Although beneficial, hiring family members can be challenging. Here’s how to manage family members who are working for you.
Establish boundaries and expectations upfront in order to collaborate with family members successfully. Although it is lawful to employ family members, there are several circumstances when there are particular tax requirements.
More trust and a sense of commitment to a common objective are some advantages of working with the family; disadvantages include possible interpersonal harm and power abuse.
This post is for small business owners who are thinking about employing and collaborating with their relatives.
Working with family members can be a great way to grow your business and strengthen connections, or it can be difficult and unpleasant. If you’re thinking of hiring family members, be aware that success will require planning, commitment, and open communication. You should be aware of the advantages and disadvantages of working with family and how to make the situation successful before deciding whether to recruit a member.
How to employ and collaborate with family members appropriately?
Choosing to hire family members is not something to do haphazardly. Here are five suggestions for successfully hiring and managing family members.
1. Clearly state what is expected of the family you hire.
In each situation, it is crucial to set clear expectations for employees. However, while working with family members, it’s crucial to communicate expectations. Provide a job description explaining the duties, responsibilities, and functions of the family member you are hiring. Make sure they are aware of who to contact if it is not you.
2. Treat relatives as normal workers.
A family member must be treated just like any other employee. It can breed animosity and strife among your team members if they believe you are favouring your family, which can result in a toxic work environment.
On the other hand, you don’t want to disrespect your family member or misuse your relationship with them. Make sure that everyone who works for you, including family members, receives the same perks and treatment, and pay everyone in accordance with the compensation ranges for their respective positions.
3. Verify that family members are competent for the position.
Many small business owners make the mistake of choosing family members over the most qualified candidates when employing personnel. Even though it can feel right at the time, doing this could ultimately harm your company.
Make sure your family member has the skills and expertise required to accomplish the work properly if you’re thinking about hiring them.
4. Prepare a backup strategy in the event that hiring a relative does not pan out.
It’s critical to be ready in case your professional relationship with a relative is terminated. You might have to fire them if you no longer require their services, or you might have to let them leave.
Make a plan to communicate changes in your job connection while preserving your personal relationship because of potential familial repercussions.
5. Make clear what you hope from your working relationship.
Tell your family member that you need to keep your job relationship professional. They shouldn’t randomly drop by your office and spend their breaks sitting on your desk. It’s important to keep your personal and professional relationships with any family members you hire separate, just like workplace friendship boundaries.
Should you employ relatives?
It depends on a variety of criteria whether you should hire a family member because family is about as private as it gets.
Think about the benefits of hiring a family. Think carefully about your motivations for working with family as a first step. Do you really think they will add value to your company, or are you just doing it because you feel compelled to give them a job since they are in need of one?
Think about your particular partnership. You should take your relationship with any hired family into account as well. Can you conduct yourself professionally at work? Meaghan Thomas, co-owner and president of Pinch Spice Market, remarked that “you’ve worked incredibly hard to bring your business where it is now.” “You need to have faith that your family member is treating it seriously, just like you are. You will have issues that could significantly harm your relationship if you hire a family member who turns out to be a bit of a slacker or leech, or if you end up being a harsh, unsupportive boss to them.
Considering everyone’s objectives Your company has attainable goals, and your relative probably has career aspirations. Do you have similar goals? Is it a wise career decision to work with you? Do they envision your company in the future? To foster a positive working environment and make it simpler to work professionally with family, it helps to share common goals and vision.
Tax ramifications of working with relatives
When working with family, there are several special tax circumstances to take into account.
When using your child for work
When hiring your kids, take tax and labour rules into consideration. For instance, it is prohibited for minors under the age of 14 to work at all, and children under the age of 18 to operate dangerous machinery. Review both federal and state laws thoroughly because they may differ.
Before your child starts working for your company, think about how you’ll pay them and deduct payroll taxes from their earnings; this will depend on your company. For businesses and partnerships, the IRS has different rules.
Corporations: If your company is a corporation, payroll taxes will be applied to every dollar you give your child.
Partnerships: Unless both partners are the kid’s parents, all payments you make to your child as part of a partnership are subject to payroll taxes.
When working with your spouse
If you employ your spouse, you must deduct FICA and federal income taxes from their wages. You can register as co-owners if your spouse owns a portion of the company. You must take into account self-employed tax laws and obligations if you do this.
Your tax reporting may be made simpler if you file as a qualified joint venture.
when employing adults from your family
All adult family members you recruit should be treated the same as any other employee.Upon hiring, have them complete a W-4 form; withhold federal income taxes in accordance with the data on the form.
When computing the FICA taxes owed by your business, withhold them and take family member pay into account. When computing unemployment taxes and workers’ compensation, take into account family member wages.
Family members should receive overtime pay in the same manner as normal employees.
Family members should be eligible for the same benefits (paid time off, sick leave, health insurance) as normal employees.
benefits and drawbacks of working with family
Working with family has advantages and disadvantages. It can signify a dependable and trustworthy confidant on the one hand, or it can signify a tense and unprofessional connection that doesn’t benefit your company.
Here are the opinions of several actual small company owners who collaborate with relatives.
Advantages of working with family
You have mutual trust and candor. Thomas, who along with her partner operates Pinch Spice Market, claimed that “they know you inside and out.” They can support you when you need it and call you out when you need to be grounded by calling you on your nonsense. You are free to be absolutely sincere with them.
They are committed to you and the company. The family member may become more devoted to you and your cause as a result of your relationship, according to digital marketing expert and entrepreneur Ryan Cook. “You presumably share a lot of the same values and attitudes if you come from the same family, which might lessen conflict and friction.”
Children have the chance to learn new skills. Tyler Read, the creator of PTpioneer, stated that a family business “may be a chance for a young kid to obtain vital working experience, setting them ahead of their contemporaries when they are able to enter the wider industry.” If a child is made to undertake work they don’t want to do, it may appear to them as a scam.
Money could be saved. According to Nerissa Zhang, CEO of The Bright App, “working with your significant other can have huge financial benefits because you can share an accountant, a tax preparer, a cell phone plan, and various other things that unrelated coworkers can’t share.”
Drawbacks of working with family
Work is always there. Being with someone all the time might become monotonous and make you feel like you lack autonomy if you don’t establish the proper boundaries, according to Thomas. You work at home since it’s difficult to “switch off” when your business colleague joins you for dinner. It’s crucial to separate work from personal life and avoid having them overlap excessively.
They might grow to hate you in the end. According to Michael Lowe, CEO of CarPassionate, if you give a family member a job they aren’t particularly interested in, just to assist them out or for any other reason, here is where issues could arise since one person may get jealous of the other’s success or satisfaction in their profession.
They might mistreat the connection. Family members may be more likely to disregard corporate policy since they can benefit from their connections to you, according to Cook.
It might have an impact on your union. Layoffs may be the hardest thing to handle, according to Zety’s certified professional resume writer Michael Tomaszewski. “Firing a family member will make you want to eat bubble wrap, whatever of the justifications you have for the dismissal. There is simply no good way to do this without harming interpersonal ties and perhaps even the family as a whole.
Successful family-run enterprises as examples
It could be helpful to look at successful family businesses if you’re hesitant to hire family members.
Sam Walton started Walmart, one of the most well-known family-run companies, and he eventually handed it on to his three children. With a $241 billion market valuation, the Walton family currently owns more than half of the Walmart company.
Comcast is another prosperous family-run enterprise in the telecoms industry. It was started by Ralph Roberts as a tiny cable firm in Mississippi, and he expanded it to become a billion-dollar conglomerate before handing it on to his son.
BMW: In 1916, Günther Quandt established a business that produced aeroplane engines and later used the name BMW. BMW rose to become one of the top global producers of luxury vehicles. The Quandt family continues to own over half of the company’s shares despite several changes throughout the years. Stefan Quandt, Quandt’s grandson, is a deputy chairman of the supervisory board and now owns 23.6% of the company.
The Knight family is the CEO of Nike. It was established in 1964 at the University of Oregon by Phil Knight, and it is currently worth $110.3 billion. 2015 saw the appointment of Knight’s son Travis to the Nike board of directors.
Frank C. Mars, who produced and marketed homemade butter candies, founded the Mars firm in 1911. Family members who presently own and serve on the board of directors of Mars Inc. received the business from their ancestors. According to estimates, the Mars family is worth $78 billion.
Is it worthwhile to hire a family?
It is permissible to employ and collaborate with family members, but you should proceed with caution. Saving money and working with dependable, committed employees are two advantages. Setting up boundaries and preventing work from impacting your personal life, though, can be difficult.
Establish clear expectations, treat your family member like any other employee, and make sure they add value to your company for a successful working relationship. The relationship can be advantageous for both parties as long as they are qualified, have a strong work ethic, and can produce exceptional outcomes, and you are aware of what employing family implies.
