How a Minor Can Start an Online Business

Table of Contents

• Introduction
• Choosing the Right Online Business Model
  • Selling Products Online
  • Offering Services
  • Building an Audience
• Legal Considerations for Minor Entrepreneurs
• Getting Funding and Support as a Teen
• Key Success Factors
• Mistakes to Avoid
• Conclusion

Introduction

Starting an online business as a teen or pre-teen may seem daunting, but many minors have found incredible success taking their ventures online. With determination and the right guidance, a minor of any age can start and grow a profitable internet-based business.

Some well-known examples of teenagers who launched highly successful web businesses include:

• Fraser Doherty: Started a homemade jam business at age 14 that earned $1 million in sales after two years.
• Juliette Brindak: Created the popular website Miss O and Friends at age 16 which later sold for millions.
• Sean Belnick: Founded BizChair.com selling office furniture at age 14 and sold over $25 million in chairs as a teen.

This comprehensive guide will walk step-by-step through everything a minor needs to legally and responsibly start their own online business. From choosing a business model to handling taxes, funding, and defining your brand, we'll cover all the key considerations.

Whether you want to sell products, offer services, monetize a blog, or become a social media influencer, an online entrepreneurship can be a fulfilling and financially-rewarding path for a minor.

Choosing the Right Online Business Model

The first step to starting an online business as a minor is deciding what type of virtual venture best suits your skills and interests. Some of the most popular options include:

Selling Products Online

One of the most straightforward ways a minor can start an online business is by selling products directly to consumers. Here are a few methods to consider:

Ecommerce Stores

A minor can create their own online store that caters to a specialty niche they are knowledgeable and passionate about. For example, a sports fanatic teen might choose to sell sports memorabilia and collectibles. Key platforms like Shopify make building and customizing an ecommerce store straightforward even for those with zero web design experience.

Dropshipping

Instead of purchasing inventory upfront to ship orders, aspiring merchants can partner with a dropshipping supplier. The supplier holds the products and handles order fulfillment, while the minor-owned storefront focuses on marketing and customer acquisition. Popular platforms like Oberlo integrate with ecommerce sites to help new entrepreneurs launch successful dropshipping businesses. Due to the lower upfront costs and operational overhead, this can be an accessible option for a teen to start an online business.

Selling Handmade Products on Etsy

Artsy or crafty teens can also open their own Etsy shop to sell handmade items, art, and other unique creations. As an established marketplace specifically for showcasing DIY and vintage goods, Etsy attracts millions of buyers actively searching for these niche items. A creative minor can build their brand and loyal following on Etsy as they gain experience in production, marketing, and order fulfillment.

Offering Services

For minors with specialized skill sets, selling online services leveraging their expertise can be a great launch strategy. A few top options include:

Freelancing

Whether a minor has advanced skills in writing, graphic design, web development, or another field, they can offer their services for hire as an independent freelancer. Utilizing freelancing platforms like Fiverr or Upwork allows new entrepreneurs to quickly create gigs, build customer reviews, and land clients. By basing rates on project specifications rather than hourly, minors can earn excellent wages.'

Tutoring or Teaching

Does the minor excel at school subjects like math, science, languages or SAT prep? If so, they can create virtual tutoring profiles on sites like Wyzant to get matched with students needing assistance. As video call technology has advanced, online tutoring and virtual classes have become a major opportunity. Teaching a skill like coding, music, or art through sites like Udemy also allows enterprising teens to profit from their expertise.

Social Media Marketing

Many major brands and smaller businesses today do not have the skills or resources in-house to properly manage their social media marketing. From content creation to strategy to ad management, minors skilled with major platforms like Instagram, TikTok, YouTube and Meta can offer their services. Having a deep understanding of current trends and best practices allows teens to compete in this fast-growing field.

Building an Audience

Some of the top-earning teenagers online have built massive audiences that tune in daily for their content. Options like blogging, vlogging, or becoming an influencer marketing can give creative, charismatic entrepreneurs huge earnings potential.

Creating a Blog

Starting a blog allows minors to share their inner thoughts, expertise, stories or reviews on any niche topic imaginable. After building an audience invested in their content, bloggers can then integrate affiliate links, sell ad space, promote branded products, or otherwise monetize the site. Blogging represents a scalable business that can grow exponentially based on the creator's dedication.

YouTube Channel

Broadcasting videos on everything from video games or comedy to tutorials and commentary has also proven hugely popular and profitable. Like bloggers, YouTubers with large followings and high viewership rates can integrate multiple income streams like ad revenue shares, sponsorships, affiliate partnerships and selling custom merchandise.

Instagram Influencer

Building an engaged Instagram following and promoting relevant brands through sponsored posts has become a coveted career path. Rates for an Instagram Story ranges from $100 for smaller accounts up to $20,000+ for mega-influencers. Teens skilled at photography, trend analysis and promotion can establish themselves in this market.

Legal Considerations for Minor Entrepreneurs

While the internet provides boundless opportunity for budding business owners of any age, minors still face certain legal limitations when starting an online venture:

Discussing Plans with Parents

Before diving fully into launching any form of business, minors should first discuss their idea and plan with their parent(s) or legal guardian(s). As the ones legally responsible for the child's wellbeing, parents deserve full transparency into major plans and activities. Beyond approving the general concept, parent support in areas like:

• Helping research laws, regulations and risks
• Providing startup funding if available
• Allowing the business to initially use family computer equipment
• Assisting with opening financial accounts

can be invaluable for transforming an entrepreneurial dream into reality. Parents can also contribute business guidance based on personal experience. By thoughtfully including guardians in launch plans rather than hiding activities, teen founders gain an extremely helpful advisor and advocate.

Business Structures

Most small businesses launch as either sole proprietorships or limited liability corporations (LLCs). However, limitations apply when owners are under 18:

• Sole proprietorships: Parents or guardians must formally register and claim full responsibility due to the minor's lack of legal capacity.
• LLCs: Minors are not permitted to independently form an LLC. Instead a parent or guardian must create the LLC but can assign manager duties to the child. Upon turning 18, full ownership typically transfers to the young founder.

Without adherence to entity structuring formalities, parents run major risks around legal liability and taxes. Consulting a business lawyer ensures full alignment with regulations based on the minor's state of residence.

Taxes

Generating substantial revenue also triggers tax obligations that must be handled properly. Minors operating online stores, monetized blogs or service businesses typically qualify as self-employed sole proprietors for federal tax purposes. While parents claim minor children as dependents, all income must still be reported accurately.

Business-related tax documentation like 1099 forms also legally require the minor's parent to provide their own Social Security Number rather than the child's. Failing to report earnings or account for income taxes can lead to unpleasant fraud penalties. So maintaining detailed financial records is essential.

Financial Accounts

Given legal minor status, teenagers cannot independently open business bank accounts or merchant services. Instead a parent or guardian must:

• Become the primary or co-owner of PayPal, Stripe or ecommerce portal accounts tied to the venture
• Add teen founders as secondary users
• Oversee all transactions until age of maturity is reached

Upon turning 18, the young entrepreneur can then assume full account ownership.

Getting Funding and Support as a Teen

Launching any successful business requires access to sufficient capital and resources. While parents may choose to help fund their child's promising venture, additional options exist for ambitious teens to obtain backing:

Parents Funding Business

If supportive and financially able, parents can be enormously helpful in covering core startup and operating costs like:

• Purchasing initial website hosting, inventory and supplies
• Contributing a laptop, camera or other vital gear
• Paying for development help like a web designer
• Assisting with marketing efforts
• Providing an allowance supplement for additional purchases

Establishing openness around finances also streamlines record-keeping when the time comes for filing taxes.

Crowdfunding

Recently, raising funds from broader friends, family and follower networks via crowdfunding campaigns has surged in popularity. Platforms like Kickstarter and Indiegogo make creating a polished campaign page and shareable video to promote new ideas simple and intuitive even for young founders. By validating and monetizing concept interest pre-launch, teens can secure ample working capital.

Business Plan Contests

National and local competitions specifically intended for high school and even middle school student entrepreneurs exist across the country. These contests prompt founders to formally analyze target customers, document opportunity sizing via market research, create financial models and craft a cohesive strategy. Judges then evaluate submissions based on innovation, thoroughness and real-world viability. Many then award grant funding to turn top business plans into reality.

Resources for Teen Entrepreneurs

Non-profits like Young Entrepreneur Council and DECA offer tips tailored to students plus access to exclusive funding, special programs, influential mentors and investor introductions. State governments also aim to empower local job creation through grants, affordable loans and classes offered by small business development centers. These state assistance portals like California for Young Entrepreneurs contain helpful funding resources.

Key Success Factors

Beyond financial backing, several fundamental building blocks underlie every sustainable minor-owned online business. Be sure focus on:

Establishing a Brand

Creating a recognizable brand identity builds familiarity and loyalty with the right target audience. This includes elements like logos, color schemes, patterns, mascots, slogans and an overall style that visually reinforces the venture's core vision and values. For example, teen musician entrepreneurs selling musical compositions online at Melodies for Life could use a lyre icon while selecting an orange palette featuring musical notes throughout branding.

Utilizing Young Perspective

Instead of hiding their youth, teen founders should proudly embrace perspective to relate better with peers and younger customers. This demographic offers built-in market insight to craft more compelling content and products. Teens also tend to be highly passionate, creative and energetic if empowered properly - huge assets for any modern company.

Consistent Marketing

Between search, social, email campaigns and multimedia content creation, actively sustaining multi-channel promotion ensures continual new customer acquisition. Dedicate daily time to spread brand visibility, share your own creations and sincerely engage with supporters rather than chasing overnight fame.

Providing Excellent Service

Delivering incredible customer support builds satisfaction, loyalty and invaluable word-of-mouth endorsements. Reply to messages instantly, ship orders promptly, admit mistakes openly, prioritize fair policies and empower staff to resolve issues (even if you are currently a solo-founder)! Little touches like handwritten thank you notes also show clients how much you appreciate their support of your journey.

Learning Business Skills

Read books, take online courses, follow established entrepreneurs and continuously absorb everything possible across disciplines like sales, negotiation, accounting, leadership and web development. Knowledge fuels capability so dedicate time daily to level up.

Tracking Finances Responsibly

Business viability requires far more than just making sales. Use tools like Quickbooks or Wave to carefully monitor cash flow, provide income statements to parents and pinpoint where to refine pricing or processes to improve profitability. With scale, financial oversight becomes even more critical.

Mistakes to Avoid

While minor entrepreneurs can absolutely succeed online, avoiding these common pitfalls protects against frustration and failure:

Lacking Parental Oversight

It's tempting to keep details private and retain full autonomy, but as covered regarding legal considerations, maintaining open communication ensures proper structures and oversight are in place. Be sure to provide regular financial updates and discuss major decision considerations.

Pouring Money into Scam Programs

From shady online business opportunities to overpriced website templates to influence fads, countless traps exist waiting eagerly to siphon income from overeager entrepreneurs. Always carefully validate products and services before purchasing to confirm quality and legitimacy. If an offer seems too good to be true, it almost always is.

Growing Too Fast

While rapid growth may seem positive on the surface, scaling customer volumes, inventory and fulfillment operations faster than infrastructure allows almost always causes major issues. Onboarding new systems for order processing, shipping, even marketing automation should happen gradually so never sacrifice quality and financial controls for speed alone.

Failed Online Course Launches

Creating an online course or membership community represents an alluring business model but also takes immense effort designing curricula and promotional assets. Validate demand for paid educational content on a topic early through surveys, interviews or an MVP rather than assuming people will automatically buy any published program. Fierce competition means subpar packages inevitable flounder.

Conclusion

Starting a successful online business as a teenager takes motivation, grit and realistic expectations but absolutely remains achievable for any driven minor today. As long as young founders pursue ventures matching their abilities, properly involve guardians in key decisions and continually learn from mistakes, the entrepreneurial path promises incredible upside.

While some patience overcoming initial hurdles is required, building even a modest business generates huge knowledge plus financial profits over time through reinvestment and diversification. For any minor with an promising idea, internet access and willingness to learn, a world of possibilities await.