taxes, business-registrationMy friend and I plan to start a business building smart mirrors in my garage and selling them either online on our website or to people we know. We are both under 18(14 years old to be exact). I have most of it planned out but I am a little worried about the legal side of it.
-Are there any licenses/registrations/etc needed? If so, how do I go about getting them?
-Do we need to pay taxes? If so, how do I do that?
-Is there anything else I should know about starting a business as a minor?
I live in Pennsylvania, USA if that helps.
I’m not familiar enough with US/PA laws to say for sure, but the US Small Business Administration has an article that answers general questions related to starting a business as a minor, including some of the ones you asked:
https://www.sba.gov/blogs/6-things-you-need-know-about-starting-business-minor
Can a Minor Form an LLC or Corporation?
All states require the principals of a company that incorporates to be 18 years or older. One option is to have a parent to act as an authorized signer – but remember, the parent becomes liable if their dependent is negligent in performing the duties of the business. […] Another option, permissible in some states, is to have the minor become a shareholder. […]
^ It eventually concludes by inviting you to consult a local attorney - which usually is a good idea.
Can a Minor Sign a Contract?
A minor can sign a contract, but in most states they are not considered legally competent to enter into a binding agreement, meaning they can disaffirm the contract – rendering it void.
^ Your biggest issue in practice might turn out to be this.
What About Paying Taxes as a Young Entrepreneur?
The IRS offers tax guidance for young entrepreneurs, including resources to help you determine what taxes you need to pay. If you are selling products that qualify for sales tax, you should also consult your state revenue office to understand your obligations and obtain a sales tax permit.
^ See https://www.sba.gov/business-guide/manage/pay-taxes-business-state-federal
It’s also extremely important to maintain good records of income and outgoings, as well as receipts.
^ FWIW the best way to deal with this correctly is to offload this onto an accountant.
FYI the SBA also seems to have a Young Entrepreneurs learning center. Good luck!
All content is licensed under CC BY-SA 3.0.