Can a Minor Own an LLC? Legal Workarounds and Considerations for Teen Entrepreneurs

Teen entrepreneurs are no longer rare. From 15-year-old YouTubers pulling in ad revenue to 17-year-old Etsy sellers moving hundreds of custom stickers a month, today’s under-18 crowd isn’t just watching business—they’re running it. But one major hurdle comes up quickly: Can a minor legally own an LLC?

The short answer: it depends on the state. The longer answer requires a look at legal barriers, parental involvement, and creative solutions that don’t break the rules. If you’re a parent of a teen business owner—or a motivated teen reading this on your lunch break—this guide is for you.

Can a Minor Legally Form or Own an LLC?

Let’s start with the big question. In most U.S. states, minors cannot legally enter into binding contracts. That includes the Articles of Organization you file to form an LLC. Why? Because contracts with minors are often voidable, which makes state agencies and business partners wary.

That said, there is no uniform federal law banning minors from owning an LLC. It’s all governed by state-level rules. Here’s how it typically breaks down:

• Some states prohibit minors from forming an LLC entirely
• Some states allow ownership, but not managerial control
• Other states are silent on the matter, leaving room for interpretation

Even in states that don’t technically allow it, there are legal ways for minors to benefit from and participate in LLCs—with a little adult help.

States That Allow vs. Restrict Minor Ownership

Here’s a quick snapshot of how different states treat minor ownership of LLCs:

• California: No age requirement stated in law, but minors may face issues signing legal documents.
• Texas: Generally requires members/managers to be 18+, but enforcement varies.
• Delaware: Known for business-friendly laws; no age restrictions clearly stated.
• Illinois: Allows minors to be members, but not managers unless approved by a guardian.
• Florida: Permits minors to own LLC interests, but not to manage the business directly.

If you’re forming an LLC as a minor (or for a minor), check your Secretary of State’s website or talk to a business attorney for local clarification. When state law is unclear, filing agents and banks may still reject applications with a listed minor member.

Common Workarounds for Teen Business Owners

1. Parent-Owned LLC with Minor Participation

This is the most common approach. A parent or legal guardian forms the LLC in their own name and either:

• Manages the business on the teen’s behalf
• Gifts or transfers ownership to the teen when they turn 18

In this setup, the teen runs the business day-to-day—handling orders, making videos, crafting products—but the adult signs contracts, opens bank accounts, and deals with state filings. This structure keeps things legal while letting the teen build their brand.

2. Setting Up a Trust to Own the LLC

Some parents choose to create a revocable trust that owns the LLC. The teen is the beneficiary, and a trustee (usually a parent) handles the legal responsibilities. This option is more complex and usually involves legal fees, but it can offer long-term benefits like asset protection or tax planning.

3. Waiting to Transfer Ownership at Age 18

In some cases, teens start the business under their parent’s name with the understanding that ownership will transfer when they turn 18. If the LLC is structured correctly from the start, this transition can be smooth and simple.

4. Partnerships or Corporations with Adult Co-Owners

Some teens partner with adults—often a family member or mentor—who form a multi-member LLC or S-Corp. The teen handles the operations, and the adult handles the paperwork. Later, ownership percentages can shift to reflect the teen’s role.

Real-World Examples of Teen Entrepreneurs Using LLCs

Savannah, 17 — Custom Apparel Brand

Savannah designs and sells t-shirts online. Her mom formed an LLC in her own name and opened a bank account. Savannah does the marketing and designs, but her mom signs supplier contracts and handles tax reporting. Once Savannah turns 18, she plans to become the sole member of the business.

Jordan, 16 — Coding Tutor

Jordan teaches JavaScript to middle schoolers via Zoom. His dad formed “CodeWithJordan LLC” and lets Jordan run the show. The LLC helped Jordan land a local grant and build a reputation as a professional—even before finishing high school.

Layla, 15 — Etsy Jewelry Seller

Layla sells handmade bracelets online. Etsy requires sellers to be 18+, so her older sister runs the Etsy account under her own name and formed an LLC to handle payments and taxes. Layla creates the products and interacts with customers through her sister’s business name.

Benefits of Involving a Parent or Guardian

It might feel like “cheating” to have an adult own the business on paper, but it’s actually a strategic move. Here’s what teens gain:

• Legal compliance – No worries about voided contracts or rejected filings
• Access to business banking – Banks typically don’t allow minors to open business accounts
• Credibility with vendors – Adult-backed businesses are taken more seriously by suppliers
• Help with taxes and paperwork – Filing quarterly taxes, collecting sales tax, and applying for licenses can be tricky for anyone, let alone a teen

Plus, it gives young entrepreneurs a chance to learn about business before becoming legally responsible for one. That’s a powerful education.

Risks and Legal Considerations

There are a few things to watch out for:

1. Banking Restrictions

Even if an LLC is formed, most banks require all account holders to be 18 or older. This makes it nearly impossible for a teen to open a business checking account on their own.

2. Contractual Limitations

Vendors, sponsors, and marketplaces (like Amazon or Etsy) may reject applications or terminate accounts if the true business owner is a minor. Always check the platform’s terms of service.

3. Tax Implications for Parents

If a parent owns the LLC, technically the income belongs to them and must be reported on their tax return. This could impact things like student aid applications, tax brackets, or eligibility for certain credits.

4. Family Disputes

Clear communication is crucial. If a teen believes they “own” a business that is legally in someone else’s name, misunderstandings can arise. A written agreement (even a simple one) can prevent friction later.

Steps to Launch a Teen-Owned Business the Smart Way

If you’re a teen—or the parent of one—here’s a roadmap:

1. Decide who will form the LLC (parent or trusted adult)
2. Choose a business name and check availability in your state
3. File Articles of Organization through your state’s Secretary of State
4. Get an EIN from the IRS (free online)
5. Open a business bank account (in the adult’s name, if needed)
6. Create a basic Operating Agreement outlining ownership, responsibilities, and future plans
7. Maintain good records of income, expenses, and roles

Don’t forget business insurance if you’re offering services or shipping physical goods. It’s not required everywhere, but it’s wise to have.

Minors Can Be Business Owners—With the Right Help

While most states don’t roll out the red carpet for teen LLC owners, that doesn’t mean young entrepreneurs are shut out. With guidance, legal structures, and a pinch of adult cooperation, teenagers can run legitimate, income-generating businesses well before they turn 18.

In fact, some of the most successful founders in the country started before they were old enough to drive. Forming an LLC may be a hurdle, but it’s far from a deal-breaker. With the right foundation, today’s teen side hustle could become tomorrow’s full-time brand.