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.
7 Steps to Starting a Teen Business
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:
-
1
An executive summary with the most essential points from your business plan
-
2
Your goals and what you hope to achieve with your business
-
3
A description of your business, background information and context
-
4
A market analysis and likely demand
-
5
An overview of how your business is structures
-
6
Your business model
-
7
How you will market and sell your offerings
-
8
Financial projections, revenue and profitability
-
9
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.
A Clear and Comprehensive Guide to Starting Your Business the Right Way
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.
Depending on the state you’re located in, you will probably have to file a report every year. This report tells the state about any major changes to your business, and we can file your Annual Report on your behalf.
Your business will probably have several licenses, permits and other regulations. These typically need to be renewed every year.
If applicable, you will need to make payroll and sales tax payments on a regular basis.
You will need to work with your accountant to prepare all the taxes you need to pay and create a savings plan to pay them.
You will need to file your taxes once a year.
If you earn more than $400, you will be expected to pay estimated taxes on what you plan to earn in the current business year. Typically, you will need to pay estimated taxes in April, June, September and January (of the following year).
Useful Online Tools for Your Teen Business
While you’re likely super familiar with platforms like TikTok and Twitch, your teen tech-savvy may fall short when it comes to online tools for businesses. Give these platforms a try for assistance in project management, legal issues, HR, advertising and more.
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.
From TikTok to Second-Hand Shop
Let Bizee walk you through how to open your business, create a top-notch business plan and keep your business thriving well into your 20s (or hey, even your 30’s).
Start your teen business with Bizee today