Last updated: November 23, 2022

A limited liability company (LLC) is a business structure that provides limited liability to its members. It may be treated as either a corporation, partnership, or sole proprietorship for tax purposes. Since minors are usually not legally capable of owning property or entering into contracts, can they be an LLC member?

The short answer is yes.

Most state LLC statutes do not have a minimum age requirement for membership in limited liability companies, so the LLC serves as a viable option to protect young businesspeople from personal liability.

Can a Minor Form an LLC as a Passive Member?

Young teenager woman using her laptop

Minor can passively be a member of an LLC owned by another person without having to take any legal action.

Passive or minor members can share in business profits but do not have the right to participate in business decisions and LLC's daily business operations.

Because of this, only the adult members and business owners are the LLC members who are allowed to manage and control business decisions actively.

In some states, a minor can own an LLC as a member if they obtain consent from a parent or legal guardian.

In most cases where minors have been given ownership of an LLC, business assets have been put into a trust or custodial account until the minor reaches a certain age, such as 18 or 21.

Can a Minor Form a Business Entity?

Minors can form business entities with the help of their parents or legal guardians. This includes business structures like corporations (Inc.), general partnerships (GP), limited partnerships (Ltd.) and limited liability companies (LLC), and other business entities.

But keep in mind that business owners are still responsible for business debts, taxes, and any business operations lawsuits.

The legal entity must designate a person in charge, who is usually referred to as the "incorporator," "organizer," or "promoter."

This person's name will appear on business documents, but it can be changed later by filing an amendment to the business' Certificate of Formation.

How Can a Minor Form an LLC with the Least Amount of Hassle?

An adult should form an LLC on behalf of the minor. This can be done with or without the help of an attorney.

If possible, it is advisable for both parents to form an LLC membership due to their obligation to support their child(ren). Parents will need to form an LLC membership with the least amount of hassle.

If you're a minor trying to own an LLC membership, your LLC must have over 18 years old member.

This person can be you, or it can be another natural person with an LLC membership. However, each state has different LLC laws, so it's better to consult an attorney for professional legal advice.

Can a Minor Get Access to Credit?

A minor accessing his credit using a tablet

An LLC gives young entrepreneurs limited liability protection from business debts and lawsuits.

It can also help minors gain access to credit by allowing them to take out a business loan in the name of the LLC rather than as an individual.

But before a minor can join an LLC, they must go through the proper legal steps to ensure it's done correctly.

This includes notarization and filing necessary documentation such as Articles of Organization, Operating Agreements, etc., with the state in which a limited liability company is established.

Is Experience Necessary to Run a Successful Business?

Expertise is always an advantage, but owning an LLC membership is not necessary. An LLC's members can share equally in LLC profits and business decisions.

And they do not have to contribute financially to the LLC or perform services for it. LLC bylaws, however, may require LLC members to help run the LLC if they receive any of its profits.

States That Restrict Minors from Owning an LLC

The following is a list of a few states that will restrict minors to form an LLC:

  • Minnesota
  • Oregon
  • Illinois
  • Colorado
  • Texas

Related Article: How Many Owners Can an LLC Have


Can a Minor Sign a Contract?

The short answer is yes.

Most state LLC statutes do not have a minimum age requirement for membership in limited liability companies, so the LLC serves as a viable option to protect young businesspeople from personal liability.

How Does a Young Entrepreneur Pay Taxes?

The Internal Revenue Service requires LLC owners to report company profit or losses on their federal income tax returns.

There is a 1099-MISC form, which the LLC files with the IRS, and the young business owner reports self-employment income on their own personal tax return.

Who Is Eligible to Join an LLC?

Generally speaking, anyone who wants to can be a member of an LLC, and members do not have to be U.S. citizens or residents, and they need not even live in the country where the company operates.

What Are The Disadvantages of Minors Owning LLCs?

One of the disadvantages of minors owning LLCs is their limited ability to enter legally binding contracts. Laws will vary for every state, but minors entering contracts are difficult to enforce or voidable. Worse, many states forbid minors to enter specific types of contracts, such as property purchases.

Some people may be hesitant to conduct business with a minor-owned LLC because of contract issues. The best way to avoid this issue is to ensure that the LLC has adult members as well. These people can handle the legal deals, contract signing, and all other legal paperwork for the LLC.

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