Should I tell my boss that my sister in law refuses to pay?

Wow! I think you should talk to your brother and tell him to pay because this is your job, and it could be on the line just because his wife does not want to pay. Do not be afraid stand up and say family is family, but Business is Business! They are no different then any other paying customer! Then tell him you do not own this company! And if you did you would do it for free ( just to er him up)