Starting a Small Business as a Teenager

The entrepreneurial spirit has always been strong amongst young children and teenagers. From the quintessential lemonade stand to garage sales and car washes, kids across the country have always been involved in the world of business and enterprise.

However, now more than ever, the opportunity for teens to make significant amounts of money has arisen. With the internet and eCommerce, teenager entrepreneurs’ jars full of coins and dollar bills are often replaced by PayPal, Venmo, Etsy stores, and Amazon Affiliate accounts. With so many online resources and opportunities at their disposal, the increasingly naturally tech-savvy youth of America have the ability to make some serious profits online. But whether a teenager has a more traditional business or an online one, the question comes to mind about the legality of it all. What does it take for a teenager to run a legitimate company?

A business that a teenager starts will still require certain paperwork and permits to be recognized as legitimate by the state. Here we will explore how teenagers can legally start and run their own businesses. We will also examine a few good business ideas for teens and how entrepreneurship is beneficial to their development.

We will discuss the following topics in this article:

• What Are the Benefits for Teenagers Starting Businesses?
• What are Good Business Ideas for Teens?
• Why Does a Teenager Need to Make Sure Their Business is Legal?
• What is Legally Required for a Teenager to Start a Business?
• How Does a Teenager Acquire a Business License?

• What Are the Benefits for Teenagers Starting Businesses?

  Many benefits can be gained from a teenager starting their own business. Teens can learn more about personal responsibility, develop their communication and social skills, learn about managing finances, and stimulate their minds while learning more about running a business and their area of interest while earning an income. Not every teenage-owned business will become what a teenager continues to do in their adult life to earn a living, but some will get a great start and could turn their business into what they pursue as adults. Others can learn valuable information and lessons they can use in their future occupations or businesses. Starting a business as a teen can be a great investment in themselves as they continue to develop and learn more about who they are as a person and the world around them.

• What are Good Business Ideas for Teens?

  Great ideas for a teenager’s business can be drawn from their interests, passions, and unique talents and skills. For example, if a teenager loves animals, they could consider starting a pet-sitting or dog grooming business. Likewise, if a teen is skilled in a particular area, they could leverage this in their business. For instance, if a teen is especially proficient in math or another subject, they could start a tutoring business for other students, or if they are good at using computers and have organizational skills, they can start a business as a personal assistant.

  With younger people becoming increasingly tech-savvy, online businesses are also an excellent way for teenagers to get into entrepreneurship. If a teen has a specific interest, they can create an online store that sells products that revolve around their interest. For example, teens can develop homemade products, start an Etsy store, or sell collectibles on eBay. Another way teenagers could use the internet is to run an in-person business and promote it online. For example, if a teenager enjoys making homemade baked goods, they could sell their products in person and at events but promote their business online. Teenagers can take advantage of many fun and creative ways to use the internet and create a profitable business.

• Why Does a Teenager Need to Make Sure Their Business is Legal?

  It may seem harmless for a teen to start a small business without going through the proper steps to legitimize it. However, if you are the parent of a teenager who starts a business, what happens if they start making significant amounts of money or if someone wants to file a lawsuit against your teenager? Teenager-owned companies can run into serious issues if they have not taken the appropriate steps to make their business legal. Choosing the correct business structure for a teenager’s business can provide legal protection for them. Using a business structure such as a limited liability company (LLC) can provide liability protection for the teenager in the event of a lawsuit. If a teenager makes more than $400 with their business, they will also need to pay taxes on their income. It is important to ensure a teenager-owned business is legitimate in the eyes of the state, and doing so can keep them out of trouble and protect them legally.

• What is Legally Required for a Teenager to Start a Business?

  A business owned by a teenager will need to choose a business structure, just like any other business. LLCs are some of the most popular and widely used business structures due to how easy they can be to form, their versatility, and the protections they provide. For more information on starting an LLC please view our article, Step By Step Guide: How to Start an LLC (insert link). Depending on the type of business you are starting, another structure may be more beneficial. Teenagers starting their own businesses must figure out the correct business structure for them. To learn more about the different types of business structures, please view our page Compare Entity Types. On this page, you can compare the advantages and disadvantages of Limited Liability Companies, C-Corporations, S-Corporations, Limited Liability Limited Partnerships, Non-Profit Corporations, Limited Partnerships, and Sole Proprietorships.

  All businesses must also meet certain requirements to operate legally, including those owned by teenagers. States, counties, and cities have different laws requiring businesses to obtain licenses and permits. These requirements can vary depending on where you live and the type of business you have. The city and county where you will operate your business should have what is required listed on their websites. Teenage entrepreneurs can also go to City Hall and speak to the local officials overseeing business licensing to see what steps they will need to take and receive assistance with the process. Again, the licensing requirements can vary depending on your location and the type of business you are operating, but typically every business requires a business license; other business permits may also be required.

• How Does a Teenager Acquire a Business License?

  In order for a teen to obtain a business license or permit, they will need to fill out all of the necessary documents and forms and pay a fee. The requirements will be different from state to state. The teenage business owner may need to submit a detailed business plan and show that they have a good understanding of all of the legal and financial responsibilities involved. City and county officials can explain and walk you through the process. Teenagers can legally enter into contracts but may be required to have a legal guardian grant them permission to do so. Acquiring a business license as a teenager may be more of an involved and lengthy process depending on what type of business you are starting and where you are applying for the license, so it is better to begin sooner rather than later in order to start legally operating the business as quickly as possible.