Small Business Ownership: Should You Hire Family Members?

Whether you’re thinking of starting a small business or already own one, there will probably come a time when you’ll consider hiring family members as employees. Hiring members of your family can pose some pitfalls of course, but it also offers you some nice benefits that make the idea worth looking into. Carolyn M. Brown, senior content producer at BlackEnterprise made a great point when she said “Running a successful family business doesn’t mean running an entitlement program where if you have the right last name you are guaranteed a job and a certain title.”

Here are some of the downfalls and benefits associated with hiring family members as employees.

Pitfalls of Employing Family

Regarding hiring relatives, leadership/HR consultant Paul Keijzer make a valid point when he said, “Unfortunately, hiring relatives is a two edged sword – it can diminish the credibility of those who employed a family member and the person who’s been hired into the company.”

Before you go ahead and pull the trigger, you should be aware of the disadvantages associated with hiring family. First of all, when you hire your relatives, some resentment could crop up among your other staff as they may feel you are being partial toward the family members you brought on board.

Another downside to hiring family is that the relatives you hire may feel as though you expect more out of them than you do your other staff. This can lead them to feeling as though they’re being used or exploited. And, you could cause a lot of upset in your family structure if you run into problems with a relative you’ve hired.

A major problem with hiring family is dismissal. In other words, it can be very difficult to fire a family member who isn’t doing his or her job.  You could find yourself facing a huge problem if you hire a family member who doesn’t perform well wherein you want to give them the boot.

Another problem you could face is having the family member you hire expecting you to treat them better than your other employees. Many business owners who’ve hired relatives have found themselves being taken advantage of wherein their family members expect special treatment and privileges. To avoid this from happening to you, be very clear when explaining to a family member you’re about to hire that they’ll be treated the same as your other staff.

The Benefits of Hiring Your Relatives

One of the main benefits you’ll reap by hiring family is that you will already be familiar with that person as you will know their strengths and weaknesses as well as their potential. This will help make sure they’re given the right job responsibilities you know they’ll excel at. And because you already know your family, you won’t have to run any background checks or worry that they’re not being honest on their resume.

Because your relatives want you to succeed in running your new business, the family you hire will be motivated to help you succeed. You also can depend on your family members to work hard for you when you need it most due to the fact that they will want to help you when the going gets rough.

You may be able to take advantage of some state and federal tax benefits by hiring family. For instance, you might be able to exempt wages you pay for your spouse or children under the age of 18.