Product Introduction
- Definition: Employkids is a specialized SaaS (Software-as-a-Service) platform for IRS-compliant documentation of child employment within family households or businesses. It automates the creation, tracking, and storage of legally required records for paying minors and funding Roth IRAs with earned income.
- Core Value Proposition: Employkids eliminates complex IRS paperwork barriers, enabling parents to legally hire their children, generate verifiable earned income, and maximize long-term Roth IRA growth—turning early contributions into $1M+ retirement funds while avoiding audit penalties.
Main Features
- Employment Agreement Generator: Creates IRS-compliant contracts with role-specific clauses, fair market wage guidance, and legally binding e-signatures. Uses dynamic templates aligned with IRS Publication 929 (Household Employment Tax Rules) and IRC §3121(b)(3)(A) for business exemptions.
- Automated Time Logging & Payment Tracking: Documents work hours via timestamped entries with optional photo proof. Generates payment ledgers reconciling tasks, wages, and payment methods (Venmo, cash, check). Exports timesheets in PDF/CSV formats for audit trails.
- Year-End Tax Packet Compiler: Consolidates W-2 worksheets, signed agreements, timesheets, payment ledgers, and Roth contribution memos into a timestamped ZIP file. Integrates with custodial Roth IRA accounts at brokerages like Fidelity or Vanguard.
Problems Solved
- Pain Point: Manual documentation errors triggering IRS audits and Roth IRA disqualification (e.g., missing work logs, unverified payments, or non-compliant agreements). Employkids ensures 100% audit-ready records.
- Target Audience:
- Parents/Custodians funding Roth IRAs for children (ages 4–18).
- Small business owners (Sole Props, LLCs, S-Corps) deducting child wages as business expenses.
- Financial advisors managing multi-generational wealth strategies.
- Use Cases:
- Legally paying a 7-year-old $8/hour for household chores (e.g., dusting, organizing) to fund a $7,500 Roth IRA contribution.
- Deducting $12,000 in wages paid to a teenager for business tasks (e.g., social media, data entry), saving $5,676 in taxes via the Pro Plan.
Unique Advantages
- Differentiation: Unlike generic accounting software (QuickBooks) or DIY templates, Employkids specializes in minor employment compliance—preconfiguring IRS-approved task lists, wage rates, and documentation workflows specific to IRC rules for family employees.
- Key Innovation: Proprietary audit-log system with cryptographic timestamps for all documents, creating an immutable chain of custody. This meets IRS "contemporaneous records" requirements under Rev. Proc. 97-22.
Frequently Asked Questions (FAQ)
- Is hiring your child for Roth IRA contributions legal?
Yes, per IRS Publication 590-A and IRC §3121(b)(3)(A), children of any age can earn taxable compensation for "real work" at fair market rates. Employkids ensures all documentation meets IRS standards. - What tasks qualify as legitimate work for children?
Age-appropriate tasks like household chores (cleaning, yard work) or business support (data entry, customer service). Employkids provides 100+ IRS-aligned job descriptions with market-rate guidance. - How does Employkids handle IRS audits?
The platform generates cryptographically timestamped documents (agreements, logs, ledgers) organized in a Year-End Tax Packet. This satisfies IRS burden-of-proof requirements for earned income and FICA exemptions. - Can business owners save on payroll taxes using Employkids Pro?
Yes, the Pro Plan leverages IRC §3121(b)(3)(A) to exempt wages paid to minors from FICA taxes (15.3% savings) when work directly benefits the business. Employkids separates household vs. business tasks for compliance. - What age can a child start earning income for a Roth IRA?
Roth IRAs have no minimum age. Children as young as 4–5 can perform simple tasks (e.g., modeling, stamping documents). Contributions are capped at annual earned income (up to $7,500 in 2026).