The Absolute Best Tax Deduction for Small Businesses: Hiring Your Kids

Photo by Paul Efe on Pexels

If you have a business, then you are likely missing out on a goldmine of benefits and tax deductions. Let me ask you: do you have kids? Do they help out? Do you pay them? If so, they should be your employees!

To be honest, I didn’t figure this goldmine out until our kids were teens and I’m still kicking myself for not hiring them sooner. This is because every cent I paid them I could have written off as a business expense. It wasn’t until I only had a few years left that it dawned on me that I could do this.

Before hiring them, I had already been paying them for years. It was usually with gift cards, extra toys, fast food, or plain cash. But none of it was official, so I lost out on many years’ worth of tax deductions.

So don’t make the mistake I did. If you have a business, hire your kids now!

Why I Didn’t Hire Them Sooner – Probably Your Reasons Too

I’ve heard all the excuses. Every small business owner I have interviewed or spoken to over the years repeats these to me. Tell me if you’ve heard these, or if you are thinking them right now as you read this.

• I was too busy to bother. Actually, my employed kids saved me far more time than if I hadn’t hired them.

• I didn’t think it would help my bottom line much. Boy was I wrong.

• I didn’t think my kids would benefit much either. Again, what a mistake to think so.

• I thought that it would create a red flag on my tax returns. It didn’t.

• I thought it was going to be difficult, with lots of paperwork and more stuff that I would have to manage. After a little online research, I found out it was all pretty easy.

There is a ton of information online about hiring your kids and like all online sources, not all of it is useful, while much of it is a sales pitch. In the end, the good info gets lost in the junk. The more I researched it myself, the more I became demoralized.

So instead of providing links to all the info I’m going to share how I hired my kids. I believe the best way to learn is by following the examples of others more so than what they tell you. Many online sources are also rather general, and they may not mean much to your specific business. For those reasons, examples are better than lectures.

Let’s address each concern, in order. But before I do, let me add a quick disclaimer:

It goes without saying that each family business is different. Tax questions can become complicated. I am not a tax advisor or an accountant, I am only describing the decisions I made for my specific business. Please consult with your own accountant to make sure you manage deductions, and your business tax returns properly. Much of this stuff was way over my head too, so I relied on professionals for advice, and some of that I am sharing below.

Being Too Busy

We are all busy, and I was running my own business as well as assisting with three other businesses when I started this. It turns out that when you are being pulled into different directions, one of the best things you can do is hire someone to take over one of these directions for you.

So that’s what I did. I “assigned” one of my big projects to one of my kids. I knew it would be more than they could handle, but I would be there to guide and train. To my surprise, my son took the task by the horns. He taught himself new skills, he took initiative, and he alleviated something that was more of a burden when I was doing it all myself.

The important thing is to trust that your kids are resourceful and smart. More often than not, they will rise to the challenge, much in the same way a non-family employee might. They might even see things you may miss and actually improve things for the better – youthful eyes have advantages.

Now this isn’t always the case, but if your kids have already been working in the business by “helping out” they undoubtedly already have the experience they need to step into the job. What I found is that my kids saved me time once I trusted them with more responsibility – whether it was designing a new website or packing products for shipping.

I was able to grow the business significantly as a result of these time savings. I sold more products and provided more services as a result of having the extra help. Since my kids had already learned so much from the business before I formally hired them, I also did not need to spend time training them. The training I did provide was above and beyond what they had done before.

Photo by Kenny Eliason on Unsplash

Helping My Bottom Line

As I mentioned before, I was already paying my kids before I hired them. While this is an important factor, I think this is not uncommon with small family-owned businesses. Once I officially hired them, I had a deductible expense that I could claim on my taxes that same year: their wages. So, for example, if I paid each child $3500 that year, this is $7000 in income that I could deduct from my taxable profits.

Of course, this only makes sense if the labor that your children do also generates more income. For me, it absolutely did. One single account that I added that year was worth half of my labor expenses. I also increased product sales significantly that year. This would not have been possible without their hard work in making that happen.

There are other benefits you should consider that make hiring one’s children better than hiring non-family members. Because they are your children, your business is not subject to social security, Medicare, or unemployment taxes – that’s right, you don’t have to pay FICA or FUTA. This reduces expenses and paperwork.

If you think about it, this makes perfect sense because, as your children, they typically fall under your insurance. While you do have to purchase Worker’s Compensation Insurance, which we did through our business insurance provider, this is fairly straightforward. I literally did this over the phone with my agent in a few minutes and it was not a significant additional expense.

Other than the software I used to manage their payroll (more on that below), there were no other expenses. So, at the end of the year, it was considerably less expensive than hiring employees who were not family members.

Oh, I almost forgot, I also was able to deduct an online Microsoft training course that the kids completed, as well as the required safety equipment I bought for them. I’m sure there were other deductions specific to the kids, but I can’t recall them off the top of my head. Anyhow, it’s all deductible.

The bottom line was that I was already paying my kids before I officially hired them. So, when I did, I was then able to deduct their salaries too. On top of that, I was able to deduct any expenses related to their work as well.

Photo by Kaboompics.com on Pexels

How Hired Kids Benefit

While the benefits to our bottom line were already clear, the real shock came in the many ways this benefitted the kids. First of all, they received valuable training in working for a small business. More than before, they were now invested in its success and I believe this really made a difference in the quality of the work.

Yet that only scratched the surface.

They were now officially earning income. As a result, they learned about money management, credit cards, checking accounts, doing their own taxes, as well as investing. While they could have learned much of this in a classroom because they were doing it with their own money, there was a sense of ownership, an investment in their own financial health, which meant so much more.

Speaking of taxes, they paid none on their income, because they did not earn enough to be taxed. As of 2024, that threshold is $14,600 per year, and they didn’t exceed that. Now I realize that some of you run larger businesses and your kids may exceed that, but they will likely still be in a lower tax bracket than most other employees because they only work part-time.

But wait, there’s more (I’m starting to sound like a Shamwow commercial). I also set the kids up with personal retirement accounts that their paychecks automatically funded. There are many investment options for this. Because they are official employees, they can have a traditional 401k, a personal IRA, as well as education investment accounts like Coverdells or 529 plans. According to IRS guidelines, up to $6,500 of their earnings can be put into such accounts each year.

Because these investments are directly deducted from their paychecks, this can further reduce their taxes, even if they earn more than the threshold of $14,600. If they don’t earn that much, that pre-tax deduction is nice to have on their returns too. I opted for a 529 plan for each kid and had my stock broker manage this for me, but that is an extra expense, of course. Alternatively, you can set this up on your own too.

One more detail that applied to us directly. My kids used Turbo Tax to do their taxes – a great learning opportunity, by the way. Because their taxes were relatively simple, the Turbo Tax services were completely free. Doing taxes is not free for me, unfortunately, because my taxes are a bit more complex, lol.

Hiring Your Kids Does Not Create a Red Flag

As with most small business owners, my taxes are always at the forefront of my mind. That is why I use an accountant. When I was discussing hiring my kids, my accountant was not concerned at all. As a matter of fact, he said many of his clients do this and he asked why I had waited so long. Hmm, Ok.

But I wondered if this would generate extra scrutiny by the IRS and the state tax services. While he acknowledged that it does add complexity to the returns, he assured me that this is common enough that it shouldn’t raise any red flags. As a matter of fact, if done properly and consistently each year, it shows that the business is growing and progressing well.

Now that I’ve had my kids working for the business for a couple of years, I can say that I have not noticed any additional scrutiny. What I have noticed are all the benefits, and those cannot be understated. The fact is that the benefits far outweigh those risks.

Hiring Kids is Easier Than You Think

One of the biggest hurdles that small business owners have when they hear that they should hire their kids is that they don’t even know where to begin. I had the same concerns so I did a ton of research and settled on one product that has made the whole process very easy. It’s not free, but considering how much of the heavy lifting they do, I can’t imagine having done it without them.

So, as soon as you finish reading this article, you should head on over to Gusto.com:

Now, this is my referral link, so I am compensated a little bit for referring people, but hear me out. I signed up as a Gusto referring customer because I am such a big fan of the service. I researched dozens of alternatives before deciding on Gusto and nothing is as easy, as convenient, and as well-reviewed. Go ahead and do your own research if you don’t believe me; I’m certain you’ll come back to Gusto every time.

As I said, it’s not free. It costs $40 a month + $6 a month per employee, and here in California, I also had to register with the state, something Gusto automated for me, but there was a one-time charge of $200. Yes, I know, the up-front cost was a bit of a shock to me too. Some of the other companies I had looked at charged less for these things, but they also had fewer features and a lot more complexity.

What really convinced me, though, is how Gusto made everything so simple and easy. I didn’t have to submit anything to the IRS, the State, or anyone else. Gusto did everything for me. My business bank account and my accounting software plugged right into Gusto. My accountant, too, was onboarded in one step.

Speaking of onboarding, Gusto sent all the necessary info to my kids’ email addresses, so hiring them was a breeze as well. It synched with their TurboTax accounts, and it sends them the required W-2 forms for their taxes every year. Every month I do their payroll, and I’m done.

I mentioned above that I set up 529 educational plans for my kids with an outside stockbroker. However, Gusto also has an option to do this internally without a broker. For a small fee, they can set up any tax-deferred investment plan, all integrated with their service. It is very convenient to have this all managed in a single interface.

While this is a bit outside of the scope of this article, Gusto can be a great resource for later too. For example, if you decide to maintain your children as employees after they turn 18, Gusto will handle all the extra paperwork and tax reporting for you. Also, Gusto will manage outside contractors who provide services for your business and handle the 1099 paperwork for you automatically. I’ve used it to manage my contractors on occasion as well.

So, is Gusto worth $52 a month (for two employees)? Well, for me, it definitely is. All the paperwork I would be responsible for would add substantially to my workload, and now I don’t have to do anything – well, other than monthly payroll. I’ve set up Gusto for clients I work with and they rave about the improvement over what they were using before. This tells me that I made the right choice for my business. If you need a hassle-free way to hire your kids, then Gusto is the way to go.

Conclusion

As I mentioned above, there are many online sources with advice about hiring your kids – just Google it. I neglected to do this for years until my kids were much older. This means that I missed out on a huge opportunity for additional tax deductions. If you are already paying your kids, or compensating them in some other way, then you should really consider hiring them.

I do realize that every business is different. It may not make sense for every family business to hire their kids, and I understand that. However, if you are still on the fence about this, you should also consider the other benefits I mentioned.

After hiring my kids, they became much more dedicated employees. This allowed me to grow the business and increase profits. In the process, the business is now better established, and more stable and this attracts more clients/customers. Of course, the extra cash flow also goes back to my kids as well. They have more income with their own investments, and this benefits us all.

Saying No to Profits: Put Income Dollars to Work First

Photo by Alexander Grey on Unsplash

If your small business generates mostly extra income for you, then make that income work harder for you.

Many small business owners and solopreneurs also have a “day job.” That 9-5 with all the cushy benefits is what pays the rent, puts food on the table, and keeps the lights on. Indeed, for many of these startups, it is the financial basis that allows the small business to exist.

Now, I know that this is the one thing that the pundits, YouTubers, venture capitalists, and every shark on Shark Tank hates to hear; they want the people they work with to be 100% invested in the business. Those folks are also at a very different stage in their business ownership; and more often than not, they forget how they started. So, my advice to almost every small business owner in this position is to keep that day job.

Many small business owners are even in the position to not really need that extra income. They started the business less from need, and more out of curiosity so that extra income is more of a nice perk. Likewise, if your profits suddenly jump (the famous hockey stick effect), then you are also in the enviable position of too much income.

If that’s you, then this article is for you.

A Word of Caution about Business Profit Spending

I’m not an accountant or bookkeeper and I’m not providing certified financial advice. I’m just proposing an interesting option that I have personally taken in the past. In my case, it has paid handsome rewards and so I’m suggesting it here as an option. However, before you do this, you should probably speak to more specialized experts about it as well and follow their advice.

Ok, now that we have that out of the way, we need to settle what I mean by extra income. This is business income that remains after all the business expenses and allocations have already been deducted. Don’t forget to budget for benefits, taxes, licensing, etc. The bottom line is that you first need to cover the expenses of running your business.

After expenses, I also believe that extra funds should be reinvested in the business whenever possible. Invest in new equipment, services that grow the business, market research, customer/client development, and whatever else will generate growth. All these things need to be budgeted for first, before we consider what is left.

Those remaining funds are what I’m talking about. I’m referring to what you might spend on lavish restaurants, that extra night in Vagas, massages, upgrading the car to something foreign and ostentatious, or insisting on being the high bidder at your church fundraiser. If you are spending your extra business income on things that are more frivolous than necessary, then there is another option.

Put that Extra Money to Work for You

What if instead of spending extra business income you invested it? Let me be more direct: instead of taking any extra funds as income, you decide to invest it in the stock market or other investment vehicles. What if you made investing a habit and a regular allocation for your extra business income? Every extra dollar is invested, period.

So, if you have extra business income, which is often also the case when you also have a day job, then you can do just that. You don’t need to wait either, you can implement this as soon as you start too. If this is an option, it is a fantastic opportunity to grow your wealth well beyond what the business can generate. If you do this from the start and stick with it, then think of what this can mean when your income is $10K per month, or even $50K!

That extra money can now grow on its own. As long as you make sound, conservative investments, it will grow much faster than if it was just sitting in a cash account. If you absolutely need to generate income from it, you can even invest in high-dividend paying stocks, so that you will receive regular payouts without impacting your original investment.

You can even be more creative with more aggressive investment vehicles, but this is not my area of expertise. As I said, I am no financial advisor, so I now defer to experts who do this for me. However, when I was first starting out, I opened up a personal brokerage account and did this on my own at very little expense.

It can be done, but more importantly, it has many advantages:

1. It keeps you from spending your extra income on frivolous things

2. If you have never invested, this is a great way to start

3. It may clarify how you run your business, ensuring that you aren’t just covering expenses, but working to generate profits too

4. It generates a sense of accomplishment beyond the business itself

5. It can have tax advantages since you are not drawing the income directly – talk to a specialist about how to do this properly

6. It can significantly increase your business income over time

7. If necessary, that additional income can be reinvested in the business for greater impact in the future (a possible alternative to seeking VC funding)

8. With some planning, these investments can be protected from lawsuits and asset claims – talk to a specialist

9. Speaking of specialists, you will be surrounding yourself with experts that you will need as your wealth grows over time.

It’s been said already, but making this a habit in your life can change your life. It can be the doorway to changing your mindset about wealth. It can change your priorities about everything you do in life concerning money.

There is no Overnight Success

OK, now that we’ve dreamed a bit, let’s bring this back down to today’s reality. None of this is possible without extra income from your business. The business does need to generate positive income for you to be able to invest any extra funds. It should also be noted that this will not generate massive amounts of wealth overnight. This is a long-term plan.

As a long-term plan, though, it also gives you time to learn from it and to fine-tune it. When it comes to investing, long time-windows are your friend. I suppose an extra benefit is that implementing this can help calm things down a bit. If it’s long-term, then growing the business may not need to be rushed either. This can be very liberating.

That said, you don’t have to wait a long time to implement this either. As a matter of fact, you can implement this from the time of your first sale. As long as you are covering your expenses, your can set aside anything above that towards investing. You can literally start with pennies in profit. Just set them aside and let them accumulate in a separate account just for that purpose.

Once you have enough in the account to invest, you start investing – that is what I did when I started and was just scraping by. Purchasing stocks or other investments is not something you need to do every day. You can do it at the end of the month, or even quarterly. Just put it on your calendar to do your investing at a future date.

By the way, you can completely automate this with software too. Several apps will do this for you like Acorns, SoFi, Webul, and others. These will automatically shave off a little bit of each transaction and automate the purchasing of investments. I’m not exactly a fan of letting an app make investment decisions for me, but it is another option for those who really don’t want to think about it.

Whatever option you choose to invest the extra income from your business, always remember that this is a long-term plan. That means that you shouldn’t spend all your time checking up on your investments – it will take time for your wealth to grow. The stock market always goes up and down, but there is one truth that has held for over a century: over time the market continues to go up – yes, even through the Great Depression.

Conclusion

I must confess that I stopped doing this several years ago and I have not restarted. This is because when COVID-19 arrived, my extra income completely disappeared. I know many small business owners who have experienced the same difficulties. I simply wasn’t prepared for that kind of shock to my business models.

However, since I had been investing this way for decades, I also had a sizeable cushion. Honestly, I didn’t want to spend my investments to reinvest in my business, but I was more concerned about the business dying out, and since these were all profits and investment income generated from the business, it was only fitting that I use it to reinvest in the business.

That is one of the many benefits of having this cushion. Unlike retirement investments which can also be tapped in emergencies, a stock portfolio is much more liquid and has fewer penalties for early withdrawals. So, while I had to put my plan on hold for a few years, I was able to keep the business running without interruption. I was even able to rebuild important processes, pivot where needed, and invest in some infrastructure that should make it more robust and resilient in the future.

That said, I probably should have returned to the plan sooner. We’ve been out of COVID-19 for some time already, and I have delayed funding my own investment plan. I suppose writing this article is my realization that it’s time to start up again. If you are in the same position, with extra income from your business, you may want to consider doing the same.

The Massive Advantage for Small Business Owners in the U.S.

Ever consider how easy, convenient, and automated it is to ship packages in the US?
(Photo by Sticker Mule on Unsplash)

As small business owners, we often complain about the high cost of goods and services. This is especially true for small businesses that operate online businesses. From packing peanuts to mailing labels, everything seems to have become way too expensive. The future seems bleak at first glance.

However, in the US we benefit from something that no other Western country can even marginally compare to. We have the largest market. By this, I mean that the US has the best developed, best regulated, and most secure infrastructure for online businesses. This has created the most active online shoppers in the world.

Sure, China may have a huge online presence, but the infrastructure for ease of shipping, online payments, and security doesn’t quite compare. Sure, India may have many more people, but the vast majority of them do not have the means to regularly shop online. And sure, the European Union shares many of the same benefits as us, but they still have issues related to their heterogenous history, from competing customs regulations to income inequities between Eastern and Western Europe.

Now this isn’t an America First rant. It’s just that the US dominates the world in creating and fostering a business culture, but even more importantly an online business culture. This online culture is an evolution of the historical fostering of business that has existed in the US for generations.

How This Online Dominance Came About

It came primarily from the software industry. The ability of this industry to adapt their products to the online world has made the transition from in-store (aka brick & mortar) shopping to online shopping. Yes, the market economy of the US played a role, but this was merely a financial vehicle for the software industry to thrive.

The software industry made Google, eBay, PayPal, and Amazon possible. These became such household names that their names have become verbs: “Just Google it!” and “Can we eBay that?” While other popular companies like Microsoft, Adobe, and later Apple are also lumped into the same industry, the reality is that they primarily adapted their products to the online world.

This is also why programming exploded in the US. While many other countries also produce great programmers, it was seen as an emerging dominant field in the US first. What was originally the small niche of a few mainframe geeks, quickly became respectable, lucrative, and above all, necessary as personal computers became mainstream and cost-efficient for the masses.

I know I’m generalizing quite a bit here, but the companies above, the economic infrastructure, and the programmers who made it happen all had one thing in common: they adapted, they evolved, they incorporated, and when necessary, they pivoted to fit into whatever was new on the horizon.

That ability is something very American. It is ingrained in our economy. When the US was left to its own devices by the great powers of Europe after the Revolutionary War, the country as a whole adapted, evolved, and incorporated. After the country practically tore itself apart during the Civil War, it followed that catastrophe by adapting, evolving, and incorporating (yes, I know it wasn’t a perfect end to the war, but the economy persevered). After the devastation of WWII, again the country adapted, evolved, and incorporated.

This is the same resilience we see in modern times. The Oil Embargo of the 1970s, the Savings & Loan debacle of the 1980s, the Dot.com Bubble of the 2000s, the 2008 Housing Bubble, and the 2019 COVID-19 pandemic, are all examples of American resilience. For those of us who can only remember that last one, the US has emerged out of that crisis stronger than any other country.

This is because we adapted, evolved, and incorporated.

How All this History Is Tied to Small Businesses and Online Shopping

There is a culture of economic resilience in the US that is simply not ingrained in the cultures of other countries. This is an advantage that we have as a country that we need to embrace. No matter how bad we may think the economic outlook is, no matter how dire the future looks for our own small business, this country is still the best place for that business to thrive.

The best way to succeed as a small business is to also adapt, evolve, and incorporate. There is a massive infrastructure in place for small businesses to benefit from. This is especially true for online shopping. The simplicity, convenience, and access that exists in the US for online shoppers is like nowhere else on earth.

Just think how easy it is to tell Siri to play the playlist from your senior prom. Think how convenient it is for Alexa to ship your Neuriva to your door. Remember how simple it is to walk into an Amazon Fresh store, grab a drink and snacks, and then walk out without ever pulling out your wallet.

Now I know that these are all products developed by large companies and that your small business doesn’t have those same resources. However, these companies have laid the groundwork for these conveniences, now it is up to you and your small business to figure out how to adapt, evolve, and incorporate your products or services into that infrastructure.

Conclusion

I know that many small businesses are struggling in this economy. Rising costs have impacted us especially hard. This is why it is important to remember how fortunate we are to be in this country right now.

There is a massive surge occurring right now in the American Economy. As happened after every economic crisis mentioned above, this post-pandemic economic recovery is also one that you don’t want to miss out on. Instead of focusing on the negatives, which are largely behind us anyhow, focus on how your business can adapt, evolve, and incorporate to ride this economic wave to new successes.

This surge isn’t just that the stock market is reaching new heights, although that is a very good sign. It is also because unemployment is at an all-time low, which means there are customers out there with money to spend. It is also because there are new technologies out there like AI that are revolutionizing industries and will improve the online shopping experience for all. And it is also because as this country’s economy continues to outpace the rest of the world, its products and services will also generate more interest and income.

Consider how fortunate you are that you are also based in the US at this time. This is when the iron is hot and it is time to strike. Look at where the software industry is headed, think about where the financial markets are investing, and follow the lead of large online retailers. The infrastructure is there, you just need to figure out where your place is in it.

Politics Do Matter… Even for Small Business Owners

Taking a political stance can be an effective business strategy for small businesses (photo by fauxels on pexels.com)

I’ve learned that politics is a dangerous topic, especially when it comes to small business owners. Most would rather avoid the topic altogether. Obviously, they don’t want to alienate their customers, but it’s also a self-imposed bubble that allows them to pretend that they, and their business, can exist outside of politics.

When I interview business owners, I ask a very general question about their politics. Over the years that I’ve been doing this, the wording has evolved, and I think I have it down to be as innocuous and broad as possible:

Being green, aware of diversity issues, meeting local requirements, etc. can increase costs but also offer benefits. How do these things figure into your operations? Do you have any initiatives in place? What would you recommend to other business owners?

Of course, they can also skip answering the question altogether, and often people do. One person even wrote a very insulting response to this question. Yes, it happens.

Here’s the thing: I don’t want my blog and the interviews to be cookie-cutter bland. There are tons of other places online where you can read those. At the same time, I don’t want to alienate the people I interview either. It’s a careful balancing act, because ultimately politics do matter, even to small business owners.

An Example

Let’s take a recent news topic (that isn’t about a current war or Trump): the November 2023 Meeting between President Biden and Premier Xi of China in San Francisco. Now China and the US have been at odds over several important issues, the main one being the status of Taiwan. China would prefer a peaceful reunification of Taiwan, similar to the way they repatriated Hong Kong. In contrast, the US points to the fact that this was not a very peaceful transition at all.

I realize I am oversimplifying this issue tremendously and glossing over economic, social, and military factors. However, this issue is also extremely political in that it could impact regional balances of power, the elections in the US, and to some extent the divide between democratically led governments and more authoritarian ones.

There is also a moral and ethical concern. How will this affect the people of Taiwan? How will China incorporate the vastly different systems of governance and social structures? Will there be a massive exodus of Taiwanese people, and where will they go?

The bottom line is that this is actually a very complex issue that has global ramifications. On the other hand, the economic relationship between China and the US is also a critical matter. It is a precarious balancing act. To be honest, I truly wonder how these meetings between world leaders unfold. The pressure on each side must be tremendous.

How Politics Matter

Underlying all these issues is that the US is highly dependent on products, components, and services from China. More specifically, small businesses here in the US are highly dependent on them. Your bottom line is highly dependent on them.

A single sigh at the wrong moment during the Biden-Xi meeting, could mean that your paintbrushes, your sesame oil, or your paper wrapping is suddenly more expensive. You need capable, experienced, and intelligent people to be sitting in that meeting. Hence, your vote this year counts.

So, for you, too, it’s a careful balancing act. On the one hand, you need to do things that are political to support your business’s bottom line. At the same time, you need to remain as a-political as possible so as not to alienate any customers who disagree with your political position.

This becomes even more complex when you need to decide how much of your politics you need to reveal through your business. Will you quietly boycott that cheap wrapping paper from China because it is manufactured in ways that you disagree with? If so, will you pass on the cost of the higher-priced paper to your customers? How will that decision affect your bottom line?

The answers aren’t always so easy. Everyone is talking about using cleaner energy such as solar panels. You sure could cut some costs for your business that way, especially in the hot summer months. On the other hand, do you want to advertise this widely? Your business could be dismissed as too tree-hugging, and you could lose customers... or gain some.

Where to Draw the Line

Which politics you embrace will also depend a great deal on where you are located and what type of business you are in. If you sell motorcycle parts, then you may not want to have a Made-in-China sticker on the packing box, even if it will save on shipping costs, for you and the buyer. On the other hand, if you sell trendy t-shirts to teens, it may not matter… or it could.

So how do you know? Well, you need to know your customers. You need to know your industry. Most importantly, you need to know about politics. What you can’t do is pretend it doesn’t impact your business. It does and the more you can learn about it, the better.

This is why I ask my innocuous and broad question to everyone I interview. It is a risk, and I could alienate my interviewee. On the other hand, it’s a valuable piece of information for my readers. It shows other business owners what their peers are thinking and doing about it.

So yes, it is a careful balancing act. Most things in life are.