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The Ultimate Guide to Teen Businesses
From making and selling products on Etsy to starting your own YouTube channel that draws in thousands of views a week, the business opportunities for teens are endless.
Interested, but don’t know how to get started? Let our guide walk you through how to make a business plan, get your company off the ground and plan out your day-to-day operations to create a brand that’s sure to go viral.
How to Start a Business as a Teen
Come up with a Teen Business Idea
There are several different types of teen businesses that you can start, from helping out your neighbors with household chores to starting a website and blogging or selling products on Etsy. When brainstorming what type of business to start, make sure it’s something that you’re passionate about so that you don’t lose steam juggling your business with your other responsibilities like school and extracurriculars. Just because it’s a teen business doesn’t mean it will be easy.
Running a business is hard work, but with the proper planning and dedication, you can create a thriving teen business very quickly. In addition to understanding what you’re passionate about and how that can become a profitable business, ask yourself the following questions:
What is my unique selling point (USP)?
This might be surprising, but even though you "only" have a teen business, you still need to offer something unique. Whether that’s what you do, your reliability and speed or your unique approach, figure out what makes you stand out so you can capitalize on it.
What is my target market?
Identify who your target customers are, where they hang out and how you’re going to reach them. If you’re running a local business, this could be as simple as talking to your neighbors; if you’re online, you’ll need to do a little more research.
What do my potential clients want?
Now that you’ve found them, speak with potential customers to understand what they want from you, and validate this by asking if they would commit to spending real money on it.
It’s okay to say “no” to your first, second or third idea. Very few teen entrepreneurs get it right the first time. In fact, getting it wrong is often a badge of honor! Still, you don’t want to waste too much time, energy or money on the wrong initiatives, so ask and answer these questions honestly to find the right way forward.
Creating a Teen Business Plan
Teen businesses that just earn you a little spending money may not need a business plan, but if you want it to become a genuine success (think, college fund) you can really benefit from one. A business plan will help you define how you’re going to run your business, market yourself, get sales, make a profit and grow.
Business plans force you to get your thinking in order and show your commitment to your teen business. Though they can vary slightly, a good business plan should all cover the following areas:
An executive summary with the most essential points from your business plan
Your goals and what you hope to achieve with your business
A description of your business, background information and context
A market analysis and likely demand
An overview of how your business is structures
Your business model
How you will market and sell your offerings
Financial projections, revenue and profitability
Appendices
Looking for more help? Check out our guide to writing your business plan.
Choose a Structure and Register Your Business
There are five main business structures you can have in the U.S., and it’s important to choose the right one. We’ve shared your options below. They are:
- Sole Proprietorship
This is the "default" business structure and it is what your teen business will be if you decide not to create a more formal structure. If you’ve just got a very small venture that’s only earning a few dollars, this business structure is fine — as long as you understand that it doesn’t provide any legal protections against liability.
- Partnership
This is a type of business that is formed when two or more people work together without creating a more formal business entity. Like a sole proprietorship, it may not give you all the protections your teen business needs. Also, it may be difficult to get a long-term commitment from another teenager or young person to form a partnership with you.
- Limited Liability Company or LLC
The most common type of business entity, an LLC is fast, simple and inexpensive to set up and maintain. It protects your personal finances and assets — if you’re serious about your teen business and want to see it grow, this is an ideal choice. However, if you’re under 18, you’ll need your parents to get your LLC started. But more on that later.
- S Corporation
This is a more complex type of business and isn't generally recommended for smaller organizations like a teen business.
- C Corporation
These are the largest and most complex types of businesses and are typically far more than the average teen entrepreneur will need.
For more information on the advantages and disadvantages of different types of businesses, check out our in-depth guide. If you’ve still got questions, our founder has answered all the questions you have on the differences between an LLC and a corporation.
In some cases, our recommendation for a teen business would be to create an LLC. However, it’s a good idea to find a mentor in your field who can help support you in your entrepreneurial journey. LLC formation does vary from state to state, but if you work with Bizee, we’ve got you covered wherever you are.
Setting up Your Teen Business and Business Operations
Once you've legally created your teen business, you’ll need to get some other things in place. This includes deciding where your business will be located, how you’ll handle finances and even your marketing plan. More on this below.
- Location
The location you work from will be defined by the type of business you start. Some businesses can be run successfully from home, although others may need a specific location.
- Software and Process
The right software and processes will make running your teen business much easier. See our list of the best apps and software at the end of this guide.
- Marketing
How you market your company will depend on the type of business you start. To determine how to best market your business, spend some time identifying who your audience is and the best channels to reach them. Then, make sure to create the marketing assets you need to attract and convert.
- Finances and Taxes
If you make more than $400 a year from your teen business, you may want to set up a business bank account and keep careful records because you'll need to file business taxes. Here at Bizee, we can help you manage your business account with ease.
- Equipment
Depending on the type of teen business you run, equipment needs will vary widely. You may need a lot of tech or the right equipment in order to attract the right customers.
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Rules, Regulations and Taxes for Your Teen Business
There are a lot of rules and regulations when starting a business. From how to get the proper licenses and permits to understanding how to file taxes, we can help you with every facet of your teen business. But first, let's start with the basics.
Do Teenagers Need a Parent or Guardian to Start a Business?
Teenagers that are under 18 years of age will need a parent or guardian's help when starting their own business. While teenagers tend to want to do everything themselves, this process is set up for a good reason, as minors aren’t able to form a business or apply for a loan without parental approval.
Legalities of Starting a Business as a Teen
No matter your age, there are a lot of legalities and challenges to starting a teen business. As mentioned above, minors cannot be organizers of their own corporation or LLC. However, that doesn’t mean your dream is dead. Teens can serve as a member or partner of an LLC, or they can choose to set up their company in a more business-friendly state.
Other legalities include gathering funding, opening up a bank account and filing taxes. Many of these cannot be completed by a minor on their own and must be approved by a parent or guardian (who will then take the liability). If your kid wants to start a business, do some research to determine what paperwork is required in your location.
State Regulations
There’s a reason some states are known as more “business-friendly” than others. State and local governments are allowed to set their own rules and regulations regarding small and teen businesses, meaning what you can and can’t do will vary by where you start your company.
When starting a teen business, if you’re under 18, your parents will need to speak with a local attorney to determine child labor laws in your area. They’ll also need to do research into how to file, who is responsible for contract signing and even liability risks to understand exactly what they are taking on.
According to The Motley Fool, Montana and South Dakota are the easiest states to start a small business in. In addition, states like Delaware, Nevada and Wyoming are pretty teen-friendly, making them a great option for young entrepreneurs.
Taxes
Taxes are a fact of life if you’re in business, and there are various ways you will need to file and pay them. This can include self-employment tax, state income tax and federal income tax.
Depending on where and how you’re selling products and services, you may also be liable for sales and use tax.As a rule of thumb, we recommend holding back around a third of your earnings to pay your taxes. Want to take tax prep off your plate? We can prepare and file your tax returns for you to help lighten the load.
Maintaining Your Teen Business
The work doesn’t stop once you form your business. In fact, many entrepreneurs will tell you it only ramps up from here. To maintain your teen business, follow these steps.
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Collaboration
Social Media Management
Communication
Email Marketing
Advertising
Customer Relationship Management (CRM)
Customer Support
Human Resources
Website Development
Analytics
Hiring
The internet has made teen entrepreneurship available to everyone. If you can find a great idea, build a niche, develop your reputation and put together a solid business plan, you will have every chance for success.
Please note: This post contains affiliate links and we may receive a commission if you make a purchase using these links.
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