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Allowing your kids to start their own business is a great way to teach them valuable life skills. Not only will they learn organization and money management, but they will also learn problem-solving and communication skills.
If you’d like to help your kids start a business, the following tips can help you ensure it runs smoothly and successfully.
1. Let Them Choose a Business Idea
You want your child to enjoy the experience, so let them choose something they’re passionate about. Suggest ideas, but avoid saying things like, “That won’t work,” or “Nobody will pay for that.” Toss around concepts for custom promotional products as well as advertising to help get the word out about your child’s new venture.
2. Set Goals and Make a Plan
Get your child thinking about what they want to accomplish by starting a business. What will they need to obtain to run the business? If they’re mowing grass, for example, what kind of equipment will they need? If they’re babysitting, should they take an infant CPR class before offering their services?
Have your child make a list of the things they want to accomplish and how they’’ go about doing so. This will help them realize what it takes to be successful.
3. Teach Money Management
Running a business is a great way to teach kids money management, including concepts like overhead costs and gross profits. If your child is a teen, they can keep track of business expenses and income. If they are younger, they can have a go at calculating purchase totals and giving change.
You’ll likely need to help your child out with some money upfront. Have them create an itemized list of everything they’ll need to get started, and if possible, have them contribute to some of these upfront costs with their own money. This will help them understand the value of a dollar and give them something to be proud of when they see it multiply.
4. Stress Customer Service and Work on Communication
Providing good customer service and being able to communicate effectively are both important to running a successful business. Help your child learn good customer service skills and teach them how to communicate effectively with customers and other stakeholders in the growing business. These are skills they can use throughout their life in a multitude of situations.
5. Take Care of the Legalities
Your child’s venture is subject to the same laws as any other business. This means they may need a business license, so check with your local city or county clerk’s office to find out.
If you’re concerned your child’s business might take off and put your own assets at risk, you may want to create an actual business structure. You can create a holding company or an LLC to separate your child’s business finances from your personal finances.
6. Pay Taxes
If your child earns over a certain amount, they may need to file a tax return. There may be self-employment taxes to account for, so be sure to check what your obligations are. Thankfully, you can easily file their tax return online, and don’t worry – even if they have to file a return, you’ll still be able to claim them as a dependent.
Letting your child start a business is a great learning experience for them. As a parent, you can use the tips above to help your child get off to a good start with their first enterprise.