Is it considered legal forming a business through your parents?


2

I'm 15, and an enthusiast programmer, I've built loads of web based applications, some of which have even been called useful after demo'ing them to others, apps that have not been created (atleast none that I've found to exist!), and I'm considering taking some of these products to an actual audience, and charging for certain types of usage, resulting in a profit.

The question, if I wanted to do this, I would need to be an official 'business', at least in order to legally claim profit from an audience, and I'm just asking about the legality of starting a private limited company under the name (and agreement, as well as 100% director/shareholder control) of my parents, as there is an 18 year old lower bound age limit, where I live (Hong Kong), but me being the person actually 'running' it.

Thanks!

Legal Company Business

asked Dec 22 '11 at 01:53
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Karan K
26 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll
  • you don't need to form a business entity to collect money from people or sell software. You can be a "sole proprietor" or DBA or even just you. (At least that is the case in the USA) – Tim J 8 years ago
  • I figured that a sole proprietor/trader would be the better alternative to start with, then again, that business entity isn't valid here in Hong Kong, it's either a Limited company, or Unlimited company. Thanks for your answer though :) – Karan K 8 years ago
  • Is it true that one be a company to do business there (HK)? Can't someone get a cart and sell stuff on the street without being a company? – Jonny Boats 8 years ago
  • @JonnyBoats it's considered 'hawkwing' which is generally illegal around the urban areas of HK – Karan K 8 years ago

2 Answers


3

In most countries, minors (under 18s) can't legally form a company. This is because you can't enforce a contract made with a minor, (so it is difficult for others to do business with you and protect themselves against common business risks.)

So the most common solution is the one you have come up with - parents (or another responsible adult) become directors of a company.

One way you could do it is form a company with your parent/s as director and you as the sole shareholder. Then when you are 18, you could become the director of the company. In this scenario, your parents would be legally liable for the decisions and actions of the company so they would need to be comfortable with decisions you make. Therefore I would suggest that decision making is a joint process. This helps them understand and mitigate their risks and also gives you a sounding board and valuable feedback. (A good business mentor would also be invaluable!)

The strategy you use is something to talk over with your lawyer and/or accountant. They will help you find the optimal structure for HK and also how to mitigate risks for your parents as much as possible. (After all, if you do something unwise, they could lose their assets.)

Most importantly, once you have figured out how to mitigate your risks, GO FOR IT!! Go and do something with your ideas. It will give you great experience, you'll feel great about what you acheive and it will be fun.

answered Jan 4 '12 at 16:00
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Susan Jones
4,128 points

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Totally agree, if the concept is well thought out and the risk minimal then support your kids. I've done it and my sons business is starting to grow. At some point i will resign as director & leave him to it. I will always be there to help if he asks for advice. Take the leap of faith you'll be surprised by how they repay you.

answered Jan 4 '12 at 18:02
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Tim Stannage
11 points

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