Starting a Business as a Teen
Athletes are entrepreneurs — your brand is your first business
Why Teen Entrepreneurship Matters
Here's a truth most schools won't tell you:
The skills that make great athletes — discipline, risk-taking, handling failure, competing — are the same skills that make great entrepreneurs.
Starting a business as a teen teaches:
- Problem-solving and creativity
- Money management (for real, not theory)
- Marketing and sales
- Time management
- Resilience when things don't work
And for athletes, there's a direct connection: NIL is entrepreneurship. Your name, image, and likeness IS a business.
Legal Realities: What Minors Can and Can't Do
The Contract Problem
The issue: In most states, contracts signed by minors are "voidable" — the minor can cancel them, but the adult can't.
Why this matters: Some businesses won't work with minors, and some legal structures require adult involvement.
What Minors CAN Do
| Activity | Possible? | Notes |
|---|---|---|
| Earn money | ✅ Yes | From services, products, NIL |
| Open a business bank account | ⚠️ With parent | Most require adult co-owner |
| Get an EIN (tax ID) | ✅ Yes | Can apply as sole proprietor |
| Register a DBA ("doing business as") | ⚠️ Varies by state | Some require adult signature |
| Form an LLC | ⚠️ With parent | Parent typically listed as member/manager |
| Sign contracts | ⚠️ Voidable | Can sign but can also void later |
| File business taxes | ✅ Yes | Report on personal return |
The Parent Solution
Most teen businesses operate in one of two ways:
- Sole proprietorship in teen's name — Simplest, no formal registration needed, teen is personally liable
- LLC with parent involvement — Parent is managing member, teen operates day-to-day, better liability protection
Business Structures Explained
Sole Proprietorship (Simplest)
| Aspect | Details |
|---|---|
| Setup | None required — you're automatically a sole proprietor when you earn business income |
| Taxes | Report on personal tax return (Schedule C) |
| Liability | You're personally responsible for business debts/issues |
| Best for | Simple services (lawn care, tutoring, babysitting) with low risk |
LLC (More Protection)
| Aspect | Details |
|---|---|
| Setup | File with state, pay registration fee ($50-500 depending on state) |
| Taxes | Usually "pass-through" to personal return, or can elect corporate tax |
| Liability | Personal assets generally protected from business debts |
| Best for | Higher-risk businesses, significant revenue, multiple clients |
For most teen businesses: Start as a sole proprietorship. Consider an LLC when revenue grows or risk increases.
Starting Your First Business: Step by Step
Step 1: Identify Your Skill/Service
What can you offer that people will pay for?
| Category | Examples |
|---|---|
| Athletic skills | Coaching younger kids, private lessons, sports camps |
| Tech skills | Web design, social media management, video editing |
| Physical work | Lawn care, car washing, moving help, pet care |
| Teaching | Tutoring, music lessons, test prep |
| Creative | Photography, graphic design, content creation |
| NIL | Sponsored posts, appearances, merchandise |
Step 2: Get an EIN (Optional but Useful)
An Employer Identification Number from the IRS:
- Free to obtain
- Lets you open a business bank account
- Separates business from personal (on forms)
- Required if you hire employees
How to get one: Apply online at IRS.gov — takes 5 minutes
Step 3: Open a Business Bank Account
Keep business money separate from personal:
- Makes accounting easier
- Looks professional
- Required for many business expenses
Most banks require: Adult co-owner for accounts when you're under 18
Step 4: Track Everything
| Track | Why |
|---|---|
| All income | Need to report for taxes |
| All expenses | Can deduct from income |
| Mileage | Deductible if business-related |
| Receipts | Proof for deductions |
Simple approach: A spreadsheet with date, description, income, and expense columns works fine to start.
Step 5: Set Your Prices
| Pricing Strategy | How It Works |
|---|---|
| Hourly rate | Good for services with variable time |
| Flat fee | Good for defined projects |
| Package pricing | Good for recurring services |
Research: What do others charge for similar services? Start competitive, raise prices as you gain experience and reputation.
Teen Business Taxes
The Basics
Business income is taxable — but you may owe less than you think:
| Income Level | Tax Reality |
|---|---|
| Under ~$14,600 (2024) | Federal income tax: likely $0 due to standard deduction |
| Self-employment tax | Still owe 15.3% on net profit over $400 |
| State taxes | Varies by state |
Deductible Expenses
These reduce your taxable income:
| Expense | Examples |
|---|---|
| Supplies | Equipment, materials, software |
| Marketing | Website, business cards, ads |
| Professional services | Accounting, legal help |
| Education | Courses directly related to business |
| Mileage | Driving for business (at IRS rate) |
| Home office | If you have dedicated space |
Keep receipts! No receipt = no deduction if audited.
Estimated Taxes
If you expect to owe $1,000+ in taxes, you should make quarterly estimated payments:
- Due April 15, June 15, September 15, January 15
- Avoid penalties for underpayment
- Most teen businesses under this threshold
Funding Your Business
Bootstrap First
Most teen businesses should start with minimal investment:
- Use equipment you already have
- Start service-based (no inventory)
- Reinvest early profits
When You Need Capital
| Funding Source | Good For | Notes |
|---|---|---|
| Personal savings | Small needs | No strings attached |
| Family loans | Moderate needs | Document it formally |
| Youth entrepreneur programs | Varies | Many offer grants + mentoring |
| Crowdfunding | Products with appeal | Build an audience first |
| Traditional loans | Larger needs | Usually require adult co-signer |
Youth Entrepreneur Resources
| Program | What They Offer |
|---|---|
| NFTE (Network for Teaching Entrepreneurship) | Curriculum, competitions |
| Junior Achievement | Programs, mentoring |
| SBA Resources | Learning modules, connect to resources |
| Local SCORE chapters | Free mentoring |
| Teen business competitions | Seed funding, exposure |
What ISP Teaches
The First Business Challenge
ISP students work through:
- Ideate — Identify 3 business ideas based on your skills
- Validate — Talk to 5 potential customers — would they pay?
- Plan — Create a simple one-page business plan
- Launch — Complete your first paid transaction
- Track — Set up basic income/expense tracking
- Teach — Create a "You Teach" video about what you learned
Completing the Challenge Earns:
- 🚀 First Business Badge on your MyPath profile
- OVR boost in the Financial Skill Tree
The NIL Connection
For athletes, NIL IS a business:
- Your personal brand is your product
- Sponsored content is your service
- Followers are your customers
- You're building enterprise value
Everything you learn starting a "regular" business applies directly to NIL. The teen who ran a lawn care business understands marketing, pricing, and taxes — exactly what NIL requires.
Common Teen Business Mistakes
| Mistake | Why It's a Problem | What to Do Instead |
|---|---|---|
| Not tracking income | Tax trouble, missed deductions | Track from day one |
| Underpricing | Undervalues your work, hard to raise later | Research market rates |
| Over-investing upfront | Risky before validating demand | Start lean, grow with revenue |
| Mixing personal and business money | Accounting nightmare | Separate bank account |
| Ignoring legal structure | Personal liability risk | Understand your options |
| Giving up too soon | Most businesses need iteration | Expect to pivot and learn |
FAQ
Q: Do I need a business license?
A: Depends on your city/state and type of business. Many casual service businesses (babysitting, lawn care) don't require licenses, but check local requirements.
Q: Can I hire my friends to help?
A: Yes, but you become an employer with responsibilities (payroll taxes, workers' comp, etc.). Consider paying them as contractors instead for small-scale help.
Q: What if my business loses money?
A: Losses can offset other income on your taxes. But if you consistently lose money, the IRS may consider it a hobby (not deductible).
Q: How do I handle difficult customers?
A: Welcome to business. Set clear expectations upfront, communicate professionally, and know when to fire a customer who isn't worth the hassle.
Q: Should I tell my school about my business?
A: ISP encourages it — entrepreneurship is part of our curriculum. For traditional schools, check their policies on outside work.
Related Topics
- NIL & Athlete Income → — Your athletic brand as a business
- Filing Your First Tax Return → — Reporting business income
- Your First Job → — Employee vs. entrepreneur
- Building Credit Early → — Credit for business needs
- Personal Finance Overview →