Paying your kids

If you pay your kids via your family mgt company and have an S corp, how would this affect workman’s comp. On the WC audit it specifically asks if 1099s are issued and S corp would need to issue to the family mgt LLC since kids are 18+. The front of the 1120S also has a line for 1099’s and the 1120S can be requested with the audit. Seems like another expense for the SCorp to deal with. What am I missing? I’m in NY.