My 6 year old would like to start a newsletter business. How can I get him started on legalizing a business?

Question

He wants to do a print newsletter for kids his age. How can a business be legalized for a child or does it have to be established under the parent's name and information. I want to be able to take any money he makes and put into a savings for him and his 529. I want it to be his business.

Answer 1

I honestly wouldn't worry about legalizing it. To begin with it won't make that much right off the bat. If he starts raking in serious cash thats when you go to a CPA about handling it in a tax-effective manner (think trust fund!). My daughters are 6 and 8 and run a typical lemonade stand. They don't make much more than $20 total in one day, not enough to worry about tax wise.

While your at it, get him a bank account!! teach him how to make his deposits. You also really should teach him about expenses (paying for his paper, ink cartridges, etc). My girls have been slowly paying me back for their expenses to get started, it has really taught them the value of money.

Also, be sure he can have a little bit to spend once in awhile. $5 to get some ice cream and soda once in awhile will help reinforce good financial teachings. Saving for college is great, but its very far away. Give him smaller things to save for that he can have in the near future. My own saved money for their trip to Disney last month. Then I only allowed them to take half of what they had saved up, they had a blast and appreciated their money a bit more and weren't quick to spend it all up right away.