Entrepreneurship Has No Age Limits: Can Minors Form an LLC?

By Bazal Razzaq

Chief Editor

Updated: August 10, 2023

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Can Minors Form an LLC

Entrepreneurship knows no age bounds! The business world welcomes young minds swarming with ingenious ideas and an uncompromising hunger for success, irrespective of the digits on their birth certificates. But here’s the intriguing twist: Can these young prodigies legally form a Limited Liability Company (LLC)?

For those youthful thinkers with grand visions, a pleasant revelation awaits: Yes, indeed, minors can form an LLC. Yet, like any enthralling journey, a few potential obstacles may loom on the horizon, warranting consideration before undertaking.

In this piece, we delve into youthful proprietors’ potential ownership of an LLC—many young creatives harbors ambitious business dreams and the drive to establish their very own enterprise. However, the labyrinth of legal requirements and potential pitfalls in establishing a limited liability company as a minor might need to be more precise.

Whether you’re a budding entrepreneur on the point of your own venture or a parent shepherding your fledgling’s entrepreneurial aspirations, this article serves up a trove of insights on minors steering the ship of an LLC. To get the ball rolling, let’s tackle the query that might tickle the minds of beginners: “What exactly is the meaning behind ‘LLC’?” 

The Meaning Behind 'LLC'

The Limited Liability Company, also dubbed the LLC. This sought-after business entity crafts a legal framework to nestle your entrepreneurial endeavors. Gleaming with perks for business proprietors, the LLC extends a safeguard known as limited liability protection. This magic partition fortifies your assets, standing as a guardian against the financial tempests your business might encounter.

Beyond this defense of liability protection, the LLC graces its owners with tax privileges. A standout, “pass-through taxation,” produces a symphony where the business itself sidesteps taxation, and the profits and losses pirouette onto the stage of individual owners’ tax returns.

Can a Minor Assume the Role of an LLC Owner?

Now, for the burning inquiry: Can a minor, yet to be inducted into the realms of adulthood, weave the intricate tapestry of an LLC? Alas, the answer dances in the winds of jurisdiction as the norms oscillate based on the patch of land you call home. Some domains harbor no age requirements, extending an open invitation for minors to carve their own businesses into the annals of commerce. However, caution tape abounds; certain regions brandish specific stipulations or barricades that demand vigilance and scrutiny.

#1 Havens of Possibility

For the majority, the realm of LLC formation casts aside the shackles of age, endowing minors with the power to forge their entrepreneurial odyssey. The canvas unfurls before young Picassos, primed to metamorphose their visionary daubs into bona fide success stories. Yet, heed this clarion call: Customs and rules might cavort, potentially bestowing individual states with unique prerequisites or restraints. Thus, an odyssey of legal elucidation is your lodestar.

#2 Bastions of Caution

Yet, alas, a handful of domains—Colorado, Illinois, Minnesota, Oregon, and Texas—brandish a resounding nay. These terrains decree that minors, who have yet to accrue 18 revolutions around the sun, can’t summon forth an LLC. But fret not, for amidst the parched landscape, a potential oasis beckons. In certain instances, these states unfurl a parchment that grants minors passage if an adult member escorts them across the threshold. Navigating this labyrinth of bylaws is imperative ere you breathe life into your LLC dreams.

#3 Venturing Beyond State Borders

Should your homestead proffer a stern “nay,” the world remains your oyster. Seek a haven, a realm across the state lines, where the torch of opportunity is high for minors. Yet, this expedition could levy extra fees or prerequisites. Thus, before this journey happens, a stopover into the core of legal counsel is a cautious step.

Some States that do not allow minors to form LLCs

Most states in the US make no mention of laws regarding age. However, there are a few states that especially require LLC owners/members to be at least 18 years of age, including,

  1. Colorado
  2. Illinois
  3. Minnesota
  4. Oregon
  5. Texas

Limitations of LLC Ownership for Minors

While minors can own an LLC, there are limitations to keep in mind. 

  1. Minors, in general, lack the legal capacity to enter into contracts and agreements. And running an LLC involves signing these contracts, agreements, and legal documents, which could be invalidated if a minor is involved in these agreements.

  2. Validating the above point, many states have laws that allow minors to cancel contracts they have entered into, making business agreements unstable and complicated.

  3. LLCs require management decisions and participation from owners, and minors might not have enough maturity or experience necessary to properly participate in the decision-making processes of the business.

  4. There might be special tax rules for minors’ income and ownership interests, making the whole LLC taxation process complex and irritating.

  5. As expected, hiring and employing minors in specific roles in an LLC could trigger additional legal requirements and restrictions, such as labor laws related to minors’ working hours and conditions.

Some Top Tips for Addressing Minor Limitations

  • Appoint other members who are over 18 to handle legal dealings.

  • Adopt a member-management structure that allows the LLC to be managed by its members or non-member managers.

  • All the ownership interests can be held in a family trust until the minor reaches legal adulthood.

  • Minors can instead participate in the business merely for educational interests with no ownership rights.

  • File a Statement of Authority with the Secretary of State to authorize adult members to enter into contracts on your behalf.

Final Word

If we were to give a piece of final advice, it’d be this: if you’re a minor with big entrepreneurial dreams and aspirations, it’s possible to form an LLC, but still, there are some important factors to consider.

So, while the path to forming an LLC may not be easy, don’t let it deter or discourage you! You can still take steps toward turning your dreams into reality with the correct guidance and understanding. Just make sure to do your homework, research properly, consult professionals, and then proceed wisely. Your age may be young, but your potential knows no bounds.

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Frequently Asked Questions​ (FAQs)

Well, the answer is yes! Just like older people, a minor can also become a part of an LLC. But there’s a small catch: they might have some trouble with making official agreements.

Most places have no strict age limit for starting an LLC.

It’s like following a map. First, you come up with a name for your business. Then, you make it official by registering that name in your area. Finally, you draw out a plan for your business in something called “articles of organization.”

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