You’ve gotten through that first year (or two or three), and you’re no longer worried about whether you’re going to make it as a real estate agent. However, it seems that every evening, you go to bed with a longer to-do list than you woke up with. Congratulations! You’ve graduated to the next step as a real estate agent—having too much work and having to hire a real estate assistant.
As you start to streamline your workflows, and build out your processes, you’re doing so with the intent of hiring out your lower-end work to an assistant, so you can focus on the client-facing work. After all, your ability to close more sales depends on your ability to meet and talk with more clients. Naturally, you look at your options—using your broker’s office, hiring your own assistant, or perhaps dabbling in the world of VAs (virtual assistants–definitely worth looking into at some point). However, if you have a child who is eager to learn and take on responsibility, you’re sitting on a gold-mine.
Caveat: This article is not a legal paper, and does not purport to give legal advice, so check with your state regulations or your broker to ensure you’re in compliance with applicable legal authorities.
Here are 10 reasons why you should consider hiring your child to become your real estate assistant
- Children can do a lot! First and foremost, your main reason to hire a real estate assistant should be to free you up to get more clients. If you’ve got a child with an energetic & entrepreneurial spirit, you can get a LOT of administrative tasks completed. Additionally, if your child has a driver’s license, they can take your act to the road by helping place flyers in neighborhoods, post “For Sale” signs, and conduct other physical errands that a VA can’t do on your behalf. Note: This article does not define what children can and cannot do as unlicensed real estate agent assistants. As a starting point, REALTORMAG®has a listing, by state, of what unlicensed assistants can or cannot do. However, you will want to get permission from your broker to ensure you’re in the clear, legally speaking.
- Children are less expensive to hire. You pay their rent, you pay their food, and put clothes on their back. Depending on what website you look at, you can hire a VA for anywhere between $30 to $75 per hour. While a VA can be worth the price, you may be able to get your child to do a lot of this work for a fraction of the cost.
- If you can’t trust your child as an employee, what makes you think any other employer would? It’s better to recognize up front that you’ve got some work to do as a parent. On the flip side, you’ll probably be able to trust your child a lot more than someone else you’d hire as a real estate assistant.
- Children can help you shelter tax income and ‘keep it in the family.’ According to IRS Publication 929, ‘Tax Rules for Children and Dependents,’ any dependent who earns less than $6,300 in 2016 is exempt from filing a tax return. For most teenagers, that’s probably a good summer’s income. Also, if you own a sole proprietorship, or an LLC (not S or C corporation), you can avoid withholding payroll taxes such as Federal Insurance Contributions Act (FICA), Federal Unemployment Tax Act (FUTA), or state unemployment taxes. For those of you whose children break through the magical $6,300 limit, those children will have to file a tax return, but they’ll be taxed at lower marginal tax rates. In either case, you can still claim them as a dependent as long as they continue to meet the IRS dependent criteria.
- What about kiddie tax? If you’ve heard of the kiddie tax, this is a very good question. However, the kiddie tax, which was designed to prevent parents from hiding their investment income under their children’s accounts to avoid higher tax rates, only applies to unearned income. Any income your child receives as a result of working for you is considered earned income and is not subject to kiddie tax.
- You can start their retirement plan early. You didn’t know there’s no age limit for starting an IRA? According to IRS Publication 590-A, ‘Contributions to Individual Retirement Accounts (IRAs),’ anyone who is under 70 ½, and has compensation, can open a traditional IRA. In this sense, the IRS defines compensation as, “what you earn from working.” This includes earned income. For Roth IRAs, you can contribute as long as you have compensation, and fall under certain income limits, which is usually not an issue for children (in 2016, the income limit for single taxpayers is $131,000).
- You can instill a sense of financial responsibility and ownership. One of my favorite stories is about my childhood best friend, Paul. When Paul was 15, his dad kicked him off the couch one evening and got him a job at the local pizza joint. The following summer, Paul was driving around in his own truck, which he paid for (to include insurance, gas, and maintenance). All of that was from Paul’s pure hustle, which he wouldn’t have recognized if his dad didn’t give him that opportunity. Who knows what your child can accomplish before college if you give him or her the chance to do so.
- Start their career. Who knows whether your child will want to become a real estate agent like you? Perhaps they like real estate, perhaps they hate being a real estate assistant. There’s a common statistic that 70% of family businesses never reach the second generation. The flip side to that is that 30% of them do! Perhaps, if you’re managing your real estate career like the business owner you are, you’ll have a built-in partner to turn the reins over to as you plan your eventual exit strategy. If not, they’ll at least have established some early accomplishments to go on their resume to impress their next employer.
- Experience. Speaking of the next employer, perhaps you’re hiring your child to do some busy work that doesn’t really need to get done, or perhaps they’re doing stuff you’d never want them to do once they finish school. However, work is work, and experience working for their mom or dad counts just as much as working for anyone else.
- Getting stuff off your plate can help you realize how much is on your plate to begin with. Perhaps hiring your child to do busy work allows them to ask about all the other stuff you’re doing. They could be doing a lot of work that you never knew you needed a real estate assistant for. You know, the stuff you should have outsourced a long time ago, but never did as you were building your systems.
- Finally, a temporary hire might help you prepare for that long-term employee you eventually do hire. Perhaps you both know this isn’t a long-term deal. Even if they’re not the long-term solution, hiring your child to do summer projects might help you systematize the work you eventually hire out so that you can frame it to your eventual employee.
These are just some of a few reasons why you would want to hire your child. Can you think of any other reasons? Please feel free to comment on this post, join me on the Facebook page, or email me directly. I’d love to hear from you, and can be reached through my email or at www.westchasefinancialplanning.com