How We Track Our Kids’ Work (and Why It Matters More Than You Think)
How We Track Our Kids’ Work
Why documentation matters more than most families think
You’ve set up the business. You’ve chosen the pay. You’ve even involved your kids in content creation, modeling, packaging, or some other legitimate task.
Now comes the part most families skip:
Documenting it.
It’s not the most glamorous part of building a family business, but it’s the most important — especially if you’re paying your kids.
In this post, I’ll walk through exactly how we track our children’s work each month:
- Why documentation matters
- What the IRS expects
- What tools we use
- How we build a year-end audit file (without the stress)
- And what not to do
Why Documentation Is Everything
When it comes to paying your kids, the IRS has one golden rule:
The work must be real, and the pay must be reasonable.
But there’s an unwritten rule too:
If you didn’t document it, it didn’t happen.
That’s the standard they’ll apply in an audit. They won’t assume good intentions. They’ll want:
- Contracts
- Logs
- Invoices or pay stubs
- Deliverables or product links
- Proof that the work happened
If you can’t show it, they’ll reclassify that money as non-deductible — or worse, as personal income.
What the IRS Looks For
Here’s what the IRS would likely request if they reviewed your return and saw wages paid to a minor:
- Nature of the work performed
- How compensation was determined
- Dates and duration of the work
- Proof that the work directly supported your business
- Proof of payment — including method, amount, and deposit location
- Whether payments align with the child’s age and skill level
If you can’t show any of that? You’re exposed.
How We Track Our Kids’ Work
We’ve built a system that’s simple enough to maintain monthly, and thorough enough to survive scrutiny. Here’s our flow:
1. Work Assignment Sheet (Monthly)
At the start of each month, we list:
- Each child’s name
- The content/projects they’ll be involved in
- What their role is (e.g. likeness, voice, character inspiration)
- Estimated value of contribution
This is a 5-minute Notion table or spreadsheet we reuse and duplicate monthly.
2. Project Logs
Each time a piece of content goes live (YouTube video, book, poster, etc.), we log:
- The name of the project
- Link to live media (or screenshot)
- Where the child appeared (cover? character? narration?)
- File name of asset used
- Hours or minutes contributed (if applicable)
This log is tied to Google Drive or Dropbox where final assets are stored.
3. Likeness Releases and Creative Agreements
Yes — even for our own children.
Every child has a one-time Likeness & Work Use Agreement that we signed as both the business owners and parents/guardians. It outlines:
- What types of content they may appear in
- How their likeness, voice, or name may be used
- Duration of agreement
- Monthly or project-based compensation
This protects both us and them. It also shows the IRS this wasn’t an informal arrangement.
4. Payment Records
We pay our kids monthly from the business bank account.
Each transfer is:
- Labeled (e.g. “January Creative Work – [Child’s Name]”)
- Logged in the company books
- Accompanied by a brief note referencing the project(s) worked on that month
Payments go into: - A custodial brokerage account
- Or, if earned income is high enough, a custodial Roth IRA
We don’t co-mingle funds or pay from personal checking.
5. Summary Sheets (Quarterly)
Every quarter, we generate a PDF summary for each child:
- Work log
- List of projects
- Total payments
- Screenshot thumbnails
- Agreement reference
At year-end, it’s a clean record of 12 months of structured, tracked, IRS-safe work.
Tools We Use (Free or Low-Cost)
You don’t need enterprise software to do this. Here’s what we rely on:
- Notion: For project and work logs
- Google Drive: For storing screenshots, PDFs, and audio
- Gusto or Wave: For payroll and payment logs
- Dropbox: For archived media
- DocuSign (or even Canva PDF + email): For signed agreements
This setup keeps everything simple, accessible, and secure.
Examples of Real Work We Track
Voice Work
- Snippets recorded for use in story narration
- AI voice modeling input
- Reading lines for an animated story
Likeness Modeling
- AI-generated scenes based on baby photos
- Digital posters featuring a child’s face
- Merchandise mockups using character-inspired assets
Creative Involvement
- Picking names, storylines, or animal themes
- Modeling emotional reactions for illustrations
- Participating in creative planning (“What should the dragon say next?”)
Brand Representation
- Appearing as the featured face of a branded IP
- Signing off (as a parent) on likeness-based marketing
What NOT to Do
Don’t:
- Backdate everything in December
- Pay lump sums with no documentation
- Use vague labels like “family help” or “admin”
- Skip signatures, contracts, or logs
- Rely on memory when the IRS asks for detail
Do: - Start simple (even a Google Doc is better than nothing)
- Use screenshots, links, or even smartphone photos
- Keep things updated monthly — it takes less than 30 minutes if done regularly
Final Thought: The IRS Isn't Your Enemy — But They Do Expect Receipts
We don’t document our kids’ work because we’re paranoid. We do it because:
- It respects their contribution
- It keeps our business legit
- And it protects us if someone questions the structure
This is about more than tax savings. It’s about raising kids who understand value, contribution, and ownership. It’s about doing things the right way.
And yes — having clean, beautiful records helps us sleep at night.
Next post: The exact “work categories” we use to assign jobs to kids by age — and what’s realistic for each phase.
Disclaimer: The information provided in this post is for general educational and informational purposes only. It is not intended as, and should not be construed as, financial, legal, tax, investment, or other professional advice. You should consult with your own qualified advisors before making any financial decisions. We disclaim all liability for any actions taken based on the content provided.