How to Start a Business as a Kid

Some kids naturally have the entrepreneurship bug. My own children were born with it – and I’m not too surprised, because, as they say, the apple never falls too far from the tree, and I was hit with the spirit of entrepreneurship from a very early age. Starting a business as a kid can – to them – feel like an easy task (“mom, I’ll just make this thingamajig, and we’ll put it up online and sell a million of them!”), but we know, there’s always much more to it. We’re going to share how to start a business as a kid, and how you as a parent can help your child.

Can kids even have a business?

Kids can most defnitely start their own businesses. Let’s get that out of the way. But even though they’re children, their business is going to be subject to things like taxes and administrative paperwork – and so a parent will have to help spear-head the effort and be listed as a manager who is able to make decisions on behalf of the company.

By working with your child, you’ll be able to help guide him or her and provide valuable life lessons and build strength of character.

How to actually start a business as a kid.

1 – Decide on your method of legal formation.

The very frst thing you’ll need to do is incorporate the business. Will it be a sole proprietorship, a partnership, or an llc? If you don’t have much experience with this, consult a business attorney or check out Legalzoom, which adds a nominal fee of $149 to the typical state fling charges. Setting up an llc is not actually a hard or expensive task, but you’ll need to make sure you understand the difference and implications of each type of legal formation.

Each state has its own website with resources dedicated to helping individuals start a business. Start by searching for your state’s resource page for incorporating a business.

2 – Register with the Department of Revenue.

We all have to pay taxes, whether we like it or not. So your business will need to be registered with the Department of Revenue. Each state has its own DOR website, so just do a simple Google search for “your state” DOR, and you’ll easily get to where you need to go. It’s a simple and free process to register, so don’t get scammed by online agencies pretending to register you for a fee.

3 – Find out if your kid will need a business license.

All businesses, whether started by adults or minors, are subject to the legal and licensing regulations of your state/city/county. Depending on your child’s chosen business idea, you may need to pay an annual license fee to maintain good legal standing. Start by checking your state’s business licensing resource site to see what you’ll need to do with/for your kid.

How to know if my kid’s business idea is a good one?

Sometimes, entrepreneur learn only after they start their business a) if it was a good idea, b) and if this is something they really wanted to do in the frst place.

I tend to think that it’s a good idea to learn some of these lessons as early in life as possible. One of the most important things you can help your kid discern is whether there will be demand for their product or service – because this ultimately will determine of people are going to pay – and what they’re going to pay – for it.

Once your child has a business idea, start by helping them do some research into the actual market and demand for that thing. As as many people as you can fnd – whether family, friends, or perfect strangers – if this is something they could use, an how much would they pay for it.

This will give you a good frame of reference. If you only get a small number of takers, then this may not be a good business idea to invest in. Remember, you really do want your little one to enjoy the fruits of their labor with some fnancial rewards, or they may be turned off to the idea of entrepreneurship later on.

You may also have to stay strong, as we know how tenacious kids are – if they are really in love with particular business idea, but you are pretty certain there is no demand for it, you may have to give your kid a dose of tough love as you guide them toward another more promising business idea.

What to remember after starting a business as a kid.

It’s a great idea to create a calendar for a few things related to your kid’s business.

You’ll need to keep track of important fling dates for things like taxes and annual reports. Not only will this help you budget fling fees and tax payments, but it will keep your kid’s business in good standing and not subject you to hefty late fees and penalties – or worse, having your business shut down all together.

A business is an investment of your time and money. You need to put in a lot of hard work to fnd success, and so you’ll need to teach your kids about valuable organization and planning skills.

What are good businesses for kids?

Good business ideas for kids are largely dependent on their interests, and kids are motivated by different things. Is your kid motivated by money? Or are they more motivated by wanting to do something that seems fun or cool, or even something more philanthropic in nature where they can give back and do nice things for others.

Regardless of their interests, you’ll then – as described above – need to determine the demand for that product or service.

It’s also a good idea to take into account the level of time that a business will take, and to be realistic about what you and your kid have to devote to it. If it takes off, are you prepared to give 40, 60, or more hours to it every week to build it and keep it going? Because starting a business is not a 9 to 5 job. Being an entrepreneur is a 365 day a year, 24 hours a day profession.

Should my kid start a business?

If you’ve gotten this far and it still feels doable and interesting to you and your child, then why not jump into the world of entrepreneurship feet first. Save this handy reference on how to start a business as a kid, and refer back to it through each of the steps above. Share with us your own story as you and your child start his or her first venture! Need more inspiration? Check out these books on starting a business for kids!