Are you dreaming of starting your own business while still in school? Maybe you’re the parent or guardian of a teenager with an entrepreneurial spirit. The great news is that they don’t have to wait until they’re 18 to open a company.
Even though some tasks—like opening a bank account or getting funding—might be tricky, there are ways to overcome these challenges. Let’s break it down to help you open a company, regardless of age.
Key Takeaways
- You can own a company at any age, but you must be at least 16 to be a director.
- Someone over 18 will need to help you open a business bank account. Numerous grants and awards could help you get funding.
- Learn about entrepreneurship and build confidence using dedicated educational programmes and reading resources.
Age restrictions for teen entrepreneurs
The law does not have restrictions concerning how old you must be to own a company (i.e., to be the shareholder). You can, therefore, own a company at any age.
That’s not to say there would be no issues with someone under the age of 18 owning a company. Contractual issues can arise later, and transferring the company’s shares may be more complex. If you’re under the age of 18, it may be worth considering getting an adult to hold the shares on trust for you.
On the other hand, you must be at least 16 to be a director. The directors are the people who run the company on a day-to-day basis.
If you’re over 16, you can be a shareholder and a director. But if you’re under 16, someone else will need to take up the director role instead. Talk to your parents or a trusted adult to see if they would be willing to take up this role for you.
Can you open a business bank account under 18?
Companies don’t legally need to have business bank accounts. However, we strongly recommend opening one to make managing your business finances easier, keeping them separate from your personal funds, and creating a professional corporate image.
That said, you must be at least 18 and a director to open a business bank account for a limited company. But don’t let your age discourage you; there’s a simple solution.
If you know an eligible adult who can be the company’s director, you can start a business together and overcome these barriers. Once you turn 18, you can appoint yourself as a director.
How to get funding
While you can’t take out a bank loan, get a credit card, or secure other typical investments as a minor, there are other ways to raise finance for your new company when you’re under 18.
For example, you could ask friends and family for financial support. They could gift you the money to start your business or lend it to you with little to no interest.
You could also apply for start-up investment for young people, such as the Growth Impact Fund, which supports young entrepreneurs dedicated to making a socio-economic difference.
There are also grants available. Grants are non-repayable loans that help you get your business off the ground. Look at the UnLtd Starting Up Award, which offers up to £8,000 for new companies.
You will have to be financially savvy as an under-18 entrepreneur. But as long as you’re dedicated and passionate about your business idea, and you have the support of family and friends, there are plenty of options for funding your new company.
Finding educational support
A young age doesn’t mean you can’t succeed as a business owner. There are several options to develop your entrepreneurial education and confidence.
If you know any entrepreneurs, that’s an excellent start. Speak to them about their journey and learn from their experience.
You should also look into educational support programmes like Young Enterprise and Launch It. These programmes can help with anything from developing a great business idea and writing a business plan to launching a startup.
Also, check if your school offers any workshops or resources where you can get the advice and support you need.
There are also plenty of educational books and podcasts you can listen to about starting and running a business. Here are a few suggestions to get you started:
- The Diary of a CEO, Steven Bartlett
- Big Ideas for Small Businesses, John Lamerton
- How to Start a Business As a Teen: A Beginner’s Step-by-Step Guide, Ethan Johnson
Remember, don’t be afraid to ask for help. Starting a business can be scary and challenging at any age, and we all need advice and guidance sometimes.
Reasons to open a company at a young age
Entrepreneurship is a much more popular life ambition for teens and young adults than you might think. Archimedia Accounts looked into this and found that out of 2,000 people aged 16 and over in the UK, 57.75% of those between 16 and 24 said they wanted to start their own business in the future.
It’s no surprise that in the age of flexible working and side hustles, more and more young people want to become their own bosses.
But it’s not just social trends inspiring teenagers to explore the entrepreneurial route. Other reasons why teenagers may want to open a company are to:
- Gain financial independence
- Pursue a personal passion
- Explore a natural entrepreneurial spirit
- Have a sense of autonomy and control over their professional lives
- Make a broader impact on their communities
- Develop core skills like responsibility, leadership, and communication
- Experiment and innovate
- Get a sense of achievement and success
How to open a limited company as an under-18
The easiest way to open a company is through Rapid Formations. We are the UK’s leading Companies House-approved company formation agent, and we can help you bring your business idea to life in just a few simple steps.
Bear in mind that if you are under 16, you’ll need an adult to help you with the registration process.
1. Choose a company name
Whether you have one in mind or need to brainstorm more ideas, the first step is choosing a company name. It must:
- End with ‘Limited’ or ‘LTD’
- Be unique and not too similar to any other registered company name
- Not contain any offensive or sensitive words or expressions
Use the company name checker on our website to see if your company name is available.
2. Select a package
Next, choose your preferred formation package depending on the type of company you want to form. We offer a range of packages to set up your limited company, including a dedicated package if you live abroad and want to open a company in the UK.
You can compare our packages to see how they differ and which services they include. Also, read our blog ‘Different types of business structure for your startup’ for more information on the types of companies you can form.
3. Create an account
When ready, create a Rapid Formations account and complete your purchase. Unfortunately, you won’t be able to register with Rapid Formations if you’re under 16.
We are supervised by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, the London Local Authorities Act 2007, and Know Your Customer (KYC) guidelines. We need to run ID and proof of address checks on our customers and certain shareholders.
If you’re under 18, please ask an adult to create an account.
4. Tell us about your company
Finally, we’ll need to know who will own and run your company. You’ll need to provide the following information:
- The part of the UK in which your company is to be registered (for example, England and Wales or Scotland)
- Your business activities
- The company’s registered office address
- Directors’ details
- Shareholders’ details
- Details of any People with Significant Control
- Company secretary’s details (this is optional for private companies)
We’ll handle the rest.
The administrative process of opening a company can sometimes be confusing and daunting if you’re unfamiliar with any technical terms. Ask an adult for help or contact our Customer Support Team with any questions.
Turn your dreams into a business today
Opening a company as an under-18 might seem scary, but with the proper support and determination, you’ll see how easy it is to make that first step.
We hope you found this article helpful. Please comment below if you have any questions about starting a company, legal requirements for company formation, or running a business.
Don’t forget to explore the Rapid Formations blog for more helpful business tips and advice.
Please note that the information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While our aim is that the content is accurate and up to date, it should not be relied upon as a substitute for tailored advice from qualified professionals. We strongly recommend that you seek independent legal and tax advice specific to your circumstances before acting on any information contained in this article. We accept no responsibility or liability for any loss or damage that may result from your reliance on the information provided in this article. Use of the information contained in this article is entirely at your own risk.
