How to Help Your Kid Start a (Legal) Business

Children often have lofty aspirations and an extraordinary imagination. Some people’s dreams involve starting their own businesses. Businesses can provide kids with the space to be innovative and creative while earning some money. Even though more states and communities have made it simpler for young people to start businesses and make money, kids and teenagers still need to obtain the necessary documentation in order to legally operate their enterprises.  

What laws apply to children’s businesses?

No matter how old the boss is, a business is still a business. If a child-run business is illegal, they may encounter severe issues. 

According to Mark Williams, a former senior leader at BizFilings, “cities, countries, and states have laws that require businesses to secure permits and licenses to operate.” “Those regulations apply to practically every business, including those run by children. The compliance requirements for the typical lemonade stand, lawn-mowing business, or snow-shoveling operation must be confirmed with local officials.

Parents should be aware of the legal requirements that must be followed by all businesses in order to ensure that their children’s ventures are legitimate. To determine which paperwork you will need to fill out to start the business and what permits you will require, you will want to assist your child in choosing the right business structure for their idea. The majority of businesses opt to establish themselves as LLCs. [If you choose this course of action, see our article on how to form an LLC.]

However, before you launch this business, be certain that you are comfortable with its tax obligations. Your child will be required to pay taxes on any profits made if their business is profitable enough to generate more than $400. Fortunately, you can rely on experts and tools to get you through these initial stages.
Visit the city and county websites where the business will be located to learn more. You and your child can also go to City Hall to meet with the people in charge of business licensing since every business, even one run by a child, needs to have a business license. Williams claimed that the finance or revenue departments in your community frequently house these officials.