Starting a business under the age of 18 – a guide

Dear schoolpupils, dear apprentices,

are you interested in launching a start-up? Maybe you have an idea for a start-up, but are not yet old enough? Then you are in the right place. Below you will find an overview of the legal regulations and places where you can find information and advice.

Legal rules

Persons under the age of 18, also referred to as minors, are considered to have limited legal capacity. If you wish to become self-employed, you need authorisation, i.e. permission from your legal representatives. Your legal representatives are your parents or, if your parents are not authorised to represent you, your appointed guardian. This authorisation must be approved by a family court. This is a legal requirement governed by Section 112 Para. 1 (1) German Civil Code (BGB).

Why has the legislator decided this?

In Germany, minors between the ages of 7 and 18 are considered to have limited legal capacity. Minors are generally only allowed to enter into contracts or transactions within the specifications of the so-called pocket money paragraph (Section 110 BGB). This means that minors cannot enter into work or rental contracts as pocket money is not intended for this purpose. However, anyone who wishes to start a business must have the opportunity to do so and requires the parent/guardian authorisation described above and that of the family court. The involvement of the family court in such instances is to protect minors from excessive liability consequences arising from entrepreneurial risk which they are less likely to be aware of due to their relative lack of business experience and which could quickly overwhelm them due to their often limited financial resources. The aim is not to prevent young people from starting their own business, but to protect them. The judicial officers in the family courts are responsible for granting authorisations.

The question of money

A fee is normally charged for a family court review. The fee is based on the Law on Court Costs in Family Matters. As of April 2021, the fee stands at 80.50 euros plus expenses.

From what age can you launch a start-up?

Section 112 BGB speaks only of “minors”. Minors under the age of 7 are considered to have no legal capacity and therefore may not found a start-up. In theory, a minor aged 7 or over may be granted business registration, however, in practice, no 7 year-old has the required maturity to be self-employed. The family court will therefore not issue an authorisation. In practice, the youngest age a minor can receive authorisation is 14. However, 16 to 17 year-olds are much likelier to be granted authorisation.

What steps await on the path to business registration?

1. First of all, you should speak to your parents and obtain their consent. This requires no strict format and can just be a conversation. We also advise that you hold a preliminary discussion with your nearest Startercenter NRW. You will receive competent advice and support on how to proceed further.

2. If your parents agree, you must contact the family court to make an application to become self-employed as a minor (or your parents on your behalf). This application must be signed by your parents. In case of shared custody, a power of attorney from the other parent must be enclosed. Below you will find information that an application should contain:

The informal application should include the following information:

Who is applying?: Own name, own date of birth, parents' names.
What is being applied for?: You are applying for approval of your parents’ authorisation for you to operate a gainful business independently.
What is the business?: Describe your business idea in a few sentences.
You should also include supplementary information that you have the necessary skills and knowledge to run a business like a competent adult and that you will behave in this manner.
Your own signature and your parents’ signatures

It is advisable to enclose the following documents with your application as they may be beneficial. These documents are frequently requested, but the list is not prescriptive. This is because reviews depend on the facts of the individual case and is subject to the judgement of the judicial officer in charge of your case at the family court:

Original birth certificate
Proof of power of representation (e.g. joint custody declaration before the youth welfare office; equivalent proof for guardians)
Proof of required maturity e.g. school reports, assessment of teachers and trainers (at least the name of your school and teachers or contact persons so that written consultations can be held by the court).
Proof of business knowledge: You can demonstrate to the family court that you have basic knowledge of the business world by learning about what it is like to be self-employed and, for example, attending a start-up seminar. Over 70 Startercenter NRW provide information on start-ups, individual consultations and a range of learning opportunities. Startercenter are run by Chamber of Crafts, the Chamber of Industry and Commerce and municipal economic development agencies. You can find an overview of locations and contact persons at www.startercenter.nrw. You will find information on topics such as starting a business. There are also many events and seminars aimed at entrepreneurs.
If you have a business plan, you are welcome to submit it. You can use it to show the court that you understand your business and the commercial environment and that you have considered the potential risks. You can also find information on business plans in Startercenter NRW. If you are in the advanced stages of developing a business plan, you can arrange a consultation meeting. A start-up consultant will then discuss the feasibility and viability of the project on the basis of your plan and highlight the potential risks.

Good to know: Judicial officers in family courts are in no way bound to the statements we have provided in this guide. According to Section 9 of the Judicial Officers Act, judicial offers act independently and are bound by law and order alone. They make their decisions at dutiful discretion, taking into account the circumstances of the individual case in the best interests of the child. Accordingly, they may request documents which are not listed here.

3. The family court will then carefully check whether you are able to take full responsibility for the legal transactions and decisions that await you. You and your parents will be invited to a hearing. Every hearing is different, as it depends on the judicial officer in charge of your case. The family court review considers whether you have the necessary maturity and the corresponding knowledge and skills and can therefore bear full legal responsibility. The discussion should also rule out any possibility of parents putting their child forward as a business owner because they want to avoid possible liability risks or are not allowed to open a business. The hearing will also ensure that the parents actually agree to any business plans.

Involvement of the Chamber of Industry and Commerce:

Family courts may consult the Chamber of Industry and Commerce. Their opinions are provided within the context of general administrative and legal assistance. This is official information that can be used as evidence by the court. Courts can thus turn to objective experts who have specialist knowledge and professional experience.

4. If you can answer the questions of the family court credibly and obtain the approval of the family court, you can:

register your business,
conclude contracts (e.g. employment contracts and tenancy agreements) required for the operation of your business, and
take care of issues such as tax, permits etc.

You now bear full legal responsibility and can no longer plead that you are a minor.

The following are excluded e.g.:

borrowing,
purchasing property,
granting of procuration

Please note that any court approval only applies to the business for which you applied for approval. If you plan to start more businesses, you will have to repeat the procedure.