How to Start a Business as a Minor
Identify your limitations and obstacles., Speak with a parent or guardian about becoming your sponsor., Know that you will have to file a tax return.
Step-by-Step Guide
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Step 1: Identify your limitations and obstacles.
There are many difficulties that might interfere with starting a business as a minor.
Many types of contracts signed by a minor are considered void.
While there are exceptions to this rule, many forms of financing, such as credit cards, are only available to people 18 years or older.
Furthermore, many lenders may be hesitant to give a minor a business loan.In addition, you need to think about how much time you have available to dedicate to a business.
If you are a student, how will you balance your business and schoolwork? Do you have transportation? Are you able to devote time every day to running a business? Ask yourself why you wish to start a business.
If you simply wish to earn money, then getting a job is a much better option.
It will allow you to gain valuable experience and generate income until you turn 18 and can begin a business without the considerable roadblocks you will face as a minor.
The U.S.
Small Business Administration offers a good deal of information for young entrepreneurs, such as whether or not entrepreneurship is right for you, how to write a business plan, find a sponsor, register your business, and apply for any necessary permits.
You can find this information on their website here: https://www.sba.gov/starting-business/how-start-business/business-types/young-entrepreneurs -
Step 2: Speak with a parent or guardian about becoming your sponsor.
If you have a supportive parent, they may be able to assist you with certain parts of the process.
For instance, you can apply for a credit card under a parent or guardian's account.
Or they may agree to act as an authorized signer so you can establish a corporation or LLC, which allows you to separate your personal and business assets.They may also help you open a bank account Keep in mind that the adult who signs for you is liable should you fail to make payments or fulfill other duties of the business.
While you may want to incorporate your business as an LLC, keep in mind that this may be unnecessary.
You can have a successful business that operates as a sole proprietorship.
This will eliminate the need for a parent or guardian to sign for you. , Unless your business is mowing lawns or babysitting, if you made a profit you may have to pay income tax and self-employment tax to the IRS.
If your profit is over $400, you may owe self-employment tax, which means paying your share of Social Security and Medicaid taxes as well as the Social Security and Medicaid taxes for any employees. -
Step 3: Know that you will have to file a tax return.
Detailed Guide
There are many difficulties that might interfere with starting a business as a minor.
Many types of contracts signed by a minor are considered void.
While there are exceptions to this rule, many forms of financing, such as credit cards, are only available to people 18 years or older.
Furthermore, many lenders may be hesitant to give a minor a business loan.In addition, you need to think about how much time you have available to dedicate to a business.
If you are a student, how will you balance your business and schoolwork? Do you have transportation? Are you able to devote time every day to running a business? Ask yourself why you wish to start a business.
If you simply wish to earn money, then getting a job is a much better option.
It will allow you to gain valuable experience and generate income until you turn 18 and can begin a business without the considerable roadblocks you will face as a minor.
The U.S.
Small Business Administration offers a good deal of information for young entrepreneurs, such as whether or not entrepreneurship is right for you, how to write a business plan, find a sponsor, register your business, and apply for any necessary permits.
You can find this information on their website here: https://www.sba.gov/starting-business/how-start-business/business-types/young-entrepreneurs
If you have a supportive parent, they may be able to assist you with certain parts of the process.
For instance, you can apply for a credit card under a parent or guardian's account.
Or they may agree to act as an authorized signer so you can establish a corporation or LLC, which allows you to separate your personal and business assets.They may also help you open a bank account Keep in mind that the adult who signs for you is liable should you fail to make payments or fulfill other duties of the business.
While you may want to incorporate your business as an LLC, keep in mind that this may be unnecessary.
You can have a successful business that operates as a sole proprietorship.
This will eliminate the need for a parent or guardian to sign for you. , Unless your business is mowing lawns or babysitting, if you made a profit you may have to pay income tax and self-employment tax to the IRS.
If your profit is over $400, you may owe self-employment tax, which means paying your share of Social Security and Medicaid taxes as well as the Social Security and Medicaid taxes for any employees.
About the Author
Rebecca Bell
Specializes in breaking down complex crafts topics into simple steps.
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