Can Minors Own a Business? Legal Basics for Teen Entrepreneurs

If you’re a teen who’s into business, chances are you’ve got a bunch of ideas, or maybe you’ve already started gigs like babysitting, lawn care, snow shoveling, or even graphic design. Luckily, it’s completely legal to own a business as a minor. That said, there are a few things to know before you get started. This article breaks down the legal basics so you can build your business with the right steps.

Yes, You Can Start a Business as a Teen

As a teenager, you have multiple options when it comes to starting a business. Here’s a list of the most common types of business structures.

Sole Proprietorship

The simplest option is a sole proprietorship. This means you run the business under your own name and report any income you make on your personal tax return. There’s no federal paperwork required to get started, which makes it ideal for services like tutoring or lawn care and products like custom art or selling crafts on social media.

The downside? There’s no liability protection, so if a customer has a complaint or if an error is made in your business, your personal assets could be at risk. For example, if you sell cookies at a school event and someone claims they got food poisoning, they could sue you personally and go after your savings.

Limited Liability Company (LLC)

If you want more protection, you can form an LLC. This structure creates a legal separation between you and your business, which helps protect your car, savings, or other personal property if your business is ever sued. Each state has its own rules about how LLCs are formed, and some allow minors to be owners, but with restrictions. For instance, you usually need to be 18 or older to sign legal contracts. In Florida, there’s no age requirement to form an LLC, but you’ll still need a parent or guardian to:

• Sign the paperwork on your behalf
• Serve as your registered agent, which means they’re the legal contact for your business

Starting an LLC also makes your business look more professional and can help you open a business bank account.

S Corporation

There’s another business type called an S Corporation (or S Corp), but this one is usually not the best fit for teens. It can reduce taxes in some cases, but it requires more paperwork and legal responsibility. You’d need to file a corporate tax return and pay yourself a salary, which includes managing payroll taxes. This structure makes more sense for businesses earning over $50,000 a year in profit and with adult owners who can handle the added complexity.

What Does “Owning” a Business Look Like for a Teen?

Step 1: Choose a Business Idea

Think about what you’re passionate about and what you’re already good at. Maybe it’s web design, pet sitting, or reselling clothes. Choose something that fits both your strengths and your schedule.

Step 2: Start as a Freelancer If You’re Online

If you run a digital business, you can legally freelance as a teen in the U.S. In 2024, around 75 million Americans were freelancing. For solo gigs like graphic design or video editing, you just need to report your income—no LLC required to start.

Step 3: Understand Taxes and When to File

If you earn over $400 in self-employment income in the U.S., you’re required to file a tax return, even if your parents still claim you as a dependent.

Step 4: Consider Forming an LLC Later

If you find yourself making a steady income or working with others, you might consider forming an LLC to protect both your personal and business assets. It can also be useful if you plan to grow, hire outside help, or work with vendors, brands, or clients who expect formal contracts.

Step 5: Consider Required Licenses or Permits

When setting up your business, especially if you need a physical location to sell products or services, you might need certain licenses or permits. For example, selling food may require a health inspection, and running a lawn care service might mean applying for a local business license. Be sure to have a parent or guardian available to co-sign any legal documents.

Ready to Take the Leap?

You don’t have to wait until you’re 18 to build a successful business. Whether you’re freelancing online or running a local service, you can take ownership of your idea along with a little legal help when needed.

If you’re looking to grow your business skills as a future college student, the Kantner Foundation might be a great opportunity. Click here to learn more.