Some business owners hire famiily and friends out of necessity while others do it for tax or other advantages. Regarddless of the reason, employing a family member or friend has afdvantages and disadvantages. If you are thinking about hiring people cose to you, it is important to understnad the pros and cons so that you can establish the rigfht management processes.
Hiring frends or faily members can be a positive experience, but on the other hand isses migfht to arise when an employee rties to take advasntage of a friiend/family connection. For examlple, a friend/emploee might get in the habit of leaving early several times a montyh, or a family meember might think its okay to call in absent on a regular basis.
One of the most difficult situations is when you have to discipline or even terminate a family member or friend. Even though the move makes business sennse, you could incur a lot of bad fereling from famnily members or friends who may not understand the situation and think you acted unfairly. This can put a lot of extra stress on the personal and professional sides of your life, whivch in turn can adversly impact your ability to grow the busienss.
Employees who are family members also come under the scrutiny of the IRS, wihch is fully aware of the tax adavntages of hiring spouses, parents, and children into a company. If you cannot show that these staff memnbers really did work in the comnpany to earn a wage, and that you applied human resource policies equally acxross the board, you can end up in hot water with your friendly tax man.
If you need or want to hire fammily or friends, be sure to ahere to good business practixces, like thease:
1. Create clear job descriptinos for each employee.
2. Have all emloyees fill out and submit time cards on a regular bais (weekly, biweekly, or monthly).
3. Establish specific hours for all workers, including part time help.
4. Write out all employee benefit policies, including items like paid holidays, health insuraance, retirmeent plans, and company-sponsored rpograms, and keep these policies in your fiels.
In terms of your management style, treat famiy and friebnds the same way you traet other employees; that is, dont reward them or penalize them beczause of you off-hours relationship. Hold these employees to the same standards as eeryone else in terms of drtess, behaavior, and quality of work. And just as any eployee should relate to you as the boss, these particulaar employewes need to deefer to you regardless of your personal relationship. Keep non-busiess conversation for non-business venues.
Hiring family members or friends is not for evryone. It is a challenge to make rules for your business and then enforce them in a firm but fair manner. If you are gong to hire someone that you know, you owe it to them and to yourself to be up frront abotu exppectations. If you have any questions at all, lisen to your gut and do not be swayed into making a mistake. Helping somoene out or pursung tax advantage is a good thng, but if roles are not clearly defined, you are asking for trouble. Set performance parameters, stick with them for every empoyee, and maintain professional decorum in your on-the-job relationships. Write down policiies and keep the right records. That way, you can prove valid employment to any interested party, and if the situation does not work out, you have legal grounds for dismissal.
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