You remain PIC, you remain flight instructor, and don't sign 'em off 'til he's capable and doing all of the tasks required as a pilot. And.. when making corrections, do so in a way that doesn't alarm the passengers.

It's always great fun. Be sure to have your performance standards clearly spelled out and remind him of them when you get debriefing or pre-briefing time. Thus, when the 300 hours hits and you don't do the signoff, you can clearly point out the where the performance is lacking, but NOT in front of the passengers!

Don't be afraid to charge for your services as a VLJ flight instructor, not a dime-a-dozen corporate pilot.