based on federal and state laws! Many independent contractors are shocked when they file their taxes and discover they have a huge tax bill because their employer was not deducting and paying payroll taxes. And they can file a form with the IRS to notify the IRS that they believe they should have been an employee and not a contractor. Then I could see the IRS knocking on your door. By the way, I have read that the IRS does allow a parent to hire a minor child as an employee and not pay payroll taxes. I have never seen it, but I’ve read it more than once.

  4. If all your “staffs” get paid in 1099, be prepared for IRS come knocking at your door.

    I am not kidding. All my staffs were 1099, with a twist, same amount every month. One day IRS literally was at my office to check my pay stubs. I explained to the IRS over and over they were all “contractor”.

    IRS wanted the payroll tax!

    About your spreading revenue around, with whom is always the question. The key is always do business with trustworthy people, family, friends or strangers.

    1. Good to know! How many 1099s were you sending out? Did you not have ANY FT employees? You were a FT employee who paid payroll tax right?

      The people receiving 1099s will be paying payroll tax on their end, so the IRS gets there money, unless you were employing shady contractors!

      1. 15. No FT at all. Im FT sort of. During the year I take money out as shareholder draws. Not until the company closes its book do the company “actually” decide if they are salary or dividends. If it is counted as salary, payroll tax remittance is submitted. Some years I chose to take the amount as dividends.

  5. MedSchool Financial

    Experience goes a long way as well, and the experience I am referring to is that throughout your life you have been negotiating and making plans or non-formal contracts with loved one whether getting help with groceries as a college student, or a sibling borrowing 10 dollars to go watch a movie, these are just examples but the point being that in these exchanges we slowly learn about those loved ones and how you would interact in business. If you have friction in noncommittal agreements you should know by the time you are an adult who and what family members you would trust with your business and which ones it’s best to just never mix the two. I think it great that this business has been another thread you could share with your parents over the years, which is definitely something to be grateful for.

  6. Budget Nerd

    I love the idea of starting a business, but as a full time federal employee (60+ hours a week) making a pretty decent amount already, I have a hard time seeing all of the advantages. The most I can do is write in the blog every now and then and ask my wife to guest post sometimes.

    My wife runs a piano studio out of our home. Next year when our daughter turns 3, we’ll hire her as our “worker” so as to pay her for administrative tasks (cleaning, putting books away, etc.). My goal is to allow her to earn her “allowance”, and give me the opportunity to open up and max out her Roth IRA.

  7. Very cool that you are and your dad are working together:) I am helping family out with my business but mainly helping them manage their money and growing it. Does that count? As for hiring family out, I have occasionally on odd jobs and it turned out ok.

  8. I can’t say that my blog is profitable enough for me to start hiring family members, but if there’s one thing that I can relate to, it’s the hardship of being part of the financial industry and growing a blog from scratch while journalists who’ve never sold a financial product to a customer in their lives get millions of readers because their work appears in the Wall Street Journal. But there’s also the pride of seeing increased readership and interactivity as your blog grows. Angry Retail Banker just hit 2,500 monthly views in January and I’m very proud of that. It’s a pride that you don’t get when you succeed in your day job. Selling other people’s products isn’t the same as creating your own brand and image from scratch.

    ARB–Angry Retail Banker

    1. MedSchool Financial

      That is awesome ARB, another aspect about growing readership that I have found to be fascinating is the global readership, even if its one or two people from the other side of the world. It’s a wonderful and hope that you are helping make a positive difference in their day or life through your efforts.

  9. Early Retirement Actuary

    Is it odd that I was touched by the image of the Financial Samurai and his dad hashing out blog posts together? In this day and age, it’s amazing to see a father who is still looking out for his son some 40 years later. Keep up the good work you two!


    p.s. I would take the job for $99,000…just saying :)

  10. Very interesting concepts. I gave my notice of early retirement this week and am looking forward to life outside of the corporate world. I too, started a LLC and will use it for some consulting projects and maybe real estate investing. Your ideas about how to help family AND save on taxes are very illuminating!

    1. Congrats! Looking forward to hearing how it went down. Any severance or golden parachute or pension?

      Good job starting your own company. You will be amazed at how much flexibility you have with your financials now once the money starts rolling in.

  11. This article really hit home for me. My wife and I are starting two businesses this year, both as side hustle. One fir her as a real estate agent and one for a rental property business. My mother has not worked for quite a long time and my father is approaching retirement age and I can tell he’s getting concerned about what’s next. He’s been asking me about passive income streams and other types of jobs he could be involved in (teaching science or writing a blog for example).

    I’m considering having my dad manage rental property fix up projects. He’s very handy, fixing up the first house my parents lived in ($9,000 property) and then fixing up the foreclosure property that is their long term home. It’s a tough conversation to have with him though. Similarly I’ve been considering asking my mom to manage and file our taxes (inactive CPA) but I’m hesitant togive this up because I like doing this myself. I’m very close to my parents, seeing them at least once a week for dinner with my wife (split check) and purposely staying near them as I feel I need to be here for them (only child). I’m hoping I can help give them purple this way as they get older.

    Also, want to note that this article is nice to read after the last two articles. As a millennial who stays close to his parents because he wants to be there with them as family the last two articles were upsetting for me to read when thinking about other’s my age.

    1. Jon,

      Can you elaborate why the last two articles were upsetting to you? It’s a reality there are a lot of adult children who’ve received help from their parents, and I think it was interesting to try and explain why there seems to be a perception that non-Financial Samurai Millennials don’t seem to care so much about money due to their expected inheritances.

      Glad you’ve found a plan to work with their parents in their retirement years!


      1. Sam,

        Sure. It was upsetting to me because I believe (somewhat naively, I know) that wealth and financial freedom should be tied to personal effort and delayed gratification and seeing examples of those from my generation manipulating feelings of those that care about them to achieve the same goal bothers me. I understand why they do it, just philisophically it brothers me.

        I spend a lot of time with my parents and help them in any way I can as they get older because I want to have a close relationship with them and in some way thank them for the support, financial and otherwise they have always given me. This is really important to me and hearing of others doing similar things but with the goal of extorting money from their parents bothers me.

        If either of us really needed it (medical reasons for example) our parents would do anything to help us but manipulating your parents so you can spend $300,000+ on vacations and retire in 15 years (per statistics from the last two articles) is just wrong in my opinion. If you want those things you should work for them yourself.

  12. They cant be on the regular payroll its why irs called freelance, they get paid in 1099 s. So the business doesnt have to pay any extra to the employee. Or if you write the check to snother corp, thats just an expense.

  13. I like the creativity of your examples above Sam.

    When I owned my IT business I hired my cousin straight out of University and he eventually became a minority partner after several years. There were definitely some great advantages to this and I always knew exactly where his loyalty was.

    However, there were always issues of nepotism (real or perceived) from the other employees no matter how much I tried to make things equal. (In some cases I think I was harder on him than other employees.) Ultimately though, for family partnerships to work, you need to be on the same page with them – which of course requires continuous communication.

    Family partnerships could also work as well in a more passive business, like a real estate partnership.

  14. Sam, great article about ways to reduce your taxes. It’s interesting that everyone is commenting on the “family” aspect but I’d rather focus on the tax planning side.

    The key to reducing taxes is to shift income from a high tax bracket person to a lower tax bracket person. I feel that too many people and online articles focus on some obscure tax deductions, when in reality, the shifting of income gets you the biggest deduction.

    I just want to point that you (the employer) also pay about 8%+ in payroll taxes which is an extra expense that needs to be factored in to your decision to move money from yourself to a family member. The math isn’t as straightforward as 33% tax bracket – 15% tax bracket = $4,554 savings (case study #2).


    1. Hi Brian,

      Thanks for the support on my idea to transfer income to lower tax brackets.

      Are you sure about me, the company, paying the employer portion of the FICA tax to contractors? I know the employer pays both sides of FICA to EMPLOYEES, but he contractor and his business pays both sides themselves.

      Please clarify as I’d love to have the best info possible for this post.


      1. Hi Sam,
        If you’re paying an independent contractor then there’s no FICA tax to you. However, the independent contractor would pay the self-employment tax on his tax return. I was assuming your dad was an employee and not a contractor.

        To accurately describe what happens when one party pays another, the answer depends on the type of business entity that’s paying and receiving payment.

        Here’s a comparison chart:
        Background: Sam’s dad is married and receives $40K pension and $10K consulting (sole proprietor). That means he pays $3,379 of federal income tax plus $1,412 self-employment tax for a total of $4,791.

        Sam is married and his S-corp makes $250K in net income. Sam’s corp pays $0 tax. Sam pays $51,284 of federal income tax.

        Scenario 1:
        Sam pays his dad $25,300. Sam’s new net income is $224,700. Sam pays $44,200 of federal income tax. His tax DECREASES by $7,084.

        Sam’s dad is a sole proprietor (Single member LLC, independent contractor, schedule C filer are taxed the same way). The additional $25,300 of income means he pays $6,911 of federal income tax plus $4,988 self-employment tax for a total of $11,899. His tax INCREASES by $7,108.

        Overall, taxes INCREASED by $24.

        1. What happened to Scenario 2?

          This is incredible that based on your calculations, my dad would have to pay a 19.7% self-employment tax on $25,300 of income ($4,988/$25,300). Can you elaborate where you get this?

          Paying $3,532 more in Federal income tax (for a total of $6,911) on $25,300 in extra income from me makes sense as that’s a 14% Federal income tax rate, but my dad now paying 20% extra in self-employment tax sounds EGREGIOUS. Did you forget to subtract a figure by any chance?

          It’s important I/we understand this concept fully. For S-Corp, you don’t pay any FICA tax on distributions. Thanks!

          1. Sorry, I had a little bit of time between client meetings so I stopped at Scenario 1.

            The self employment tax of $4,988 is for $35,300 of self-employment income. I’m assuming $10,000 for side biz + $25,300 for consulting for Sam. (I’m getting these numbers from your article’s scenario #2.)

            You’re correct in that you (shareholder) don’t pay FICA taxes on distributions from his S-corp. My calculation for your (Sam) taxes only included federal income tax but not FICA.

            If you’d like, I can email you a PDF of the mock 1040 tax returns so that you can see exactly what it looks like.

          2. Consultants have to pay both portions of FICA (7.65% * 2) which will usually make their effective tax rate significantly higher than stated.

            So if you pay your dad $10k for example on a consulting gig at 15% marginal federal tax, he’ll pay 1,500 in federal, plus 1,530 in FICA or over 30% total. IF your dad is already over 118.5k in income though he’d only pay both portions of Medicare which is 1.45% * 2 in his case as SS is capped at 118.5k this year, although his margin fed tax rate would be 25+% at that point, though.

            1. Thanks Rob. You are exactly right. Good incentive for people to try and make over $118,500, but under $250,000 adjusted, my ideal income for max happiness.

              Another scenario. Let’s say my dad had $10,000 in losses, and I paid him $10,000 in consulting income for a pre-tax profit of $0. Still have to pay the 7.65% X 2 on the $10,000? But hopefully, that is the total income tax expense. How does my dad, in this example, end up paying $0 tax then?

      2. Scenario 2:
        Same scenario for Sam. However, his dad is an employee of Sam’s S-corp and receives a $25,300 salary.

        Sam’s company pays:
        6.2% social security
        1.45% medicare
        0.9% SDI (state disability insurance)
        3.4% UI (unemployment insurance)
        0.1% on first $7,000 ETT (employment training tax)
        ~1% worker’s compensation (for a very safe occupation)
        = 13% or $3,289 in payroll taxes

        Sam’s company’s new net income is $250,000 – $25,300 salary – $3,289 taxes for a total of $221,411. His personal federal income tax is $43,279. Between’s Sam’s company payroll tax and his personal taxes the total is $46,568. His tax DECREASES by $4,716 compared to the default scenario.

        Sam’s dad pays $1,935 of FICA tax, $707 of self-employment tax, $7,174 of federal income tax. His tax INCREASES by $2,383.

        Overall, taxes DECREASED by $2,333.

  15. I like the idea, but I don’t know if a lot of people can do this. My parents are not making any money and I could hire them. However, they don’t have the skills needed for my business. Not sure what they can really do. My younger relatives and friends all have income already.
    Good stuff.

  16. We started a family LLC about 1.5 years ago, the plan is to start flipping houses and eventually start renting them out. My dad is very handy and I hope we can get this moving so he can eventually retire from his day job and just putz around investment properties as he pleases.

    Each month we all contribute money until we have enough for a down payment on our first property (we are currently looking)

    I have a younger sister in college and a brother in high school still – hope they learn some lessons that I missed out on at that age.

    1. Sounds like a good idea! Might be kinda stressful though, as remodeling is always stressful.

      There should be some good housing opportunities over the next two years as the market falls apart!

      1. So you are thinking in that direction about the market, we are too. Wonder what will happen to our 401k
        It will be interesting.
        Thanks always for your good articles!

  17. My wife has been my editor for years (starting back when I did freelance writing for women’s magazines.)

    She doesn’t know much about personal finance, but she can edit up a storm.

    It’s lead to some very interesting “discussions” over my/our work, as you might imagine, but we’re still married. :)

    1. Good stuff! It’s funny how some people can edit very well, but they can’t or aren’t willing to write! Perhaps it takes a different type of person to write and press publish?

      If you hire someone not on your same income tax return, even better!

  18. Your father was an American diplomat? That’s so cool! I bet you have some great stories growing up around that job.

    Mixing family and business can end poorly, but the way you describe it makes a lot of sense, as long as the people involved are trustworthy and understanding.

    1. Yes, my parents were US diplomats. It was fantastic to live overseas for 13 years and see the world. I gained a lot more perspective.

      It’s important for people to have OPEN dialogues with their parents and siblings about money. Don’t let pride get in their way if you have the financial ability to HELP them. A big focus on this site is figuring out how to better help others while also improving our finances.

      There’s no point being lucky, wealthy, or on the right path if we can’t help other people along the way.

  19. This is certainly an interesting and different way at looking at things. I’ve seen cases where family business turn people against each other, and I’ve seen the opposite where it brings them closer. It’s great that you have such a great relationship with your father and it sounds like you continue to improve that relationship.

  20. I think this is a great idea. To address the concerns that mixing family and business can lead to disaster, well so can hiring the wrong employee. Hiring decisions are not guaranteed to end up well but I feel like with proper boundaries, checks and balances (like metrics), you can do fine. Also, if you have a family member that you know to be hard-working and not entitled, I see no harm in offering them a job that they qualify for. Less money paid in taxes is just the icing on the cake.

  21. Caring for parents has been has been a burning thought as of late – having a single mother that is unprepared for retirement and working in the volatile oil/gas industry keeps me up at night. I appreciate you sharing your experience and ideas around this topic. The ability to care for her financially while providing meaningful work would be tremendous.

    1. I hear you Russ. The best thing we can do is prepare. By starting a business, we can provide purpose and income to those we care about, and reduce our tax liability. Those are good things. We can also get great service in return.

      Of course, we can always just pay for our parents with after-tax dollars. I’m just saying for those who want to be more enterprising, paying with pre-tax dollars is financially savvier.

      1. OnlyKetchup

        All of these ideas require an actual profit generating business right? It’s not so much start a business and help your family, it is start a successful business and then help your family. A slightly more challenging task…especially if you have a full-time gig already.

        1. Profits help. But look at COUNTLESS examples of public companies who report negative profits every single quarter and pay their employees hundreds of thousands and millions of dollars. Profits, operating profits, revenue, cost.. it’s all accounting.

          1. OnlyKetchup

            Good point…I think I read there was some rule that you needed to show profit 3 out of every 5 years, to not be considered a hobby by the IRS? I guess you could always close one business and open another if need be.

  22. This runs counter to almost all of the other advice I’ve sever seen; mixing friends/family and business is typically a recipe for disaster.

    I’m glad you’re able to make it work, but I think this ends poorly for most people.

    1. Distilled Dollar

      The key portion of this article that makes this advice work is that both parties already have a source of income. This is also the case in the first three case studies.

      Mixing business with family can be a disaster when both need the business to thrive so that they may survive. This leads to immense stress when one party doesn’t hold up their end of the bargain.

      In the case study with his sister producing art. If she fails to deliver on a few paintings, it shouldn’t cause immense stress and tear the relationship apart. Similarly, case studies 1 & 2 should not lead to any trouble if the business aspects fall through.

      Case study 4 does seem like a possibility to cause trouble but his approach is comprehensive. It is not to just hand her a job, but to sit down and discuss the bigger picture.

    2. Agreed.

      Helping family while helping yourself, and reducing everyone’s tax burden is a great purpose. Even better that it’s increasing the bonds and understanding in Sam’s family. But I would be cautious if I were doing it myself with my family. That said, I’d go into business with my family before I’d go into business with my friends…

    3. The big difference is to hire family or friends as CONTRACTORS, not full-time employees so there’s more flexibility and less stickiness. You pay them to do a specific task w/out having to pay the employer’s FICA and the benefits. Of course, if you want to hire on friends and family as FT employees, you can do so as well, but you’ll have to think more carefully.

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