In honor of Father's Day this past weekend we couldn't help but think of all the entrepreneurs out there who got to spend the day with their little ones.  Of course, Father's Day isn't the one day of the year where bonds are made between parents and their children.  With summer right around the corner what better way to spend your time with your children than by teaching them what starting a business is all about?  Not only will this process allow you to bond with your future entrepreneur, but an exciting way to encourage creativity and confidence, too!

Starting a business provides an invaluable life experience for kids, plus it develops very practical skills like organization, money management, problem-solving and communication.

Here are a few tips to help make the experience a positive one, if your budding entrepreneur shows interest in starting a business this summer:

1) Choose a business. Let them pursue their passion.

It’s important that your child is passionate about what he or she is doing so that they will enjoy the experience and not lose interest.

Having your child make a list of their favorite things to do will be the perfect way to help your child decide on a business venture if they don't already have a specific business idea in mind. If they love animals, they could start a pet-walking or pet-sitting business. Maybe they want to make candles and sell them on Etsy. 

It’s okay to think outside the box! Zappos founder Tony Hsieh started a worm farm at the age of nine, with the goal of becoming “the number one worm farmer in the world.” Resist the urge to say things won’t work or that no one would pay for their idea. This process is all about learning!

2) Set goals and make a plan.

Have your child think about all the nuts and bolts needed to turn their idea into a reality. What kind of equipment, supplies or training do they need? If they’ll be mowing lawns they'll probably need a lawn mower and gas to fuel it.  If they’ll be baby sitting, should they take a CPR or first aid course beforehand?

They should write down their goals for the business, including both financial goals and anything else they want to achieve. It will be fun and educational to revisit these goals at the end of summer.

3) Introduce the concept of money management.

A summer business is a great way to introduce kids to basic money management skills as well as complex topics like calculating gross profits and managing overhead. Teenagers can keep track of income and business expenses while younger kids can practice adding up price totals and counting change.


You'll probably need to give your child money to kick start their business. If so, have them itemize all their upfront costs, so they know exactly how much is needed. You could offer to fund a certain amount, as long as they contribute some of their own birthday money or allowance. You could even hold an investor meeting where your child pitches their idea to you and outlines their financial needs.

4) Work on customer service and communication skills.

Being an effective communicator and empathetic listener are essential building blocks for entrepreneurship. Help your child develop these skills so that they can learn how to communicate their product/service as well as understand their business’ value proposition. Stress the importance of customer service, and encourage your child to listen to and accommodate special requests when needed.

5. Manage the legal requirements.

Child business owners are subject to the same rules and legal requirements as any other business owner would be. Be sure to find out if any local licensing or permits are needed by checking with your local city/county clerk’s office.

You may actually want to create an official company structure, as well, but only if you’re concerned that the business will take off or put your family’s assets at risk. For example, your oldest son loves designing apps. If it seems that an app will be commercially successful on iTunes, you might decide to roll it under a holding company. And, if you don't already have a holding company, you may want to form an LLC (Limited Liability Company) for it. Ultimately, you can decide the scope of your child’s business and your family’s liability protection needs.

6. Pay taxes.

If your child’s earnings are greater than $400, they’ll need to file their own tax return. Most likely, they won’t be in a position to owe any income tax, but they will need to pay self-employment tax. Help them prepare for this ahead of time -- perhaps setting aside 15 percent of the earnings for tax time. They’ll report their business income and expenses on Form 1040 Schedule C, and self-employment tax is reported on Schedule SE.

And in case you’re wondering -- yes, you can still declare your child a dependent even if they file their own return.

At the end of the day, the most important thing to remember is that the process should be fun. Entrepreneurship is a labor of love, not just labor. It’s also about taking chances, making mistakes, learning from those mistakes and doing it all over again. Keep those messages front and center throughout the journey and enjoy this fun bonding experience.

We would love to speak with you about how Klear Systems can benefit your organization.

Give us a call at (949) 681-8135,
email us at info@klearsystems.com
or complete the form below and we’ll reach out to you.