Income splitting (also known as income shifting) may be defined as dividing income in a way that lowers overall taxes. Typically, income is shifted from higher bracket taxpayers to lower ones. Although there are a number of ways to accomplish this shifting of income, family businesses provide fertile grounds for taking advantage of this tool. One method of income splitting is to hire family members to work in the business; this is perfectly legal. Paying salaries to family members reduces the amount of business income for you to pay yourself. However, you cannot pay your spouse and children an unreasonably high salary, or the IRS will take notice. Another method of income splitting is to give your family members stock in your incorporated business. To maintain control over your business, give nonvoting stock only.