You can legally start a business at 16 in the United States. No federal law sets a minimum age for owning a company, and most state LLC and corporation statutes don’t either. The complication is contract law: anyone under 18 lacks full legal capacity, so a parent or guardian will need to co-sign your formation documents, open your bank account with you, and stand as the legally binding party on contracts until you turn 18. Everything below walks through how that actually works in practice.
Why Your Age Changes the Setup
The doctrine of infancy treats anyone under 18 as lacking full capacity to enter binding agreements, and under the Uniform Commercial Code, infancy is a recognized defense to contractual obligations.1Legal Information Institute. UCC 3-305 – Defenses and Claims in Recoupment A minor can walk away from most contracts without penalty. That protection is on your side as a consumer, but it works against you when you’re the business trying to sign a lease or line up a supplier. The other party knows you can disaffirm (cancel) the agreement, so many will refuse to deal with you directly.2Legal Information Institute. Infancy – Wex – US Law
So you can own the company. An adult just has to be the legally responsible person on the paperwork and the contracts. Once you turn 18, you can take over fully.
Pick a Business Structure
Your first decision is whether to operate as a sole proprietorship or form a separate entity like a limited liability company.
A sole proprietorship requires no state filing and no formation fee. You just start working. The problem is that you and the business are the same legal person, so your personal assets are exposed if someone sues or you can’t pay a debt.
An LLC creates a separate legal entity that shields your personal property from business liabilities. The tradeoff is paperwork and filing fees. Some states block minors from serving as the “organizer” who signs formation paperwork, so a parent may need to file for you. You can still be listed as a member (owner) of the LLC in most states.
Use a Manager-Managed Operating Agreement
If you form an LLC, draft a written operating agreement even if you’re the only owner. For a minor-owned LLC, a manager-managed structure solves a lot of problems at once: an adult serves as the named manager and handles contracts and day-to-day legal obligations, while you keep ownership and control. The agreement can require the manager to consult you on major decisions, so you have real authority without having to sign contracts yourself.
File Formation Documents and Get an EIN
State Formation
To form an LLC, you file Articles of Organization (sometimes called a Certificate of Organization) with your state’s secretary of state. The form asks for the company’s name, a physical business address, and the name of a registered agent, meaning a person or service authorized to accept legal notices for the company. Most states require the registered agent to be at least 18, so a parent or a professional service typically fills that role. Filing fees generally run between $50 and $300.
Most states let you file online. Once approved, you’ll get a stamped copy of your Articles of Organization. Keep it. Banks and licensing agencies will ask for it.
Employer Identification Number
An Employer Identification Number is a nine-digit tax ID issued by the IRS, functioning as a Social Security number for your business.3U.S. Small Business Administration. Get Federal and State Tax ID Numbers You need one if your business is an LLC or partnership, if you plan to hire employees, or if you want to open a business bank account. A sole proprietor with no employees can use their Social Security number instead, but an EIN keeps your personal number off invoices.
The application requires a “responsible party,” meaning the individual who controls or manages the entity. The IRS distinguishes between someone who merely benefits from an entity, such as a minor beneficiary, and someone who directs it.4Internal Revenue Service. Responsible Parties and Nominees In practice, most 16-year-olds list a parent as the responsible party, since the parent is also signing the formation documents. The application needs a valid Social Security number or ITIN and can be completed online at IRS.gov.3U.S. Small Business Administration. Get Federal and State Tax ID Numbers After approval, the IRS mails a CP 575 notice confirming the EIN. Save it.
Open a Business Bank Account
Keeping business money separate from personal money is non-negotiable for clean tax reporting, and for an LLC, it’s what keeps your liability protection intact. Banks will want your formation documents, your EIN, and government-issued ID.
Here’s the catch for a 16-year-old: most banks won’t let a minor be the sole account holder. Expect to open a joint business account with a parent or guardian, who takes on legal responsibility for the account, including overdrafts and fees.
This is not the same as a custodial account under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act. Those accounts hold property for a minor and are controlled by an adult custodian; they aren’t designed to work as business operating accounts. What you need is a standard business checking account with your parent as co-owner or authorized signer, so you can accept card payments, write checks to suppliers, and maintain a clean paper trail.
Handle Contracts Through an Adult
This is where most teen-owned businesses hit real friction. Because a minor can disaffirm nearly any contract, the other side faces lopsided risk. A landlord who leases space to your LLC knows you could void the lease. A supplier extending credit knows you could claim infancy as a defense. Many counterparties won’t sign unless an adult guarantees the deal.
The workaround is straightforward. Your parent or guardian co-signs or personally guarantees contracts for the business. If your LLC is manager-managed with an adult as manager, that manager can sign in their capacity as manager, which is cleaner than a personal guarantee on every deal. When you turn 18, you can ratify existing contracts and sign new ones on your own.
Local Permits, DBA, and Sales Tax
DBA Registration
If you operate under a name different from your legal name or your LLC’s registered name, file a “Doing Business As” registration. Some states handle this at the county level, others at the state level. Fees generally run from about $10 to $150, and a handful of jurisdictions also require newspaper publication of the DBA.
Business Licenses and Zoning
Many cities and counties require a general business license before you can legally operate. If you’re running the business from your parents’ home, you may also need a home occupation permit. Residential zoning commonly restricts activities that generate heavy foot traffic, outdoor signage, noise, or commercial deliveries. Businesses involving food preparation, animal care, or vehicle repair are frequently prohibited in residential zones. Check with your city or county clerk’s office. Operating without required permits can bring daily fines and typically forces you to shut down until you’re properly licensed.
Sales Tax Permit
If you sell physical products or certain taxable services, register for a sales tax permit with your state’s department of revenue. Most states don’t charge a fee, though some require a small refundable security deposit. Once registered, you collect sales tax from customers and remit it to the state on a monthly, quarterly, or annual schedule depending on your volume. Selling online to customers in other states may trigger sales tax obligations there too; most states require out-of-state sellers to collect tax once they exceed roughly $100,000 in annual sales into that state.
Taxes You Owe Regardless of Age
Your age doesn’t get you any tax breaks. If your net earnings from self-employment reach $400 or more in a calendar year, you must file a federal tax return.5Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
You’ll file Form 1040 with Schedule C attached to report business income and deductible expenses. Schedule C is where you subtract costs like supplies, software subscriptions, and advertising from gross revenue to reach net profit. On top of federal income tax, you owe self-employment tax at 15.3%, which breaks down as 12.4% for Social Security (on net earnings up to $184,500 in 2026) and 2.9% for Medicare.5Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)6Social Security Administration. Contribution and Benefit Base The tax is calculated on 92.35% of your net profit, not the full amount, and you can deduct half of your self-employment tax when calculating adjusted gross income.
Keep detailed records from day one. Save receipts, invoices, and bank statements. Good records are the difference between claiming every deduction you’re entitled to and leaving money on the table.
Quarterly Estimated Payments
If you expect to owe $1,000 or more in total tax for the year, the IRS wants quarterly estimated payments instead of a lump sum at filing time.7Internal Revenue Service. Estimated Taxes For the 2026 tax year, the deadlines are:
- April 15, 2026, covering income earned January through March
- June 15, 2026, covering income earned April through May
- September 15, 2026, covering income earned June through August
- January 15, 2027, covering income earned September through December
You calculate payments using Form 1040-ES. Missing a deadline or underpaying triggers a penalty, even if you end up owed a refund when you file your annual return.8Internal Revenue Service. How Do I Know if I Have to Make Quarterly Individual Estimated Tax Payments If your business is seasonal, the annualized income installment method lets you match payments to when you actually earn.
Protect Your Brand and Creative Work
If your business involves original content, designs, software, or a distinctive brand name, lock down the intellectual property early.
Copyright is the simplest. A minor can claim copyright and register works with the U.S. Copyright Office, which issues registrations to minors without requiring a parent’s involvement in the application.9U.S. Copyright Office. Who Can Register (FAQ) Copyright exists the moment you create an original work, but formal registration lets you sue for infringement and claim statutory damages.
Trademarks are more complicated. Whether a minor can be listed as the owner of a federal trademark depends on state law. The USPTO’s Trademark Manual of Examining Procedure says that if a minor can enter binding legal obligations in their home state, the application can be filed in the minor’s name. If not, it must be filed in the name of a parent or legal guardian, identified as such, for example “Jane Doe, parent of John Doe.”10United States Patent and Trademark Office. Trademark Manual of Examining Procedure – Section 803.01 If you file through a parent and turn 18 during the application process, you can amend the application to list yourself without a formal assignment.
Keep the Entity in Good Standing
Forming your business is only the start. Most states require LLCs to file an annual report (some states call it a biennial statement) updating the business address, registered agent, and names of owners or managers. Fees range from $0 in some states to several hundred dollars in others. Miss the deadline and your entity can be administratively dissolved, which means your LLC’s liability protection disappears until you reinstate it. Check your state’s secretary of state website for the schedule.
Many states also impose a separate franchise tax, gross receipts tax, or minimum tax on LLCs whether or not the business turned a profit. These state-level costs catch new owners off guard because they sit on top of the federal tax bill.
One federal item worth knowing about so you don’t go looking for it: a domestic company formed by filing with a state is currently exempt from Beneficial Ownership Information reporting with FinCEN under the 2025 interim final rule.11Financial Crimes Enforcement Network. FinCEN Removes Beneficial Ownership Reporting Requirements for US Companies and US Persons Only foreign-formed entities registered to do business in a U.S. state still have to file.12Federal Register. Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension A standard LLC in your home state is not affected.
If You Eventually Hire Help
If the business grows to where you need help, hiring triggers a whole separate layer of tax and labor obligations. For employees, you withhold federal income tax, Social Security, and Medicare from each paycheck, match the Social Security and Medicare portions, report on Form 941 (quarterly) or Form 944 (annually, if the IRS says you qualify), and issue W-2s at year-end.13Internal Revenue Service. Depositing and Reporting Employment Taxes For independent contractors, file Form 1099-NEC for anyone you pay $2,000 or more during the 2026 tax year, up from the previous $600 threshold starting with tax years after 2025.14Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns – 2026
Federal child labor laws also apply to anyone you hire. Workers under 18 are prohibited from a long list of hazardous jobs, including operating power-driven machinery, roofing, demolition, mining, and driving motor vehicles, and those restrictions apply even if the young employee works for another teenager’s company.15U.S. Department of Labor. What Jobs Are Off-Limits for Kids Employees under 20 can be paid a training wage of $4.25 per hour during their first 90 calendar days, though many states set their own minimum wages higher than the federal floor.16U.S. Department of Labor. Fact Sheet 32 – Youth Minimum Wage – Fair Labor Standards Act