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Updated Oct 20, 2023

How to Help Your Kid Start a (Legal) Business

Putting up lemonade stands and mowing lawns are popular ways for kids to earn pocket change, but could they get in legal trouble for their entrepreneurial activities?

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Sean Peek, Business Ownership Insider and Senior Analyst
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Kids have extraordinary imaginations and, often, big dreams. For some, those dreams include starting businesses. Businesses can give kids the space to be creative innovators and make some money. An increasing number of states and communities have even made it easier for young entrepreneurs to earn money, but children and teens still need to secure the right paperwork to run their businesses legally.  

How do you obtain a business license for kids?

Every state has different requirements for getting a business license. In most states, the child will need to submit a business plan, which will show their business competence and understanding of the financial and legal parameters of their proposed undertaking. This is a great opportunity for children and teenagers to learn more about how businesses form and operate.

To secure a permit or a business license, owners need to fill out forms and pay a fee. City and county officials in the jurisdiction where the business is located can outline the requirements, explain penalties for noncompliance and provide the proper paperwork to get the process going.

When applying for a business license, kids need to know the state’s laws on child and teen labor as well as laws for entering into legal agreements with minors. While minors can legally enter into most contracts, they are often subject to different terms, and some require permission from a legal guardian. Depending on the scope of your child’s business, it may need outside funding, and minors cannot legally apply for a small business loan on their own. 

Because obtaining a business license can be a lengthy process, it’s best to start as soon as your child’s idea is fully developed. If your kid plans to hold a summer bake sale or shovel snow in the winter, you should start the licensing process a few months before that season to give them enough time to obtain the proper permits.

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Business license fees vary based on the location and the type of business you're starting, but typically, they range from $50 to $200. Encourage older kids and teenagers to research these kinds of details themselves, and then review them together.

What are good businesses for kids?

When a parent wants to help their child find work, their first ideas are often selling lemonade or babysitting. But many other businesses may be more exciting for your child. To determine what type of operation is right for your kid, begin by helping them identify the activities and subjects they enjoy the most.

For example, children who are excellent at making baked goods and candy may want to start selling their confectionaries from home and even build the service into a full-fledged brand. Perhaps your child loves animals; they may decide to become a dog walker or pet sitter. Someone always needs their car washed; if your kid likes cooling off outside on a warm summer day, they may want to start a car-washing business with some friends. Meanwhile, creative storytellers or inquisitive question-askers may want to start a YouTube channel or a podcast for other children.

Here are some other small business ideas you and your child can explore together in your community or your living room.

Tutoring

Tutoring is a great small business option for older children who excel in a particular subject. Teenagers can find other students to tutor online or through their school or local library. They can help peers or younger pupils do their homework and understand subjects or concepts they struggle with. Not only will your kid earn money by helping others, but they’ll also develop their own academic thinking skills.

Social media management

Teenagers today have grown up with social media, so using it is second nature for many of them. In contrast, many small business owners don’t have as much experience on the web and may struggle to build their online presence. Teens can offer their social media savvy to these proprietors, helping them build and engage their audience online and gain more customers. But whether your child is using YouTube or Twitter, keep in mind that the internet can be dangerous, so you’ll want to make sure they’re following safe online practices and protecting their privacy

Crafting

If your child’s hobby is making a certain craft – such as bookmarks, clay figures or scarves – they could find a way to sell their creations in your front yard, online marketplaces or local craft fairs. Many people love to have or give personalized items that are homemade by local artists, especially when those artists are kids. [See online sales alternatives to Etsy to consider options that might make sense for children.] 

What is the value of starting a business with your kid?

According to Junior Achievement USA, 60% of teens would rather start a business than have a traditional job. While launching a business may require what seems like an overwhelming amount of information, it can be a great learning experience for your kid and for you, too. Starting a business can help children learn a wide range of lessons, such as personal responsibility, the importance of teamwork and the value of a dollar. As long as you and your little entrepreneur conduct research and follow guidelines carefully, you both stand to gain a lot, including business experience, profits and even precious family memories.

Cailin Potami and Jennifer Post contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

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Sean Peek, Business Ownership Insider and Senior Analyst
Sean Peek is the co-founder of a self-funded small business that employs more than a dozen team members. His years of hands-on entrepreneurial experience in bootstrapping, operations management, process automation and leadership have strengthened his knowledge of the B2B world and the most pressing issues facing business owners today. Peek uses his expertise to guide fellow small business owners and aspiring entrepreneurs in the areas of marketing, finance and software technology. Peek excels at developing customer bases and fostering long-term client relationships, using lean principles to drive efficiency and cost-saving, and identifying growth areas. He has demonstrated his business savvy through collaborations with Forbes, Inc., Entrepreneur and the U.S. Chamber of Commerce.
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