There is no minimum age to start a business under federal law, and most states don’t set one either. A ten-year-old can run a lemonade stand and a sixteen-year-old can take freelance clients. The wall shows up the moment the business needs to sign something: a lease, a vendor agreement, a bank account, a payment processor. Because people under 18 generally can’t make binding contracts, almost every practical step past “do the work and get paid in cash” requires an adult in a specific legal role.
Why Contracts Are the Real Barrier
Lawyers call it contractual capacity. In most states you reach the age of majority at 18, and until then any contract you sign is “voidable” at your option. You can walk away. The adult on the other side stays locked in.
A minor can cancel a contract any time before turning 18, and in many states for a reasonable window afterward. Miss that window and the contract becomes fully enforceable. The minor also can’t keep the favorable parts of a deal and dump the rest. It’s all or nothing.
That one-sided arrangement is exactly why suppliers, lenders, and landlords routinely refuse to deal with a business run entirely by someone under 18. The risk of a voided deal isn’t theoretical, and professional counterparties price it by walking away.
Picking a Business Structure
A sole proprietorship takes zero paperwork. You just start. The trade-off is that it does nothing about the contract problem, and the owner is personally liable for every business debt.
An LLC or corporation shields personal assets by creating a separate legal entity, but formation introduces its own age friction. Filing articles of organization or incorporation requires a designated organizer or incorporator, and some states require that person to be at least 18. A minor can usually own membership interests in an LLC, but the state filing office may balk if no adult is in the picture.
There’s a quieter problem with a minor-only entity. The LLC’s operating agreement and a corporation’s bylaws are themselves contracts. If every member or director is under 18, those governing documents are potentially voidable, which undermines the entity’s stability. That’s why most minor-owned LLCs and corporations keep at least one adult in a governance role.
How an Adult Bridges the Gap
Nearly every workaround involves a parent, guardian, or trusted adult taking on a defined legal role:
- Co-signing contracts. A parent who co-signs a lease, loan, or vendor agreement is fully liable for performance, which gives the other side someone enforceable to look to if the minor walks away.
- Serving as the LLC organizer. An adult files the formation paperwork while the minor holds the ownership interest and runs the business.
- Forming a partnership. An adult partner can legally bind the business in contracts while the minor handles the operational side.
- Creating a trust. A trustee manages the business assets on the minor’s behalf, which fits larger ventures or situations with outside investment.
Each of these takes real trust. The adult takes on genuine legal exposure, and disagreements about direction get complicated when one person has the legal authority and the other has the vision.
Emancipation and Its Limits
A minor can petition a court for emancipation, which releases them from parental control and grants most adult legal rights. An emancipated minor can generally sign enforceable contracts, hold title to assets, and open bank accounts independently.
Courts don’t grant it casually. You typically need to show financial self-sufficiency and a real reason for independence. Emancipation also doesn’t override every age-based rule. Licensing tied to age, such as alcohol or tobacco sales and certain professional licenses, stays off limits. Some states still restrict emancipated minors from entering certain labor contracts.
Bank Accounts and Payment Processing
Most banks require account holders to be at least 18. A minor usually needs a parent or guardian to co-sign or open a custodial or joint account that the adult oversees.
Online payment processors vary. Stripe allows users as young as 13 to create an account, but if you’re under 18, a legal guardian must assume the role of account owner before the account can accept charges or move funds to a bank.1Stripe. Age Requirement To Create a Stripe Account Shopify, Amazon, and most other major platforms require account holders to be 18. The workaround mirrors banking: the parent registers as the account owner while the minor runs the business.
Licenses and Permits
General business licenses in many jurisdictions don’t set a minimum age. A teenager registering a home-based tutoring business or craft shop can often get a basic operating permit without age coming up. Fees for general business licenses vary by locality but commonly fall in the range of $50 to $100.
Industry-specific permits are different. Businesses involving alcohol, tobacco, firearms, certain food service operations, and regulated professions like cosmetology or real estate typically require the licensee to be at least 18, sometimes 21. No amount of parental co-signing gets around these. If your business idea falls in a regulated category, check the specific licensing rules before putting money in.
Taxes Still Apply
The IRS doesn’t care how old you are. A minor who earns business income has the same federal tax obligations as any adult, and this is the piece families most often miss.
Any dependent with net self-employment earnings of $400 or more in a tax year must file a federal income tax return.2Internal Revenue Service. Publication 501 – Dependents, Standard Deduction, and Filing Information That threshold is set by statute and hasn’t moved in decades.3Office of the Law Revision Counsel. 26 USC 1402 – Definitions A teenager who clears $500 mowing lawns owes a return.
Parents sometimes assume they can roll a child’s business income onto their own return. They can’t. Form 8814 lets parents report a child’s interest and dividend income on the parent’s return, but it explicitly excludes earned income from a business.4Internal Revenue Service. Instructions for Form 8814 – Parents Election To Report Childs Interest and Dividends The minor files their own Form 1040 with a Schedule C and a Schedule SE.
On top of income tax, a minor with $400 or more in net self-employment earnings owes self-employment tax covering Social Security and Medicare.5Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The combined rate is 15.3%, split into 12.4% for Social Security and 2.9% for Medicare.6Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax Few teenage businesses hit the Social Security wage ceiling, so in practice the full 15.3% applies to all net earnings. The so-called “kiddie tax” that taxes certain children’s income at the parent’s higher rate applies only to unearned income like interest and dividends, not to money earned from running a business.7Internal Revenue Service. Topic No. 553 – Tax on a Childs Investment and Other Unearned Income
A sole proprietor with no employees can use a Social Security number and skip an Employer Identification Number. An LLC, a business with employees, or certain bank accounts will need one. The IRS requires the “responsible party” on the EIN application to be an individual who controls, manages, or directs the entity and its assets.8Internal Revenue Service. Instructions for Form SS-4 A minor who genuinely runs the business could technically qualify, but the IRS separately notes that a minor child who is merely a beneficiary does not qualify as a responsible party.9Internal Revenue Service. Responsible Parties and Nominees When in doubt, listing an adult avoids processing delays.
Owning Intellectual Property
A minor can own patents and trademarks. Age doesn’t block ownership of IP. The filing process is where adults come in. The U.S. Patent and Trademark Office provides that if an inventor is under a legal incapacity, a legal representative may file the patent application on the inventor’s behalf.10USPTO. MPEP 605 – Applicant A parent or guardian handles the paperwork while the minor keeps inventorship and ownership.
Trademarks have no specific age bar on ownership, though the same contractual capacity issues make adult involvement smoother. If you’ve built something worth protecting, file now through a parent or guardian rather than waiting until 18, because IP protection generally dates from the filing.
Child Labor Rules and Self-Employment
Federal child labor rules under the Fair Labor Standards Act govern the employer-employee relationship. They restrict what jobs employers can assign to workers under 18 and limit hours for younger teenagers.11U.S. Department of Labor. Fact Sheet 43 – Child Labor Provisions of the Fair Labor Standards Act for Nonagricultural Occupations A self-employed minor working for their own business isn’t in that relationship, so these restrictions don’t apply to the owner’s own labor.12eCFR. 29 CFR Part 570 – Child Labor Regulations, Orders and Statements of Interpretation
The picture changes the moment the business hires employees. Now it’s an employer subject to the standard labor regulations, including child labor laws if it hires other minors. Workers’ compensation requirements vary by state and turn on employee count and industry, not the owner’s age. A 17-year-old with a few workers takes on the same compliance load as any other employer.
Running an Online Business
E-commerce and app development are where many young founders start, and the age barriers here are mostly platform policies rather than law. Beyond the payment-processor rules already covered, the federal Children’s Online Privacy Protection Act creates compliance obligations for any commercial website or app that collects personal information from users under 13.13Federal Trade Commission. Complying With COPPA: Frequently Asked Questions COPPA applies based on your users’ ages, not yours. A young founder building an app or game that will attract other kids needs to understand it.
COPPA requires covered operators to post a clear privacy policy, obtain verifiable parental consent before collecting children’s data, and give parents access to review or delete their child’s information. Violations carry civil penalties of over $53,000 per incident. If the business is aimed at adults and doesn’t knowingly collect data from children under 13, COPPA likely won’t apply. If your user base skews young, build compliance in from day one.