Last updated: January 2026
If you're a business owner looking to pay your children through your business, you've probably wondered: should I use regular payroll software like Gusto or QuickBooks, or is there a better way?
We built Kids Payroll specifically for parents who want to hire their kids compliantly, and there are some significant differences from traditional payroll solutions.
Here's an honest comparison to help you decide.
Quick Comparison Table
| Feature | Kids Payroll | Gusto | QuickBooks Payroll | Wave |
|---|---|---|---|---|
| Built for hiring kids | ✅ Yes | ❌ No | ❌ No | ❌ No |
| Kid-friendly interface | ✅ Yes | ❌ No | ❌ No | ❌ No |
| Age-appropriate job templates | ✅ 50+ templates | ❌ None | ❌ None | ❌ None |
| IRS compliance guidance | ✅ Built-in | ⚠️ Generic | ⚠️ Generic | ⚠️ Generic |
| Roth IRA tracking | ✅ Yes | ❌ No | ❌ No | ❌ No |
| Work hour logging | ✅ Kid-friendly app | ⚠️ Complex | ⚠️ Complex | ⚠️ Complex |
| Audit documentation | ✅ One-click export | ⚠️ Manual | ⚠️ Manual | ⚠️ Manual |
| Goal setting for kids | ✅ Yes | ❌ No | ❌ No | ❌ No |
| W-2 generation | ❌ Use your CPA | ✅ Yes | ✅ Yes | ✅ Yes |
| Starting price | $19/month (up to 2 kids) | $40+/month | $50+/month | Free* |
| Additional children | $5/month each | $6/person | $6/person | $6/person |
*Wave is free but charges for payroll tax services
Kids Payroll vs. Gusto
What Gusto Does Well
Gusto is excellent full-service payroll software. It handles:
- Multi-state payroll
- Benefits administration
- Full-time employee onboarding
- Tax filings for traditional employees
- W-2 generation
If you have a team of adult employees, Gusto is a solid choice.
Where Gusto Falls Short for Hiring Kids
1. No guidance on child-specific tax rules
When you hire children under 18 in a sole proprietorship or spousal partnership, they're exempt from FICA taxes (Social Security and Medicare). Gusto doesn't automatically recognize this. You have to manually configure it and hope you did it right.
Kids Payroll provides clear guidance on the correct tax treatment based on your business structure and your child's age.
2. Complex interface intimidates kids
Gusto was built for HR professionals. If you want your 12-year-old to log their own work hours for your business, good luck explaining the dashboard.
Kids Payroll has a separate kid-friendly app with gamified work logging, savings goals, and a friendly robot guide named LedgerBot.
3. No age-appropriate job descriptions
The IRS requires that work be "legitimate" and wages be "reasonable." What does a reasonable wage look like for a 10-year-old doing filing vs. a 16-year-old managing social media?
Kids Payroll includes 50+ age-appropriate job templates with suggested hourly rates based on market data, all for legitimate business tasks.
4. No audit protection features
If the IRS questions your child's employment, you need documentation: timesheets, job descriptions, proof the work was real.
Kids Payroll generates audit-ready documentation with one click. Gusto requires you to piece it together yourself.
5. No wealth-building features
The whole point of paying your kids is often to fund their Roth IRA and build tax-free wealth. Gusto doesn't track Roth contributions or help kids see their long-term savings grow.
Kids Payroll includes Roth IRA tracking and projections, showing your child what their money could become by retirement.
Pricing Comparison: Kids Payroll vs Gusto
| Kids Payroll | Gusto | |
|---|---|---|
| Base price (up to 2 kids) | $19/month | $40/month |
| Additional children | $5/month each | $6/month each |
| 2 kids, 1 year | $190 | $624 |
| 3 kids, 1 year | $240 | $696 |
Note: Kids Payroll focuses on work tracking, compliance documentation, and wealth building. Your CPA handles W-2 filing using the records Kids Payroll generates.
Kids Payroll vs. QuickBooks Payroll
What QuickBooks Does Well
QuickBooks Payroll integrates seamlessly with QuickBooks accounting. If you're already in the QuickBooks ecosystem, it keeps everything in one place.
Where QuickBooks Falls Short
1. Overkill for simple family payroll
QuickBooks Payroll is designed for businesses with employees, benefits, PTO tracking, and complex pay structures. If you're just paying your kids for legitimate business work, it's like using a semi-truck to drive to the grocery store.
2. Same issues as Gusto
- No child-specific tax guidance
- No kid-friendly interface
- No job templates for minors
- No Roth IRA integration
- No audit documentation generator
3. Higher cost
QuickBooks Payroll starts at $50/month plus $6 per employee. For a family just paying their kids, that's expensive for features you'll never use.
Pricing Comparison: Kids Payroll vs QuickBooks
| Kids Payroll | QuickBooks Payroll | |
|---|---|---|
| Base price (up to 2 kids) | $19/month | $50/month |
| Additional children | $5/month each | $6/month each |
| 2 kids, 1 year | $190 | $744 |
Kids Payroll vs. Wave Payroll
What Wave Does Well
Wave's accounting software is free, and their payroll is relatively affordable. For bootstrapped businesses, it's an attractive option.
Where Wave Falls Short
1. Limited tax service states
Wave only offers full-service payroll (where they file taxes for you) in 14 states. If you're in other states, you're handling tax filings yourself.
2. Same child-specific limitations
Wave wasn't built for family employment. You get none of the specialized features that make hiring your kids easy and compliant.
3. No mobile app for kids
Wave's interface is web-based and designed for accountants, not children logging their business work.
Kids Payroll vs. DIY (Spreadsheets + Manual Filing)
Some parents try to save money by tracking everything in spreadsheets and filing taxes manually.
The DIY Approach
- Track hours in Excel or Google Sheets
- Calculate wages manually
- File quarterly payroll taxes yourself (Form 941)
- Work with CPA for W-2s at year end
- Keep paper records for audits
Why DIY Is Risky
1. Easy to make mistakes
Disorganized records and inconsistent tracking make it hard to prove legitimacy if questioned.
2. Audit vulnerability
If the IRS questions your child's employment, disorganized records make it easy for them to disallow the deduction entirely. That could mean back taxes, penalties, and interest.
3. Time cost
Your time has value. Hours spent on tracking and organizing could be spent on your business, or with your family.
4. No wealth-building motivation for kids
Spreadsheets don't show your child their savings goals or future Roth IRA projections. Kids Payroll gamifies work and saving, teaching financial literacy along the way.
Cost Comparison: Kids Payroll vs DIY
| Kids Payroll | DIY | |
|---|---|---|
| Annual cost (up to 2 kids) | $190/year | $0 |
| Your time (4 hrs/month × $50/hr) | $0 | $200/month |
| Risk of IRS issues | Low | Higher |
| True annual cost | $190 | $2,400+ in time |
When to Use Traditional Payroll Software
Traditional payroll solutions like Gusto or QuickBooks make sense if:
- ✅ You have adult employees beyond your children
- ✅ You need benefits administration (health insurance, 401k)
- ✅ You have complex multi-state payroll
- ✅ You need HR features like PTO tracking and performance reviews
- ✅ You want automated W-2 filing
In these cases, you might use Gusto for your regular employees and Kids Payroll specifically for tracking your children's work and building their financial future.
When Kids Payroll Is the Better Choice
Kids Payroll is built for you if:
- ✅ You want to pay your children for legitimate business work
- ✅ You want IRS compliance documentation without the complexity
- ✅ You want your kids engaged in tracking their own work
- ✅ You're using this strategy to fund Roth IRAs
- ✅ You want audit protection with minimal effort
- ✅ You want to teach your kids financial literacy
- ✅ You have a CPA who handles your tax filings
What Kids Payroll Does (and Doesn't Do)
Kids Payroll handles:
- ✅ Work hour tracking with kid-friendly interface
- ✅ Age-appropriate job description templates
- ✅ Earnings calculations
- ✅ Audit-ready documentation export
- ✅ Roth IRA contribution tracking and projections
- ✅ Savings goals and financial literacy features
- ✅ Compliance guidance based on your business structure
Your CPA handles:
- W-2 preparation and filing
- Quarterly payroll tax filings (if required)
- Year-end tax planning
- Business structure optimization
Kids Payroll gives your CPA everything they need in a clean, organized format.
The Bottom Line
Traditional payroll software is built for traditional employment. It works, but it's not optimized for the unique situation of hiring your own children.
Kids Payroll was built from the ground up for one purpose: helping business-owner parents track their kids' legitimate business work compliantly while building tax-advantaged wealth and teaching financial responsibility.
You wouldn't use accounting software to teach your kid about money. Why use traditional payroll software to track their work?
Ready to Get Started?
- ✅ 14-day free trial
- ✅ No credit card required
- ✅ Set up in under 5 minutes
Frequently Asked Questions
Can I use Kids Payroll alongside Gusto?
Yes. Many parents use Gusto for their regular employees and Kids Payroll specifically for tracking their children's work and building their financial future.
Does Kids Payroll file my taxes or generate W-2s?
No. Kids Payroll focuses on work tracking, compliance documentation, and wealth building. Your CPA handles tax filings and W-2s using the records Kids Payroll generates.
What kind of work can my kids do?
Kids Payroll is designed for legitimate business work, not household chores. Examples include filing, data entry, social media management, office organization, inventory help, packaging, and customer service assistance. We provide 50+ age-appropriate job templates.
Is my child too young?
There's no minimum age to earn income for legitimate business work. Kids Payroll includes age-appropriate job templates starting at age 6 (shredding paper, organizing, simple sorting tasks) up through age 21.
What if I get audited?
Kids Payroll's one-click audit export generates a complete documentation package: timesheets, job descriptions, payment records, and a summary showing your compliant setup.
I have an S-Corp. Can I still use Kids Payroll?
Yes. While the FICA exemption rules differ for S-Corps, Kids Payroll still helps you track work, document compliance, and build your child's financial future. Consult your CPA about the best structure for your situation. Some S-Corp owners work with their CPA to set up arrangements that maximize tax benefits.