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Can a Minor Own an LLC?

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Your little one has picked up a new hobby, and they’re passionate about it, which is great! As a flourishing child, they’re starting to look outside of creating things for themselves and the family. You’re seeing the start of their entrepreneurship, especially since your kid’s asking about starting a business.

To go the legal route, it’s probably best if they work under an LLC. However, it does sound complicated for a child, and is yours ready for such a responsibility?

Let’s say your teenager is gung-ho about becoming a business owner. Can a minor own an LLC though? Keep reading to find out the answer to this question.


Can a Minor Form an LLC?

To start, you should know that every state has its own LLC laws, which means they’ll differ across the nation.

The good news is, only a few states specifically say that minors can’t form LLCs themselves. The states where minors can’t be LLC organizers are:

  • Colorado
  • Illinois
  • Minnesota
  • Oregon
  • Texas

If you live in any other state, then it shouldn’t be a problem for your minor child to form an LLC on their own.

How Old Do You Have to Be to Start an LLC?

In the states listed above, you must be at least 18 years old to start an LLC. Otherwise, there are no limitations as to how old your kid has to be to start an LLC. This means that whether they’re two years old or 16, your child can create a company before they reach adulthood.


Can a Minor Own an LLC?

As you can see, the above deals with the formation of LLCs. However, when it comes to ownership of LLCs, it becomes more complicated.

Generally speaking, minors can own LLCs, even in the states that prohibit them from being organizers. But there are laws that allow minors to void contracts as they see fit, and these laws let their parents or guardians to do so on their behalf too. What’s worse is that these laws don’t extend the same right to the other party (who’s an adult).

In addition, courts don’t enforce contracts if minors are involved. So if your child violates a contract with another party, they’ll get away scot-free, as the adult party can’t sue for damages.

The above laws are in place to protect children, as in the majority of cases, they aren’t able to understand exactly what they’re agreeing to. Do note that once a minor turns 18, the contract does become enforceable.

So while a minor can own an LLC, it’s not recommended. This is because other parties will be extremely hesitant to do work with them. For example, if your kid wants to run a catering service, then it may be difficult to find chefs and vendors who are willing to sign contracts, which can then make it next to impossible to start their business.


Can a Minor Be a Member of an LLC?

An LLC can have as many members as it wants, whether it’s 10 or 1,000. The LLC can also have members of all ages.

Theoretically, your minor child can join an already-formed LLC, and they shouldn’t have any issues.


The Options Available for Your Kid

After learning all this information, your kid may still want to be an LLC owner. If you live outside of the five states that bar minors from forming LLCs, then it should be relatively straightforward for your child to create and own a company. However, as we’ve said, it can be challenging to get things going, as people will stay away.

If you do live in those prohibitive states, and still would like your child to be an LLC owner, then not to worry. You can always register the LLC in a different state and get a virtual mailbox, which will give you a professional and physical address in that state.

Those are your choices for minor ownership of an LLC. But what else can you do to increase your child’s chance of success?

Join Their LLC

You, your spouse, siblings over 18, or any other adult family friends can join your kid’s LLC. These adults can then sign contracts on the LLC’s behalf, as all of you will act as its agents.

This is an excellent way to make other parties feel more at ease, while still allowing your child to have ownership of the business.

Form an LLC Yourself

You might be thinking that this venture is your kid’s idea, and that you don’t want to take on extra work. Forming an LLC is much easier than you might think though!

This is especially true if you use our business registration services. It’ll only take a few minutes to create an account, fill out our form, choose your services (which are affordable), and make a payment. After that, we’ll take care of everything and get your child’s LLC set up quickly.

You can then have your kid become a member of this LLC. This can help them feel more involved in the business.

Have a Manager-Management Structure

Typically, LLCs have a member-management structure by default. But you can change it to a manager-management structure to make your kid a passive member.

To do this, you need to put it down in writing in either the articles of organization or the operating agreement. This puts the responsibility of management in the adults’ hands, whether they’re LLC members or not.


Kickstart Your Child’s Business Now

Now you know the answer to the question, “Can a minor own an LLC?”

While they can technically own one, it’s better if you create an LLC for your child. This will set them up for success, and they can focus on providing the local community with their services or products. You can then wait until they become older to show them the business side of things, and even give them ownership of the LLC once they turn 18.

Register now with Business Anywhere to start your child’s business endeavors.

About Author

Picture of Rick Mak

Rick Mak

Rick Mak is a 30-year veteran businessman, having started, bought, and/or sold more than a dozen companies. He has bachelor's degrees in International Business, Finance, and Economics, with masters in both Entrepreneurship and International Law. He has spoken at hundreds of conferences around the world during his career on entrepreneurship, international tax law, asset protection, and company structure. Business Anywhere Editorial Guidelines

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