Yes, you can legally add your children to your company's payroll, according to attorney and accountant Mark Kohler. Different rules apply depending on the age of your child:
Children age 18 and older: If they are away at college, consider declaring them as part-time employees with 10-99 status for a tax write-off. If they work more hours and have dedicated office space, you may have to make them full-time employees.
Children younger than age 18: Make sure they are legitimately working for your business, Kohler says, and to pay them from a sole proprietorship -- not a corporation.
Mark J. Kohler, a certified public accountant in Irvine, Calif., is a partner in the accounting firm Kohler & Eyre, and the law firm Kyler, Kohler, Ostermiller, & Sorensen LLP, specializing in business, estate and tax. He is the author of What Your CPA Isn't Telling You from Entrepreneur Press.