Kendall Jenner may only have been 16 when she went into the makeup business with her sister, Kylie, who was 19 at the time, but not everyone has the same financial privilege…
It’s hard work. You need a lot of dedication, not only in the hours you put in but the perseverance to not give up when things get hard. (As they inevitably will.)
Good news is that it has never been easier to start a business from scratch! In fact, the average age of those who do is declining! The internet has given young people a treasure trove of opportunities, not only to start an online business but to gain knowledge and information on how to do business in the offline world.
A lot of good business ideas are actually really dumb. Some of the unlikeliest of products and services go on to achieve great success. Crowdfunding websites like Kickstarter can help you not only with initial funding, but to market test the demand for your latest invention or next great idea for a product. Outside of Kickstarter, there are plenty of schemes and resources available to help young entrepreneurs with funding. A couple of well-known organisations that you may first want to look into are The Prince’s Trust and Peter Jones Enterprise Academy.
The benefits of starting early!
If you’re particularly passionate about something, monetising it can take skills beyond just a hobby. But not all entrepreneurs need to have such a personal interest in their business idea; it can be something as mundane as picking up a few household chores around your neighbourhood (such as cutting grass or washing cars) or a dog-walking and pet-sitting service. Your first business doesn’t have to be the next big industry-disrupting startup; Richard Branson’s first venture at the age of 16 was a magazine called “Student”. Five years later, he opened his first Virgin record store in Oxford Street. An entrepreneur’s early years are rarely glamorous in the grand of scheme of things, but they do weed out those who can and those who can’t.
As with everything there’s a learning curve, but starting a business as a teenager allows you to gain valuable first-hand experience at a time when you can still afford to make mistakes. Some may argue that this learning curve will affect you no matter how old you are, so why not explore it a little earlier in life?
Challenges when starting a business as an under-18
Many online platforms (such as PayPal) and eBay require you to be over the age of 18 to create an account. The most common solution to this is to ask a trusted adult (your parent or guardian) to create an account in their name. You will obviously first need their full consent to be your representative for anything that you’re unfortunately still too young for. This includes setting up a PayPal business account; you can manage the account, but you can’t create it and it can’t be in your name.
The ability to take payments is crucial, but such a simple thing for most online entrepreneurs can be an obstacle when you’re under 18. As it’s difficult to build credit at that age, obtaining things like merchant accounts, bank accounts and insurance is a real challenge. Speak to different banks. Some banks will still be willing to set you up with a business account if you are under the age of 18. (However, if you’re only looking to bring in a little each week or month, then it might not even be worth setting up a business account just yet.)
With so much access online to suppliers around the world, as well as locally within the UK, ecommerce is a popular first venture for young entrepreneurs, and many start on eBay. You’ll have to bear in mind, however, that with eBay you are only allowed to trade for 3 months as an unregistered business. To complicate things further, under-18s cannot form a limited company and will therefore need to appoint an adult to be director of the company, but you can make yourself the 100% shareholder (also known as the “shadow director” of the company). Once you turn 18, you can then put everything in your name. But, depending on your business and what’s required of it, you might not want to register a limited company right away anyway. Don’t complicate things more than you need to.
Those who are looking to start their own business under the age of 16 may find things a little harder as you won’t have received a National Insurance number yet and will be exempt from paying certain (not all) National Insurance Contributions.
As for income tax, you will only need to worry about paying it if your profit amounts to over £10,000 within the tax year. Keep a record of all your business-related incomings and outgoings, including receipts for business purchases and invoices, and read up on self assessment tax returns. Everything you earn over £10,000 will be taxed from 20%.
If you’re a 16-year-old or a 17-year-old keen to become self-employed, one of the many difficulties you may face is in obtaining public liability insurance.
With Ashburnham, as long as you are legally entitled to work in the UK then we can provide you with public liability insurance for under 18s.