What is a Family management company?

A family management company is a sole proprietorship that a business owner creates to employ their children and recapture payroll tax exemptions unavailable within a corporation. The corporation pays the management company a fee for services, and the management company pays the children wages. Because the company is a parent-owned sole proprietorship, children under 18 are exempt from Social Security and Medicare taxes, and wages remain deductible. This structure lets incorporated owners use the Hiring kids strategy while preserving their entity benefits.