Can I compensate a dependent child through my LLC by contributing to a 529 instead of paying them directly?

Yes, you may set up an arrangement where the earnings of your teenage children are contributed to a 529 plan. You may set up a formal employment agreement with your children, just as you would with any other employee. The work they do must be legitimate and done in such a way that it doesn't appear as a gift in disguise.

There may be specific compliance issues in the state where you are domiciled so you may need to check those requirements regarding documentation of their work and pay, including contributions to the 529 plan. 

 Just to be clear, it would be the children that are contributing the 529 plan because it is their money.  It would need to be clear that the child is requesting that their pay is to be deposited into whatever account they choose.

Ideally, you should pay the child directly.  Then the child can transfer money into a 529 plan if they choose to do that.  In most cases, a child would want to keep some of their pay for other purposes.

The child's entire pay going into a 529 plan can easily be construed as a scam to get a business deduction and the real intent is that the parent is contributing to the 529 plan.  So be sure to clearly document everything and let the child decide what they want to do with their pay.