If you are a kid looking to break into the business world, or an adult wondering how old is necessary to own a business, it is essential that you comprehend all legalities associated with starting and running a company. Doing your due diligence upfront can save time and money in the long run by eliminating potential pitfalls.
Depending on where you reside, the legal requirements to own a business vary considerably. In some states, you don’t even need to be 18 years old to start one; while in others, you must form the business with either your parent or guardian’s help.
In most states, you must be at least 18 years old to register your business. This includes registering it with the local government, obtaining an Employer Identification Number (EIN), and setting up business bank accounts.
Teenagers’ legal responsibilities are similar to adults’, though they may have additional duties and obligations as well. It is essential for teens to be aware of these responsibilities and take them seriously.
One of the biggest mistakes young entrepreneurs make when starting a business is failing to complete all necessary paperwork. In addition to getting a license and paying taxes on their income, they may need to purchase their own insurance as well.
Before your child begins operating a business in any jurisdiction, it’s wise to speak with city or county officials there. They can give an overview of what needs to be done in order to obtain a license, explain any fees associated with getting one and provide you with all the necessary forms for filing with government authorities.
The next step in starting a small business is deciding what kind of entity it will be and how. There are various options for structuring an entity as a limited liability company (LLC), sole proprietorship or partnership.
LLCs are one of the most sought-after types of small businesses to form, as they offer various safeguards for owners and their personal assets. Not only can these protect against legal actions, but forming one is usually quite affordable too.
Sole proprietorships require no legal documents or protections and can be an ideal option for teens just starting out in business. However, there are some significant drawbacks to consider before deciding which structure is best suited to you – be sure to carefully weigh all pros and cons before making a final decision.
It is usually wise to consult an attorney before selecting your legal structure, especially if your business will be providing services or selling products.
Unless you’re a lawyer or accountant, it’s likely best to hire someone with expertise in small-business law to assist with your venture. Not only will they need an understanding of how to set up the correct legal structure for your business, but they can also offer guidance on choosing an appropriate name and other important decisions.