Starting a business as a minor can be a challenging and exciting journey. As a young entrepreneur, you may have the determination, time, and resources to turn your ideas into a profitable business. However, there are some legal considerations that apply specifically to this group of budding businesspeople.
Firstly, minors can form a business entity, but their parents or guardians need to act as authorized signers. It is essential to consult with an attorney and a CPA to understand the liabilities involved in these situations. In some states, minors can act as shareholders or serve on an advisory board of a business. In situations of legal emancipation, a guardian can be appointed by the courts to work with the minor on business decisions.
Secondly, minors can sign a contract technically, but because they are not considered to have the legal competency to enter into binding agreements, they can disaffirm the contract, which essentially voids their end of the bargain. In most states, people under the age of 18 are considered minors.
Thirdly, securing financing can be a challenge for young entrepreneurs as they might have poor or no credit history. Credit card applications are open to people aged 18 and older, but minors may apply for a card under their parent or guardian’s account, and payment liability will generally fall onto the minor’s parent or guardian.
When it comes to paying taxes, the IRS offers specific tax guidance for young entrepreneurs, including resources to determine if they need to file federal income tax returns. Minors can claim copyright, but state laws may regulate the business dealings involving copyrights owned by minors.
Finally, young entrepreneurs do not necessarily need business experience to run successful ventures, but they need to understand the risks and challenges associated with starting a business. Finding a local entrepreneur with experience running a successful business to mentor them through their journey is recommended.
There are many helpful resources for young entrepreneurs, such as SCORE, Shopify, SBA, and Fit Small Business. With the right attitude, determination, and support, young entrepreneurs can turn their business ideas into successful ventures.
