For many young Americans, setting up a lemonade stand in front of their home is a rite of passage. Despite tradition, many towns and states see a child’s lemonade stand as a legitimate business. This practically implies that if your kid wants to start a company and generate money, they must do it lawfully or you may wind yourself paying the price. Many parents are astonished to hear that their child’s company, even something as simple as a lemonade stand, may need a permission, license, or even the formation of a legal corporation. Here’s a deeper look at some often asked legal issues about lemonade stands and other typically owned by children enterprises.
What you’ll discover:
Is a permit required for my child’s lemonade stand?
When is a permission, license, or incorporation required for my child’s business?
What kind of permission may local authorities demand for a minor-run business?
Can my kid be arrested for driving without a permit?
When do lemonade stand earnings have to be taxed?
Table of Contents
Is a permit required for my child’s lemonade stand?
A permission or license may be necessary depending on who your kid sells lemonade to and where you reside. A license may not be required if your child is simply serving relatives or friends at your house. The majority of states, however, will need you or your kid to seek a permission or license if the stand is accessible to the public, even if it is on your own property. After all, food safety is a critical government concern, and unrefrigerated lemonade may spoil fast on a hot summer day.
Lemonade stands for children are not required in the following states:
Colorado Connecticut Illinois California
Louisiana
Missouri
Nebraska
Nevada
New York City
The state of North Dakota
The state of Rhode Island
Texas
Vermont, Utah
If you set up a lemonade stand in a state that isn’t mentioned above, the police or health department may shut you down and issue citations or penalties. Moreover, even if your state is on the list, your child’s stand may still need a permission under local or county ordinances.
When is a permission, license, or incorporation required for my child’s business?
Regardless of the owner’s age, most firms need a permission before they may legally function or open for business. In general, if a company requires a business license if operated by an adult, it will likewise need one if run by a child. Beginning before a license or permission is secured may result in penalties and fines. Thankfully, a formal company structure, or incorporation, is not required before you begin. If you have older children or teenagers who are beginning a company with friends or siblings, drafting a Partnership Agreement will give safety, responsibility, and clarity for the children while also adding to the learning experience.
Several states are making it easier for minors to establish businesses, and most of it can now be done online. A permit or business license is typically inexpensive, but it must be obtained before a firm may begin. If your kid’s company becomes exceptionally prosperous, or if he or she chooses to recruit assistance, it may be time to incorporate to provide a layer of liability protection for both you and your child. Most of the time, your kid will just need a permit or a business license to get started.
What kind of permission may local authorities demand for a minor-run business?
The permission you need will be determined by where you reside. Both state and local regulations control these permissions. Certain locations may need a vendor’s permit, as well as a company license or a health inspection. Begin by visiting the website of your local or state government. Costs are normally low, paperwork are easy, and the process may be a terrific learning experience for new businesses. If insurance is necessary, don’t be concerned; you could be surprised at how inexpensive it is. But don’t neglect the rules, since the penalties and fines are usually far higher than paying for the permission or license up front.
Can my kid be arrested for driving without a permit?
While each state has its own rules, being jailed for failing to properly file for a permit for your child’s lemonade business is uncommon. Nonetheless, you may be penalized, and the penalty might be substantial. Failure to pay the penalties may result in arrest in several jurisdictions. If the police or other authorities come at the stand to shut it down, it is preferable to cooperate, since refusal to do so may result in extra fines, or possibly arrest and criminal charges for failing to obey an officer’s instructions.
However, if someone gets ill, you (and your child) might be sued, and you could face additional fines if your child’s stand does not have the proper permission or license.
When do lemonade stand earnings have to be taxed?
Taxes differ between the federal government and each state. You or your kid will need to do some study or seek legal advice to understand your tax responsibilities under both state and federal law. In general, if the stand is profitable, you must submit a tax return for your kid or put the profits on your own tax return.
By federal law, children often do not pay much tax until they earn a large amount of money, so filing a separate return for your kid will frequently make more sense than combining their income on your own taxes. Even if the money is not ultimately taxed, you or your kid must submit a tax return. Thankfully, there is another another excellent learning opportunity for children interested in business.
