Should You Hire a Relative for Your Home Business?
When you first launched your home-based business, you may have been fortunate enough to have relatives volunteer to help you out on occasion. Perhaps your teenager answered the phone when you were away or occupied, a parent assisted with the packing of orders, or your spouse prepared the checks for your signature. In the early days, you may not have been able to pay anyone, including yourself, for the work that they did. However, your business has grown, and you now feel that it is time to start hiring employees. You are considering asking one or more of your relatives to assume a paid position with your business, but you are not certain whether this would be a wise move. The answer depends on a variety of factors, and only by carefully analyzing these factors can you determine whether the decision would be disastrous or advantageous.
Factors to Consider Before You Hire a Relative
When deciding whether to hire a relative, you should ask yourself the same questions you would ask when considering any other candidate. When evaluating candidates, you try to determine whether their skills and experience match the job requirements, whether they would be conscientious about time and attendance, and whether they would be productive, happy employees. If the candidate is a close relative, you may think that you already know the answers to all of these questions. However, more than one entrepreneur has been shocked and dismayed to discover that a relative was not quite the person they thought. Ask yourself the following questions.
1. Will he or she respect my authority? You own the company. It is your livelihood, and it may represent the fulfillment of a dream that you have held dear for many years. If you know that a relative is likely to respond to your every instruction with an argument or eye roll, you might want to pass. It could prove too frustrating and stressful to endure this kind of behavior day after day.
2. Will he or she feel free to offer input? You need employees who are loyal, cooperative, and respectful. However, you also need employees who will speak up if you are about to make a mistake that could have serious consequences. You also need employees who feel free to offer suggestions if they see an opportunity to streamline procedures, deal with an ongoing problem, or address a safety issue. Some of your relatives may be too self-conscious to do so, or they may feel intimidated by you. If this is the case, you need to carefully consider the type of position for which you hire them. For example, if their only task will be to answer the phone, they might do fine, but think twice before hiring them to take your place if you are unavailable or absent.
3. Will they expect special treatment from you? Some relatives could see the job as an easy paycheck. They may assume that you will not actually expect them to perform that much work, and they may see the job as a way to get paid for socializing or playing computer games. They may think that you will not reprimand them if they show up late or fail to show up at all. If you have relatives who consider you a pushover, think twice before you hire them.
4. If you plan to hire more than one relative, how well do they all get along? Being members of the same family is no guarantee that they can work together without friction. For example, if you want to hire your brother and sister, take the time to reflect on how they get along. If they are constantly bickering with each other, hiring both of them could be a mistake.
5. Will you be able to avoid making unreasonable demands on the relative you hire? You cannot expect any employee to happily accept a last-minute schedule change, but you may be upset if a relative balks at coming in on a day off because he or she has another commitment. You should not ask a relative to let you use his or her home address as your business address; do them and yourself a favor and secure a virtual physical address. Whether or not they are your relatives, all employees are legally entitled to receive all money due them on payday, so do not expect your relatives to be totally understanding if you fail to issue their paychecks. If your business cannot afford to pay employees, do not hire them.
6. Do you have a clear idea of what tasks you want your relative to perform? It will benefit you and your relative if you prepare a written job description. Cover the pertinent points. For example, if you are hiring someone to pack orders, you will probably include packaging items securely, preparing shipping labels, relieving inventory accurately, and maintaining the proper records. If you also want this person to take your children to school or mop your kitchen floor, you had better include it if you want to avoid misunderstandings and hurt feelings.
7. Could you fire this person if the need arose? Perhaps the relative simply cannot handle the job, or perhaps you simply cannot handle his or her disrespectful or disruptive attitude. Economic conditions could force you to reduce your staffing. Could you handle having to lay the person off or fire him or her? How would this affect your relationship with the individual?
The Pros of Hiring a Relative
Once you have decided to hire relatives to increase the staff of your home-based business, you can review the benefits of doing so.
1. Close relatives probably know more about your business than strangers. Your relatives have likely heard about the products or services you offer from you or from other relatives. This means that they may not need as much onboarding before they become productive.
2. There are certain tax savings for hiring members of your immediate family. For example, according to the Internal Revenue Service, if you hire your child who is under the age of 18, you do not have to withhold FICA from his or her check, and you do not pay the employer portion. The wages paid to your child under the age of 21 are not included when calculating your FUTA tax, and neither are the wages paid to your spouse or parent. Since state laws vary, you should consult your tax accountant or attorney to ensure that you qualify.
3. Similarly, the U. S. Department of Labor makes certain concessions for children employed by their parents. They cannot work in a hazardous occupation, but they are not subject to the restrictions on the number of hours worked, the minimum age, or the times they can work. However, state laws are sometimes more stringent, so be sure that you check with the labor department in your home state.
4. Relatives can be more committed to helping you succeed. It is normal for people to want to see those they love achieve success in their endeavors. A child may have hopes of following in your footsteps, or a parent may take pride in helping you attain the rewards you deserve.
The Cons of Hiring a Relative
Hiring relatives does not mean that there will never be a problem. If you have carefully evaluated the factors listed above in the first section, you probably noticed some potential negatives. In addition to those, there are a few that you may not have considered.
1. You will be spending more time with your relatives, and this is not always a good thing. There is an old saying about familiarity breeding contempt. You may have thought that you knew your family members before you made your hiring decision, but you are beginning to cringe at the sight of them. It may not be anything major. You may just find that they have some habits or traits that you find especially annoying. Maybe they bite their nails, chew gum constantly, or have a laugh that rattles the windows. On a particularly bad day, you might lose your patience and tell them how you truly feel. If the conflict escalates, you and your relative could be enduring some interesting family get-togethers.
2. It can be difficult to enforce strict boundaries between your personal life and your business life. Relatives may feel that they have the right to pry into your personal relationships, and some relatives have been caught snooping through the personal belongings in the home of their employers. You can sometimes prevent these issues by communicating clear boundaries at the time you offer the relative a job. However, some people seem unable to help themselves.
3. Relationships can become strained over issues that have nothing to do with work, and they may not even involve you directly. For example, your aunt could be offended that your mother did not invite her to a recent dinner party. When your aunt reports to work, she may see you as an extension of the person with whom she is upset. This can create friction between the two of you.
4. Some families like to engage in gossip. If you want to keep the peace, you need to remember two things. The first is that you do not want to participate in gossip. If your relatives are talking to you about each other, you can bet that they are talking about you to each other. The second thing is that you do not want to give them any new tidbit for the grapevine. If you child is doing poorly in school, your spouse neglected to pay a bill, or one of your parents is becoming a tad forgetful, keep the information to yourself. Avoiding family gossip in the workplace is part of separating your personal and business identities.
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