To start an online business at 12 years old, you’ll run the day-to-day work yourself, but a parent or guardian has to be the legal name on every contract, platform account, payment processor, bank account, and tax form the business touches. That isn’t a formality you can skip. Federal law, platform terms of service, and IRS rules all require a legal adult in those roles until you turn 18, so the first real step is sitting down with your parent and agreeing you’re doing this together.
Why Your Parent Has to Sign Everything
Contract law treats anyone under 18 as having limited legal capacity. A contract you sign is “voidable,” meaning you could walk away from it and the other side has no legal remedy. That sounds like an advantage until you realize no vendor, platform, or payment processor wants to deal with someone who can cancel at any time. Your parent signing instead gives the other party an enforceable agreement with an adult.
This covers almost everything a business touches: e-commerce platform terms, payment processor agreements, domain registrations, software subscriptions, and supplier contracts. Your parent isn’t just lending a name. They take on real legal responsibility. If the business breaks a platform’s rules or doesn’t pay a supplier, your parent is the one who answers for it.
One piece of federal law works in your favor. Child labor restrictions under the Fair Labor Standards Act apply to employer-employee relationships, not to self-employed minors running their own ventures.1U.S. Department of Labor. Fact Sheet 43 – Child Labor Provisions of the Fair Labor Standards Act (FLSA) for Nonagricultural Occupations So nothing in federal law stops you from spending afternoons building an online store. Your parents still set the rules on hours and screen time, but the government doesn’t.
Registering the Business and Getting a Tax ID
Most online businesses a 12-year-old would start — selling handmade crafts, offering digital designs, reselling items — don’t need a federal license. The SBA notes that federal licenses apply only to specifically regulated activities like selling alcohol, firearms, or broadcasting.2U.S. Small Business Administration. Apply for Licenses and Permits Your state or city might require a general business license or a sales tax permit, and fees vary.
The federal step most businesses need is an Employer Identification Number from the IRS. The EIN is the business’s tax ID, like a Social Security Number for the business. You apply using Form SS-4, which is free on irs.gov; third-party services charge $75 to $200 to file the same form for you.3Internal Revenue Service. About Form SS-4, Application for Employer Identification Number (EIN)
This is where your age shows up on paper. The SS-4 asks for a “responsible party,” and the IRS states explicitly that a minor child cannot fill that role because they aren’t authorized to control or manage the entity.4Internal Revenue Service. Responsible Parties and Nominees Your parent goes on line 7a as the responsible party, with their own Social Security Number on line 7b.5Internal Revenue Service. Form SS-4 Application for Employer Identification Number The business can still be a sole proprietorship with you as the nominal owner. The IRS just needs a legal adult as the point of contact.
Accounts You’ll Open in Your Parent’s Name
Selling Platforms
The major selling platforms require account holders to be legal adults. Etsy’s terms require all account owners to be at least 18.6Etsy. Minors Policy – Our House Rules Shopify and eBay use similar requirements. Your parent registers using their own name, date of birth, and address. You handle the listings, messages, and order fulfillment, but the account is legally theirs and they’re responsible for everything that happens on it.
Social media follows the same logic. Instagram, TikTok, and Facebook all set 13 as the minimum age, so you can’t open marketing accounts under your own name yet. Your parent can run a business page and let you manage the posts under their supervision.
Payment Processors
You’ll need a way to accept credit cards. The two most common processors handle minors differently:
- Stripe allows users as young as 13 to create an account, but a legal guardian must assume the role of account owner before the account can accept charges or transfer funds to a bank. The guardian provides their name, date of birth, the last four digits of their SSN, and a consent statement. At 12, your parent sets up the account entirely.7Stripe: Help & Support. Age Requirement to Create a Stripe Account
- PayPal requires all users to be at least 18, with no exception for parent-supervised accounts. Your parent opens a PayPal account in their own name and links it to the business.8PayPal. PayPal User Agreement
Most processors charge around 2.9% plus $0.30 per transaction for domestic online card payments, with higher fees for international cards and currency conversion.9Stripe. Pricing and Fees On a $20 sale, that’s roughly $0.88 in fees. Track them — they add up, and they’re deductible as business expenses at tax time.
Bank Account
Minors can’t open bank accounts alone. The two options are a joint account, where both you and your parent have access, or a custodial account, where your parent manages the money until you turn 18. Either works for business revenue. The bank will ask for your name, date of birth, and Social Security Number, plus your parent’s ID.
Keep the business money separate from everything else. Even a basic joint checking account works as long as you only use it for business deposits and expenses. Mixing birthday money with product revenue makes tax time a nightmare.
COPPA and the Age-13 Rule
You’ll notice almost every platform sets a minimum age of 13. The reason is the Children’s Online Privacy Protection Act, which prohibits commercial websites and online services from collecting personal information from children under 13 without verified parental consent.10Federal Trade Commission. Children’s Online Privacy Protection Rule (COPPA) Violations carry civil penalties of up to $53,088 per incident, and the FTC has imposed penalties in the millions in past cases.11Federal Trade Commission. Complying with COPPA Frequently Asked Questions
Platforms don’t dislike young users. They just don’t want the regulatory exposure of handling a child’s data. For you, that means every account the business uses sits in your parent’s name until you turn 13, and even after 13, selling features on many platforms still require being 18.
Taxes You’ll Owe, Even at 12
This surprises most young entrepreneurs: if your business earns $400 or more in net profit during the year, you owe self-employment tax regardless of your age. The IRS says self-employment tax rules apply “no matter how old you are.”12Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The rate is 15.3%, covering Social Security (12.4% on earnings up to $184,500 in 2026) and Medicare (2.9% on all earnings).13Social Security Administration. Contribution and Benefit Base
Net profit means revenue minus business expenses. If you sell $2,000 worth of products but spent $800 on materials and $200 on shipping supplies, your net profit is $1,000, and you’d owe roughly $153 in self-employment tax. Your parent helps you file Schedule SE with your tax return.
If the business grows enough that you expect to owe at least $1,000 in tax for the year, the IRS wants quarterly estimated payments rather than one lump sum in April. These are due April 15, June 15, September 15, and January 15 of the following year.14Internal Revenue Service. 2026 Form 1040-ES – Estimated Tax for Individuals Missing them triggers penalties.
Sales tax is simpler than it sounds when you sell on a marketplace. Marketplace facilitator laws in most states shift the responsibility for collecting and remitting sales tax from the individual seller to the platform. Etsy and similar marketplaces handle it automatically. If you build your own standalone store, you may need a state sales tax permit and will have to collect and remit yourself once you cross your state’s economic nexus threshold, commonly $100,000 in sales or 200 transactions in a state, though it varies. You’re unlikely to hit that early, but the rule exists.
Owning What You Create
Here’s one place your age doesn’t limit you. Minors can own copyrights in the United States, and the U.S. Copyright Office issues registrations to minors directly.15U.S. Copyright Office. Who Can Register (FAQ) If you design original artwork, write content, take photographs, or create digital products, you own the copyright the moment you create the work. Registration isn’t required for ownership but strengthens your position if someone copies you.
State laws may regulate business transactions involving copyrights owned by minors, so if someone wants to license your designs or you’re signing away rights to use your work, your parent needs to be involved in the deal. Selling your own products through your own store is straightforward.
Picking What to Sell and Getting the Store Live
With the legal setup in place, the actual launch is the easy part. On a marketplace like Etsy, your parent creates the seller account and you build the product listings, shop description, and policies together. On a standalone site through Shopify or similar, your parent registers the account and domain, and the platform walks you through connecting them.
New websites typically take several weeks to appear in search results, so don’t expect traffic right away. Use the time to test your checkout with a small purchase, check the site on a phone, and get your product photos and descriptions right. Every customer message, order confirmation, and shipping notification routes through your parent’s account, so build a routine for checking them together.
The businesses that work best for young founders tend to use skills you’re already developing: digital art and printable designs, handmade jewelry or crafts, reselling thrifted items, tutoring younger kids, or simple digital services like social media graphics. Start with one product or service, learn the rhythm of fulfilling orders and handling questions, and expand from there. The structure you’ve built scales with you. The same EIN, bank account, and platform accounts will support the business as it grows, and when you turn 18 you can take over the accounts yourself.