Forming an LLC as a teenager or minor is not just a dream, it can be a reality for most entrepreneurial-minded young people. Recent data shows that there has been an uptick in entrepreneurship overall, and teens play a part in the increase. A majority of high school and college students hope to start a business one day. Also, about 41% of teens prefer the entrepreneurship route, careerwise. A majority of young people also have a business idea but don’t know how or where to start. Since 2009, the number of teens starting businesses has increased eightfold.
A limited liability company is the most common path for teens to start a business, especially because LLCs come with quite a few benefits. Along with tax benefits, LLCs protect entrepreneurs from personal liability for the losses and debts of the business. They also make it easier to secure funding and supplies.
Since state laws vary, minors should reach out to their secretary of state or an attorney to understand the guidelines. Some states, such as Delaware and California, do not have age restrictions in order to form an LLC. If a state does have age restrictions, there are a couple of options young people can try. A minor can either: serve as a member of an LLC or become a partner in an LLC. Since there are no age limits for members and managers of an LLC, minors can choose this route when forming their businesses, allowing a trustworthy adult to organize the company. To protect themselves, teenagers should consult a lawyer and create an operating agreement. Minors can also have a business partner to serve as an adult “responsible for the LLC formation, operation and other daily tasks of running a business that the minor would not legally be able to manage.”
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Infographic Source: Incfile