What Your Kid Legally Needs to Start a Business

Here is the whole thing in one paragraph, so you can stop worrying and let your kid start.

For a kid mowing lawns, washing driveways, walking dogs, babysitting, or selling something they make, at the scale of a few hundred dollars, you generally need no entity, no license, and no special registration. You need a record of the money and, at some point, a bank account with a parent on it.

Everything else on this page is about when that changes.

The reason this matters is not the paperwork itself. It is that the paperwork is the most comfortable place for a family to spend three weeks not starting. Filing something feels like progress. It produces no customers.

So the order is: start, get paid once, then handle the parts below that apply. Not the other way around.

Most banks require an account holder to be eighteen, so a business account for a minor usually means one of two things: a joint account with a parent, or a custodial arrangement. Options vary a lot between banks and credit unions, so the fastest path is a ten minute phone call to yours.

You do not need this on day one. Your kid can be paid in cash or through your own account at the start.

You do need it before the money gets confusing, and confusing arrives sooner than people expect. Once business money and birthday money and allowance are in the same place, nobody can tell whether the business is actually making anything.

A separate place for business money is the easiest good habit to build early and the hardest to build late. It also makes the tax conversation far simpler if it ever happens, because the answer to how much did you make is a number rather than an afternoon of detective work.

More detail: how old do you have to be to open a business bank account.

This is the one parents get wrong in both directions. Some assume a kid owes nothing. Some assume a kid owes tax on the first ten dollars.

The number to know is $400. Generally, if net earnings from self-employment reach $400 or more, self-employment tax applies and a Schedule SE gets filed. That threshold does not change because the person is fourteen.

Income tax filing works on different rules and depends on the total amount and the type of income, which is why the honest answer to will my kid owe anything is that it depends on the year and the numbers.

Two practical things follow, and neither one requires a professional.

Keep records from the first dollar. Not because the IRS is coming for your twelve year old, but because reconstructing a summer of cash payments in April is miserable and it teaches your kid that records are a punishment rather than information.

Confirm the current year's figures with the IRS directly or with a tax preparer when earnings get close to that line. Thresholds and rules do get updated and this page will not always be current.

More detail: do teenagers pay taxes on side hustle income.

Child labor laws are mostly written for employees. A kid working for themselves is generally in a different category than a kid working a shift for someone else, which surprises most parents.

That said, two things still apply.

Some kinds of work carry age restrictions regardless of who employs you, and those tend to cluster around power equipment, heights, and vehicles. States vary and the differences are real, not academic.

And if your kid ever hires a friend to help, the rules change shape entirely, because now your kid is the employer. That is worth knowing before it happens rather than after.

For a kid mowing, washing, walking dogs, tutoring, babysitting, or selling something they made, age is rarely the blocker parents expect it to be. Look it up for your state if the work involves a mower they did not buy, a ladder, a chemical, or a car.

More detail: can a 14 year old start a business.

You do not need a lawyer or an accountant to help your kid mow four lawns. You do want one at specific moments, and they are easy to recognize.

Call an accountant or tax preparer when: earnings approach or pass $400, your kid starts paying someone else, or you are unsure how their income interacts with your return.

Call a lawyer or insurance agent when: the work could damage property, the work could hurt someone, your kid is using equipment worth real money, or a customer asks them to sign something.

Call your bank when: business money and personal money are in the same place and you cannot tell them apart.

None of those is an emergency and none of them needs to happen before the first customer. They are just the honest list of moments where guessing gets expensive.

The rest of the time, the paperwork is not what stands between your kid and a business. Not asking anyone to pay them is.

Step one. Start a record today. Date, who paid, how much, and anything your kid spent. A notes app is fine. The habit matters more than the tool.

Step two. Call your bank and ask what account options exist for a minor. Ten minute call, and it answers the question permanently.

Step three. Look up whether the specific work has an age restriction in your state. Only necessary if it involves power equipment, heights, chemicals, or a vehicle.

Step four. Write $400 on the record. When earnings get close, call a tax preparer.

Step five. Skip the entity for now. Revisit when there is real money coming in or the work carries real risk.

The free parent guide includes this as a one page checklist you can print.