How to Start a Business as a Minor

Last Updated: February 17, 2023 References

Starting a business can give you confidence, independence, and above all, money. Even though that's just as true for young people as it is adults, young people don't have the same freedom to start a business an adult does. Many types of contracts signed by minors are void, minors can’t get loans or credit, and in most states, can’t even incorporate or register a business as a limited liability company.^{[1]
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Research source} Nonetheless, for an enterprising young person, there are many opportunities to own your own business.

Method 1

Method 1 of 4:

Considering the Challenges of Being a Minor

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
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.
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3
Know that you will have to file a tax return. 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.^{[2]
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Method 2

Method 2 of 4:

Making Money by Making Something Special

1
Inventory your skills and hobbies. Maybe you like to cook. Perhaps you make earrings and necklaces in your spare time. A lot of people have a skill or two that most people don’t have. If that sounds like you, you might be able to start a business manufacturing something unique and selling it at a profit. ^{[3]
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- Being able to sell something unique is the key. You’re probably never going to make plain white t-shirts and make any money selling them, because huge manufacturers already make plain white shirts and they sell them more cheaply than you can even make them. But no one can make exactly the same cookies you can make, and no one can make exactly the same custom earrings you make. It’s the uniqueness of these items that makes them worth more than generic items.
2
Add up the cost of materials. If you don’t know how much you spend making what you sell, there’s no way to know how to price each item. Be very specific when you make calculations. You need to know the cost per unit of each and every item, and you need to know how much time it takes you to make each item.^{[4]
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- For instance, if you’re making cookies, you need to know how much flour, in dollars and cents, is in each cookie, and you need to know how much each cookie costs you to make. If each cookie costs you a dollar to make, and it takes you an hour to make and bake 24 cookies, you know you’re going to have to sell each cookie for at least three dollars and sell about fifty cookies to even make $100. Do you think you can sell fifty cookies before they go stale?
3
Sell to your classmates. When you’re just getting started, it’s a good idea to use your classmates to test out your products (as long as you’re selling the type of product they can afford). When you’re selling unique items, it’s very important to get feedback about what people like and don’t like about your products. After all, you have more control over your own products than anyone else, and you can modify them to make them more marketable .^{[5]
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- Some schools don’t allow this kind of thing, but sometimes are willing to grant more leeway with respect to selling unique, handcrafted items than they are selling things like candy. Even if you can’t sell on school property, you can still sell to classmates outside of school.
4
Promote your items online. While you might need a credit card to open a webpage with an online store, you won’t need one to post items for sale on Craigslist, Facebook, or even to advertise them on a free blog, like Tumblr. Take attractive, well lit pictures of your items, and post them in your advertisements along with descriptions that are clear and free of spelling and grammatical errors.^{[6]
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Method 3

Method 3 of 4:

Providing a Service

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Watch people’s pets. If you’re good with animals, starting a petsitting service can be a good way to get into business. The costs to you are mostly limited to promoting the service by printing out fliers and business cards, and the pay can be decent--$10-$20 for a dog walk, double that for an overnight stay.
- When you’re advertising your business, start local, especially if you don’t have a car. Post your fliers in community clubhouses, and leave leaflets on people’s doors. Find out more about starting a petsitting business at Start a Pet Sitting Business.
2
Babysit people’s children. If you’re a little older and you like children, babysitting can be a good way to make money. A teenage babysitter won’t get paid as much as an adult would, but they can still make $10 or more an hour, and even more if there are multiple children involved.^{[7]
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- If you plan on babysitting for more than six months, you should invest in taking a CPR/First Aid class. Not only will it help you respond to an emergency, you’ll get paid more if you do. You can find a CPR class near you at https://www.heart.org/HEARTORG/Conditions/HeartAttack/SymptomsDiagnosisofHeartAttack/HEARTORG/CPRAndECC/CPR_UCM_001118_SubHomePage.jsp.
- Again, it’s a good idea to start in your neighborhood. However, a lot of babysitters are older teenagers who have cars, and many parents are willing to provide transportation to the right sitter, so you can advertise more widely within your local area.
- Find out about starting a babysitting business in detail at Start Your Own Babysitting Business
3
Provide neighborhood lawn care. Another way to make money is by providing lawn care in your neighborhood. People are often willing to let a neighborhood kid cut their grass, and it will give you a way to get a little extra spending money.
- The downside to this is that lawn care is hard work. It takes a lot of hours and requires a lot of equipment. On top of everything, people won’t pay a minor the same rate as an adult. Add on the fact that you’re most likely confined to your neighborhood (unless you have transportation), and you'll see it’s hard to make a steady income from it.
4
Wash and detail people’s cars. Another good neighborhood business to start is washing and detailing cars. You can usually charge at least as much to wash a car as you can to cut grass, it will take about the same amount of time, and you won’t need to buy as much equipment.
- The downside is, like lawn care, it can be physically demanding and take up a lot of your time.
5
Tutor other students. If you have good grades, you may be able to get a job tutoring other students who need help with school. You can help kids learn how to read, teach algebra to middle school students, or help high school students practice for their SATs.
- Tutoring does not mean that you do the homework for clients or give test answers to other students. Instead, your job is to help them understand the concepts so that they can do the work themselves. Make sure you understand the line between teaching others and cheating.
- You can advertise your services to both students and parents.
6
Be reliable. While all business owners need to be reliable, those offering services need to be extra reliable. After all, few will notice if the kid selling candy on the subway misses a day of work, but everyone will notice if their babysitter doesn’t show up.
- Keeping a calendar of your jobs and assignments is a good way of keeping on top of things so you can stay reliable. It also helps to tell your friends and family about upcoming jobs. That way, if it slips your mind, they might remember.

Method 4

Method 4 of 4:

Buying Low and Selling High

1
Provide a good more conveniently than it is currently being provided. The fancy word for buying low and selling high is “arbitrage.” All arbitrage means is buying something at one price and selling it somewhere else for a higher price. The biggest trick to pulling it off is finding a good that people want but have a hard time getting, and making it convenient for them to buy it.^{[8]
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- For example, if your school allows it, you can buy candy cheap in bulk, and sell it to your classmates during lunch. Make sure to buy candy and snacks that are not available at your school.
- Wheeling and dealing like this is one of the best ways for a young person to get into business, because you don’t need to get a loan or sign a contract to start--anyone can do it. ^{[9]
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Buy in bulk to get the best price. In order to make a profit, you need to sell for more than you paid. The easiest way to do that is to buy in bulk—sellers charge less for high amounts of good than they do for small amounts. Buying in bulk is also called buying wholesale. Some notable wholesalers are Sam’s Club, Costco, and BJ’s, but you’ll need a membership, and you might not be able to get one as a minor. However, retailers like Amazon and Walmart have prices almost as low as wholesale.^{[10]
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- For example, if you buy a box containing thirty full-sized Reese’s, Hershey’s, and KitKat at $15, (the going price on Amazon), you can easily sell them for $1 apiece, which will double your money.^{[11]
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3
Don’t squander your profits. After you do make a profit, you’ll probably be tempted to go spend your profits on something fun. While you should have a little reward for your hard work, keep the spending to a minimum. Since, as a minor, you probably don’t have many expenses, keep at least half of your profits to put towards your next purchase.^{[12]
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- The more money you have, the larger the quantities you can buy (meaning lower prices and more profit) and the more expensive items you can buy.
4
Keep records. It’s easy to fall into the trap of not keeping records. As a business person, it’s crucial that you do keep records. You need to record your total costs and sales, the length of time it took you to sell what you have, profits on each unit sold, and costs for each unit. This kind of information is vital to have, because it helps you minimize your own costs and adapt to what people want to buy.
- Don’t just get estimates of these numbers. You need to know all of them down to the cent. To get your total costs and sales, just add up how much money you spent and how much you took in. To get the per unit cost, take the total costs and divide it by the number you units you bought. To get the profit per unit, take the total sales and subtract the total costs. Next, divide it by the number of units.
5
Try new things and take risks. There’s no better time to try new business strategies than when you’re a minor and your parents are footing the bill for your basic expenses. There’s much less for you to risk when someone’s guaranteeing a roof over your head. Try selling in new locations and selling different items at different prices. Adopt the practices that work and discard the ones that don’t.^{[13]
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- It’s okay to risk, but don’t risk everything on a new strategy. Always keep whatever money you’ll need to maintain your current operations. Only spend what’s leftover on the new strategy.