The modern age has made it easier and more accessible for anyone to start a business, including young aspiring entrepreneurs. But how young is too young when it comes to owning a business? Is there an age limit, and what does that mean for parents who may need to get involved in the process?
Read on to learn everything you need to know about the minimum age requirements to own a business and the critical steps for a successful launch.
How Old Do You Have to Be to Own a Business?
Depending on the state in which you reside, there is no set minimum age for starting a business. However, minors may be restricted in certain industries, such as alcohol, tobacco, or adult entertainment, — and may face barriers related to contracts, licensing, and financing because of their age.
Therefore, young entrepreneurs should check local laws regarding age-related conditions or restrictions. Ask your parent or guardian for advice and consult a legal professional if needed.
Legal Definition of a Person
The age at which a person becomes legally accountable also called the age of majority, is not uniform worldwide and is set at 18 in many jurisdictions. Upon reaching this age, an individual acquires various rights, such as the right to vote, enter into contracts, and make independent legal decisions.
However, the age of adulthood may differ depending on regional laws and regulations, and a higher age limit may apply to certain activities.
Legal Definition of Running a Business
As mentioned earlier, the age required to operate a business varies by jurisdiction and business type. No explicit age requirement exists in many nations, but minors often face restrictions. Typically, minor business operators need parental or guardian consent for contract engagement due to their limited legal capacity.
Certain states, such as Texas, California, Delaware, and Nevada, allow minors to own a business entity like a Limited Liability Company (LLC).
Therefore, young entrepreneurs should be knowledgeable about their jurisdiction’s laws and consult the relevant local rules and regulations before embarking on a business venture.
Factors to Consider for Minors Starting a Business
No chance of letting your age get in the way of starting your business? We want to help and get your business thriving. However, there are some things you should consider before diving head first into entrepreneurship.
Here’s a closer look at what you should keep in mind if you’re determined not to let age requirements stop you.
Forming of Business Entity
Minors can typically form a business entity, such as a sole proprietorship or partnership, although the restrictions and requirements depend on the jurisdiction. And parental or guardian consent may be required for a minor to start a business.
Signing of Contracts
Minors generally have limited legal capacity, and contracts entered into by minors are often considered void. However, there are exceptions for contracts relating to necessities or for contracts ratified after the minor reaches the age of majority.
Getting Access to Credit
Access to credit is difficult due to legal restrictions and a legal adult is needed to enter into a binding credit agreement. Options to help minors access credit include obtaining a cosigner or exploring special financial programs for young entrepreneurs. Alternative financing options, such as crowdfunding or grants, may also be available.
Paying of Taxes
Minors must pay taxes on their business income, similar to adult business owners. They may need to apply for a Taxpayer Identification Number (TIN) or use their Social Security Number (SSN) for tax purposes. Additionally, minors must understand their tax obligations and seek advice from tax professionals or appropriate authorities to ensure compliance.
Claiming of Copyright
Minors may claim copyright protection for their original creative works. Copyright automatically applies to their works once they have been transformed into a tangible form. However, parents or guardians must assist in the administration of copyright matters and act as legal representatives when appropriate.
Is It Worth It to Start a Business as a Minor?
It can be discouraging to start a business for any age group considering all the legal implications involved. But is it still worth it to start a business as a minor?
Here are some key advantages to inspire you:
- Starting a business as a minor provides an opportunity to gain valuable entrepreneurial experience at a young age, setting a solid foundation for future endeavors.
- Minors often have the flexibility to explore innovative ideas and take risks without the same level of financial and personal obligations that adults may have.
- Running a business as a minor offers a wealth of learning opportunities in various areas, such as finance, marketing, customer service, and problem-solving — which can enhance business skills for future endeavors.
- Starting a business allows minors to connect with mentors, industry professionals, and like-minded individuals who can offer guidance and support, leading to a network of valuable people to learn or do business with.
- The experience of starting and running a business as a minor can foster personal growth, including developing self-confidence, resilience, and the ability to manage challenges and setbacks.
How to Start a Business as a Minor in 7 Steps?
Now’s the time to strap your boots and get ready to start your entrepreneurial journey.
Are you ready? Here are seven key steps to follow to get you on the right path.
1. Choose a Business Idea: Identify a business idea that aligns with your interests, skills, and resources. Consider your passion, market demand, and feasibility before proceeding.
2. Conduct Market Research: Research your target market to understand customer needs, competition, and potential opportunities. This will help refine your business idea and develop a unique selling proposition.
3. Develop a Business Plan: Create a comprehensive business plan that outlines your goals, target market, marketing strategies, financial projections, and operational details. A business plan serves as a roadmap for your venture and can be helpful when seeking support or financing.
4. Seek Guidance and Support: Reach out to mentors, business advisors, or entrepreneurship organizations that can provide guidance and support. They can help navigate legal requirements, offer valuable insights, and connect you with relevant resources.
5: Secure Necessary Licenses and Permits: Research and obtain any required licenses or permits for your business. Certain industries or activities may have specific legal requirements that you need to comply with, such as health and safety regulations or age restrictions.
6. Set Up Financial Systems: Establish a system for managing your business finances, including opening a business bank account, tracking income and expenses, and considering options for accepting payments.
7. Launch and Promote Your Business: Develop a marketing strategy to promote your business, including building a website, utilizing social media platforms, networking, and leveraging word-of-mouth. Start serving customers and continuously refine your offerings based on feedback and market dynamics.
Nurturing Ambition: Building a Business as a Minor
It’s quite clear that there are many steps involved to ensure a successful launch of your business. And with certain age restrictions, it can be tedious to get things rolling. With doola, you can streamline your business development efforts and save hours of research and effort in learning complex legal terminology.
As a one-stop store for business startups, doola’s bookkeeping professionals can help manage your finances, apply for an LLC in your state of choice, and handle the paperwork so you can focus on building your brand. Contact us today for a free consultation with one of our business experts.
Are there any industries or business types that minors are barred from owning?
Minors are generally barred from owning certain industries or types of businesses that are considered age-restricted, such as businesses involving alcohol or tobacco.
Can minors obtain loans or financing to start a business?
It can be difficult for minors to obtain loans or funding to start a business because there are legal restrictions, and contracts can only be made with an adult.
How can a minor learn more about starting and owning a business?
Minors can learn more about starting and owning a business through various resources such as books, online courses, workshops, mentoring programs, and entrepreneurial clubs or organizations.
What is the financial risk of starting a business as a minor?
Without the guidance of experienced business owners, the financial risk of starting a business as a minor is relatively high. However, with proper mentoring and attention to detail, it is possible to circumvent these challenges and mitigate financial risk.
Can minors hire employees for their business?
There may be restrictions on hiring employees by minors for their company due to labor laws and regulations, as well as the need for parental or guardian consent.