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How To Start a Business as a Kid

Starting your own business is a great way to start making money. Plus you won’t have to work for anyone, and you can be the boss!


Starting a business allows the opportunity to earn extra money as a kid and learn valuable skills that translate into life skills as adults. Getting a business up and running provides unique challenges and individual growth opportunities while allowing you to develop products or services that you’re passionate about. Setting business goals and applying for a business structure with your parents’ help will help build confidence and help with tax planning.

If you need some business ideas, check out this kids’ business ideas article to help get those creative juices flowing.

Let’s discuss how to start a business as a kid and the steps to get going!

Step 1: Brainstorm Business Ideas

This is an opportunity to think about your strengths and what you enjoy doing. Maybe you enjoy creative pursuits like designing jewelry or interacting with kids, so babysitting could be an excellent venture for those skills. If you aren’t sure what your interests are or what you’re skilled at, try a few different things on a small scale by working for others in their businesses for a time to gain experience and find what you’re good at. If you aren’t legally able to work in your state, you can ask to be an apprentice or intern who works under an adult’s supervision.

Step 2: Get Your Parents Onboard and Ask for Their Advice

Ask your parents what they think you’re good at and where your skills are strongest. They are around us regularly and know us well, so they are a great source of guidance. Parents can also provide guidance on how to structure your business, pay taxes, open a bank account, get insurance, and many other business activities. Your parents may have to set the business up in their name in some areas depending on local requirements, so it’s important to get their consent early on in the process.

Step 3: Talk to Potential Customers About Your Ideas

Doing research on what customers want to buy and what they are willing to pay for your products or services will help you figure out what resources you’ll need and what your profit margins could be. You don’t have to speak with strangers about it. Talk to your friends and neighbors or your parents’ friends. Ask them to be honest with you and provide constructive feedback to help with your journey. Take notes on their feedback when talking about what they need from a product or service, and ask clarifying questions if you don’t understand their needs. Make sure you walk away from the conversations you have with an understanding of the wants and needs.

Step 4: Write Out Your Business Plan

Determine where you will run your business, what your hours will be, how much you plan to charge for your products and services, who can help you get everything set up, what supplies you’ll need to get started, and more. Sit down and think about what questions you want to answer about your business if someone asks you what you do or how you’ll grow your business. Writing out a plan will help you communicate to others about your business and help you best understand why you’re getting started. This was the biggest step in my own personal business journey, so I highly recommend it!

Step 5: Figure Out What Money Is Needed to Start

Do you need to buy supplies to get started? How much do those cost, and how many do you need? Consider how much advertising would cost or what licenses are needed. The next step would be to determine where the startup money will come from to start your business. Can you use your allowance or take a loan from your parents to start? This phase of business is research-based, but this research is added to your business plan so you can refer back to it later or next year when you have to renew licenses or file taxes. Don’t expect to have all of your expenses figured out from the start because you may find others that you have to or want to add as time goes on and you gain more business experience. This initial budget is a target but can be changed to suit your needs.

Step 6: Decide on a Business Name

The name of your business will help you stand out from other businesses in your area that are operating in your niche. If you plan to set up a legal business structure, it will help ensure that the name is available before starting everything up and getting your advertising in place or business cards drawn up. Some kids prefer to use fun, punny names for businesses, while others choose to be professional and descriptive with their names. 

Step 7: Choose a Business Structure

Most businesses run by kids are set up as sole proprietorships because that is easier to manage, and there’s less paperwork to file. If your products and services could potentially put customers at risk of injury, consider setting up a Limited Liability Company or Corporation to protect your family if a customer were to sue your company. This establishes a separate structure for your business that limits the legal responsibility of the family. 

Step 8: Apply for Permits and Licenses

The permits and licenses needed to operate a business in your local area or online are determined by the type of business you choose to start. A business license to sell products or services may be needed, or a license to make food in your home for selling are examples of possible permits and licenses that you may have to apply for. 

Step 9: Open a New Bank Account

Keeping business money separate from personal money is important when running a business because you need to keep track of your profits and sales to pay taxes or purchase new materials to make more of your products or advertise your services. Besides filing taxes and keeping inventory on hand, it’s important to track your business finances to make sure you’re making money after expenses are taken out and, if you aren’t, to figure out how to get back on track.

Step 10: Plan for Taxes

Kid-owned businesses that make more than $400 per year are subject to annual taxes if not set up with a legal business structure or quarterly (every 3 months) if the business is set up as a sole proprietorship, LLC, or corporation. An accountant can help you and your parents find tax savings if you’ve kept your receipts from things like materials or vendor events, or uniforms you’ve purchased throughout the year. Each state has different laws regarding taxes, but a tax professional can assist in understanding how to navigate the system to your advantage and ensure that you’re paying taxes on time to avoid penalties for late payments.

Step 11: Develop a Marketing Plan and Implement It

Go back to your business plan and your market research to determine how best to reach your target customers. Are you going to be selling locally or online? If you’re selling locally, make up flyers or business cards that advertise your services and provide contact information to potential customers. Use word-of-mouth from happy customers to increase your sales and customer network. 

If you plan to sell primarily online, look into setting up a website, Etsy account, and social media accounts like Facebook or Instagram for your business. Keep your personal online presence separate from your business accounts to maintain professionalism and build your brand.

Step 12: Learn to Identify Possible Scams

There are so many scams online that it can be a little intimidating. Don’t accept friend requests from people you don’t know on your personal social media accounts, and consider limiting posting about your personal life on your business pages. Use secure payment methods like PayPal and set up a business email address to accept payment. Don’t ship products until you’ve received payment and if it’s too good to be true, ask your parents for advice. 

My friend’s daughter runs a cosmetics business. She thought a customer wanted to buy $1,000 worth of products from her, which would’ve been her largest sale ever. Still, the person wanted the items shipped before paying for them to “check their quality.” Thankfully, she asked her mom for advice, and her mom was able to help her respond to the potential scam professionally but firmly saying that she wouldn’t be shipping the product without first receiving payment.

Starting a business as a kid is such a huge opportunity to earn money and can help build your creativity. Learning how to run a business on a small budget when first getting started takes the ability to think about the world differently and hunt around to find the best sources of raw materials. Setting the business up well from the beginning is key to success over time and will serve you well!

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About the Author

Jessica Anglin

Jessica was raised in a household where her parents didn't know how to pay bills on time and indulged in life's pleasures on a consistent basis in order to cover the misery from working jobs they hated for money that wasn't enough to live off of. She took on the role of caregiver to 4 siblings at age 15 and started her first business selling tie-dye t-shirts in order to buy food and provide a stable home. Nineteen years later, she owns three successful businesses, has earned an MBA in Finance, and works daily to set an example for the next generation on how to build wealth so they never face the same struggles.

Last updated on: July 8, 2024