Do you still go to high school but want to be a business owner? Or do you as a parent want to teach your kid how to run a small business? Keep reading to learn how to start a business as a teen.

Wondering how to start a business as a teen? Here’s why you should consider dropshipping

There are adults who want their kids to be financially literate, and there are teens who want to become young entrepreneurs without having to wait till they graduate from college. Fortunately, nowadays you can start a business even if you’re an underage, and I’m not talking about running a lemonade stand.

Dropshipping provides a good opportunity for teens to learn how business works and to make money on their own. There are several reasons why.

1. No office renting

Even a lemonade stand requires a workplace of a sort, so occupying the yard sounds reasonable. But if you want to start a serious business as a teen, you’re going to need something more mature. Of course, one cannot expect the parents to rent an office.

From this perspective, an online business is a great solution for a teen entrepreneur. All you need is a PC or a laptop, and you can work from any place in the world.

2. No inventory requirements

All businesses sell products and services. Since few teens can provide services that adults can’t, the obvious choice is selling goods. But the traditional business model requires that you buy them in advance to stock somewhere and sell later.

In this case, you either have to turn your own room into a warehouse or rent a real warehouse, which is not cheap.

But in dropshipping, you sell first and buy after that. A dropshipping store promotes goods online and receives orders from customers. Only after that, the entrepreneur contacts his or her suppliers, buys the required product and asks the supplier to send it directly to the customer.

3. A smaller startup budget

Another advantage of starting a dropshipping business as a teen is the fact that you need a smaller starting budget compared to traditional business ideas.

One usually has to spend the lion’s share of the initial capital on purchasing goods from a wholesaler (or to invest it into manufacturing). Since in dropshipping it is not necessary, starting this type of business is easier.

4. Lower risk levels

Although dropshipping involves risks (just like any other business model), they are lower than when you buy first and sell later.

In dropshipping, one can test any number of goods without having to purchase them in advance. You do have to spend money on advertising products, but if people don’t buy, you just switch to another one. When you find the product that attracts a large number of clients, you start selling.

All this makes dropshipping a good way to start a business as a teen. Now let’s get to the key issues you will face and how to solve them.

How to start a business as a teen: legal and financial aspects of dropshipping for minors

Applying for bank cards

In any business, one has to pay a lot of bills. If you’re starting an online store, you’ll need to have a bank account and a card to do that. And that’s the first problem for a teenage entrepreneur.

As a matter of fact, even 6-year-old children can conduct financial transactions. When parents give their kid money and he or she buys a soda, that’s a financial transaction. The same principle applies to using bank cards. However, you can’t set up a bank account if you’re an underage.

The only way to own a bank card is to ask parents to do it for you.

In most countries, banks offer prepaid cards for teens. Parents set up an account linked to that card and deposit money on it. The teen who has the card can spend the money while the parents can see all the transactions in the account or a mobile app. Banks also allow setting certain limits.

This system works just like regular cash allowances except there’s no cash.

One can also add their kid as an authorized user on their credit card account. In other words, you simply give the child access to your credit card.

Most banks set minimum age requirements (usually teens should be at least 13 or 15). As a result, the child will get his or her own credit card linked to the same bank account.

It goes without saying that it is the parents who are liable for all the transactions their teen may conduct. So it’s a great idea to apply for a new card and ask the bank to lower its credit limit.

Buying domain and hosting

When starting an online business, you are going to need a website, which means you need to pay for a domain name and hosting.

The good thing is there’s no age restrictions on purchasing and owning a domain name. On the other hand, individual registrars have their own policies. But as a general rule, as long as one has access to a credit card, buying a domain should not be a problem.

Legally speaking, when teens pay for a domain or hosting, they do so with consent of their parents or legitimate representatives. Furthermore, when you purchase certain AliDropship solutions, it is us who buys a domain name and pays for the first year of hosting. Then we simply pass the name to the customer.

Integrating payment gateways

In order to start a business as a teen, one also has to install and register payment gateways so that customers could buy stuff with credit cards or by other non-cash payment methods. However, certain gateways impose age restrictions.

For example, to open a PayPal account, you should be of the legal age of majority in your state of residence or at least 18 years old if you are a US resident. That’s what PayPal user agreement says. 2checkout also requires that its customers be of legal age.

Stripe (another popular payment gateway) has softer restrictions. One can sign up for an account if they are 13 or older. However, the company also requires that the legitimate representatives also sign off on the account of their underage children.

So, age requirements can differ a lot depending on what payment gateway you prefer, but in all cases, a teen should be able to use the account created by his or her parents with no limitations. Of course, parents are the ones legally responsible for whatever their children do with the money.

Getting a Facebook business account

Our own experience with dropshipping stores has proven that promoting goods on Instagram and advertising them on Facebook are two very efficient strategies.

While most social media allow users to register with just their email or phone number, Facebook can be very suspicious, especially when it comes to creating a Facebook business account. In all cases, one has to confirm their identity, so an underage cannot have a business account under no circumstances.

Therefore, young people who wish to run a dropshipping website have to ask their parents to register a business account on Facebook.

Registering the business

When people ask how to start a business as a teen, they often look for tips on how to make a business plan, how to identify your target audience, how to get investments and so on. But few actually think about the legal side of the story.

If you don’t want to break the law and make the tax agency mad, you should legally register your business. But can teenagers do it?

They actually can. Most countries allow minors to register a business, but such procedures require paperwork. Even in this case, a teenager often has no or limited right to sign contracts. As a result, you can own a company but can’t run it.

One way out is emancipation – when an underage gets all legal rights of an adult, but I think that’s too much. Besides, if parents want their kid to become an entrepreneur, they can register the business to themselves and let the child take actual control of it. After the teen comes to age, the business can be handed over to him or her or sold for a token fee.

In any case, since all countries have different laws, you should consult a lawyer. But expect to take legal responsibility for your child’s business.

How to start a business as a teen: final thoughts

As you can see, it is possible to start a business as a teenager, but parents should be there to support their child. And not only legally! Even 30-year-olds who have never run a business need tips and recommendations from more experienced colleagues.

Starting a business venture is always risky and full of unforeseen challenges. And it’s great that there are people who want to learn these challenging lessons at such a young age and people who want to support them.

Those who want to start a business as a teen and are interested in dropshipping can choose the online store of their dream from multiple options and enjoy the world of opportunities it opens up for them!