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The Law & Your Business

Most teen businesses are not full time. Their "owners" are just earning spending money. So unless you're really making lots of cash and plan to turn this business into a living, you probably don't have to register company names or pay taxes. But if you get successful, here are some quick facts:

Age & work

Federal law says that you must be at least 14 years old to hold a job, unless you work on a family farm. But this law is talking about the age that an employer can HIRE you. If you run your own business, working part-time for many customers, you don't have to worry about this law.

Federal income taxes

You will not have to pay any income tax until you start to earn more than $7,600 a year. This figure can change, so check with an accountant or someone in the know.

State taxes

If you live in a state with income taxes, you will not have to pay any income tax until your income reaches a certain amount. Ask your parents or check with an accountant.

Self-employment taxes

Once you earn $400, you should be paying this tax.

Naming your business

You can become a sole proprietor (that's a single person who works for him/herself, not a corporation with employees). As a sole proprietor, you can just name your business and start trying to get customers. Down the road, if you do want to establish a legal company name, fill out a document called a fictitious business statement or file a DBA (Doing Business As). The entire process should cost about $50. You can now choose a name and have it advertised to complete the legal requirements.

Did you know?

Keep a money diary that tracks what you save and spend. It will tell you about when, why, and how you use money.