One of the biggest advantages of running a closely held family business is the ability to seek professional help from family members. Separate taxation rules are applicable for family employees in a family owned business, and it is necessary to be aware of these rules if you are running a closely held family business in Texas.
Payments made to your child below 18 years of age for services rendered by him or her to the trade or business are not accounted for while computing Social Security taxes, Medicare taxes and taxes under the Federal Unemployment Tax Act (FUTA) if the trade or business is a sole proprietorship or a partnership run by the child's parents. Exemption from FUTA is applicable until the child reaches 21. However, such payments are still subject to income tax withholding.