July 11, 2023
Small businesses for kids are one of the best ways to teach children about personal finance. Running their own business will take them beyond basic lessons on spending and saving to important concepts like expenditures, profits, and losses. They’ll boost their confidence and develop life skills that will give them a leg up in jobs later on.
Stuck on what kind of business is right for your child? Check out our list of creative business ideas for kids.
How Starting a Business Benefits Kids
The only tried and true way to learn to manage money is to manage money. Sure, you can give your child an allowance and encourage them to set savings goals and track their spending. But earning money from their own business will help them develop skills like problem-solving and decision-making. It also offers them new ways to explore their interests and strengths
The only tried and true way to learn to manage money is to manage money.
Choosing the Type of Business to Start
The first step is for your child to decide what kind of business they want to have. You can help them brainstorm by discussing their skills, strengths, and interests and how those things could be helpful to other people. Below are some suggestions to get you started.
Brick and Mortar Businesses for Kids
A physical shop gives kids practice identifying cash and coins, making change, and polishing their social skills. But just because brick and mortar businesses are old school doesn’t mean your child is limited to traditional businesses like selling lemonade or baked goods. Instead, consider selling:
Homemade fidget toys
Soaps or bath bombs
Knitted, crocheted, or woven goods
Models (cars, airplanes, superheroes, or figures for board and roleplaying games)
3D printed products
Another option is reselling merchandise. Children outgrow clothes, toys, books, and hobbies quickly. Instead of letting old things clutter up their room, consider letting them resell items — or encourage crafty kids to jazz up items to make them one-of-a-kind. They can sell their merchandise through:
Local markets or boutiques
Social media, online marketplaces, or their own website
A front yard stand can be a great start, especially for inexperienced children. But once they’ve developed a little confidence, consider participating in local community market days or farmer’s markets to reach more customers.
With an online business, kids can earn money while honing valuable tech skills.
Online Business Ideas for Kids
With an online business, kids can earn money while honing valuable tech skills. They’ll be able to reach a wider customer base, and the work they do today may earn them passive income for years to come.
Print-on-demand products: greeting cards, prints of artwork or photos, or images for T-shirts, notebooks, water bottles, and more
Digital downloads: templates, patterns, guides, ebooks
Coded products: websites, widgets, apps, games
Gaming content: mods and custom content for popular video games
Video game streamer: monetize your channel or use an online crowdfunding tool to accept tips from viewers
Hobby blogger or vlogger: sell ad space or consider affiliate marketing
Encourage your child to keep a portfolio of their work complete with screenshots and testimonials. Eventually their portfolio could help them land scholarships, admission to college or trade programs, or their first office job.
Service Businesses for Kids
Kids pick up tons of useful skills on their own. They can also build on their knowledge — or develop new skills — using free online courses or websites like YouTube and Reddit. With a little creativity, your kid can make those skills profitable as well as fun.
Car washer: upsell vacuuming and waxing services
Yard maintenance: mow lawns, rake leaves, trim bushes, or tend plants
Sitter: for plants, pets, houses, younger kids
Elder companion: run errands, perform light housework, grocery delivery, provide emotional support
Repairman: fix bicycles, skateboards, scooters, toys, or do basic phone or tablet repairs
Tech support: set up, upgrade, or troubleshoot computers, mobile devices, and streaming services
Performer: juggle, do magic, paint faces, tell jokes, or play an instrument at parties
Cosplay designer: make custom costumes and props for cosplay
Encourage your child to keep a portfolio of their work complete with screenshots and testimonials.
Helping Your Child Understand Expenses and Profits
Most kids understand that businesses make money, but the idea of spending money to make money may be new. If you child is younger, you may want to start with the basics using our read-along guide “What Is Money?”
Defining Business Expenses for Children
Expenses are what you spend to operate a business. Older children may understand this concept better after a quick shopping trip. Start by having them list the materials they need for their business. As you shop, they should record the prices of everything as you place items in your cart. Finally, review the receipt together. (This is also a great time to discuss sales tax.)
Determining Product Prices
Once you know what your child’s materials cost, you can discuss setting a price per product. You’ll need to determine how many products you can make with that amount of materials. Then you can decide on a profit margin. If your child is following these concepts well then you can also do a little competitor research together to determine how much of a profit margin to expect.
Once you know what your child’s materials cost, you can discuss setting a price per product.
Pricing Digital Products and Services
Setting prices for digital products or services is much more abstract. You can start by:
Researching online (for instance, “How much to charge for X”)
Looking at competitors to see what they charge
Experimenting with pricing until you find a sweet spot
Setting Up Accounts to Manage Your Child’s Money
Your child will need a way to manage their money. A cute piggy bank or glass jar can be highly motivating for younger kids who will enjoy feeling and seeing their money. But there are lots of advantages of checking accounts for older kids.
If your child is too young for a checking account, you can also consider setting up a savings account. They’ll earn interest on their balance, and you can help them withdraw cash periodically that they can manage. Another option is using money from their savings account to fund a pre-paid debit card or secured credit card that they can use for day-to-day expenses.
If your child is too young for a checking account, you can also consider setting up a savings account.
Addressing Tax Considerations
Your child may have to pay taxes on their earnings if they bring in over a specific threshold. For 2022, that threshold is $12,950. Minors who earn less than that can still file a tax return to receive a refund if part of their earnings were withheld.
Children may also need to file a tax return if they earn above a certain threshold in tips or self-employment income. For 2022, that threshold is $400.
Consult a tax professional if you have questions about whether your child must file their taxes or if you with to file for a refund.
Discuss Safety Rules
Running a business can expose your child to safety risks, but with a little foresight you can keep them safe while they start building their little empire. Establish safety rules early and revisit them as your child’s business evolves. Here are a few ideas to get you started:
Always ensure your child is properly supervised while running their business.
Store your child’s money securely and don’t leave them unattended with it in public places.
Start by providing lots of oversight and gradually back off as your child learns to handle their new responsibilities.
Discuss safety around strangers both offline and online. Be explicit about the kind of information they should and should not share.
Monitor online activity, especially activity that exposes your child to the public through social media sites.
Check with your child’s school and social groups (such as scouts, sports teams, or church groups) before conducting business on their property or at their events.
Establish safety rules early and revisit them as your child’s business evolves.
Managing money is one of the most important skills you’ll teach your child. By helping them start their first business, you’re putting them on the road to financial success for years to come.