Does my child's lemonade stand really need a permit?
Depending on who your child is selling lemonade to, and where you live, a permit or license may be required. If your kid is only serving family or friends at your home, a license may not be needed. However, if the stand is open to the public, even if it is on your private property, the majority of states will require you or your child to obtain a permit or license. After all, food safety is serious government business and lemonade can go bad rather quickly when unrefrigerated on a hot summer day.
The following states do not require permits for kids to set up lemonade stands:
- New York
- North Dakota
- Rhode Island
If you set up a lemonade stand in any state not listed above without the proper permit, the police or health department may shut you down and issue tickets or fines. Additionally, if your state is on that list, your child's stand could still require a permit under city or county laws. If you have questions specific to your city or state, a Rocket Lawyer network attorney can help you figure out what's needed. In the meantime, help your child prepare a Business Proposal or Business Plan so they get the most out of the experience.
When does my kid's business need a permit, license, or incorporation?
Most businesses need a permit before they can legally operate, or open for business, regardless of the age of the owner. Generally, if a business would require a business license if it were run by an adult, it will also need one if run by a minor. Starting before a license is obtained or the permit is approved can lead to penalties and fines. Fortunately, a formal business structure, or incorporation, is not necessary before getting started. However, if you have older kids, or teens, starting a business with friends or siblings, creating a Partnership Agreement will provide protection, accountability, and clarity for the kids, as well as add to the learning experience.
Some states are making it easy for minors to get started in entrepreneurship, and much of it can now be done online. The cost for a permit or business license is usually quite low, but it does need to be paid before a business can open. If the business becomes particularly profitable or if your child decides to hire help, then it may be time to Incorporate in order to add a layer of liability protection for you and your child. Most of the time, a permit or business license is all that your child will need to get started.
What kind of permit might local authorities require for a business run by a minor?
The permit you need will depend on where you live. These permits are governed by both state and local laws. Some places will require a vendor's permit and some may also require a business license or a health inspection. Start by checking your local or state government's website. Fees are typically rather modest, the forms are relatively simple, and the process can be a great learning experience for young entrepreneurs. If insurance is required, don't fret, you may be surprised by the low cost. Just don't ignore the requirements, as the penalties and fines tend to be much more costly than paying for the permit or license from the get-go.
Can my child be arrested for not having a permit?
Every state's laws are different, but getting arrested for failing to properly apply for a permit for your child's lemonade stand is unlikely. However, you can get fined and those fines can be steep. In some states, failing to pay those fines could lead to an arrest. If the police or other authorities arrive at the stand to shut it down, it is best to comply, as failure to do so could lead to additional penalties, or even an arrest and criminal charges for failing to comply with an officer's orders.
Also, if someone gets sick, you (and your kid) can get sued, and you could be on the hook for more penalties if your kid's stand did not have the right permit or license.
When must taxes be paid on lemonade stand profits?
Taxes vary between the federal government and from one state to the next. It will require some homework, or some legal help, for you or your child to understand your tax obligations under both state and federal law. In general, if the stand makes a profit, you will need to file a tax return for your child, or include the income on your own tax return.
Under federal law, children typically do not pay much tax until they start making a significant amount of money, so filing a return for your child separately will often make more sense than including their income on your own taxes. Even if the income is not going to be taxed in the end, you or your child must still file a tax return. Fortunately, this is another great learning experience for kids interested in entrepreneurship.
The legal red tape of starting a lemonade stand, or another business, does not have to stop your kid from earning some money the old fashioned way. The Rocket Lawyer Mobile App makes it easy to get legal help anywhere and on any device. If you or your child have more questions, you can always ask a lawyer to learn about the legal responsibilities of running a business.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.