Yes, a minor can own an LLC in Texas. The Texas Business Organizations Code sets no minimum age for holding a membership interest, so a child of any age can legally be an LLC member. The practical catch is that minors cannot reliably sign contracts, open business bank accounts, or handle most of the transactions a functioning business requires, which is why an adult almost always has to be involved through a custodianship, a manager role, or both.
What Texas Law Actually Requires
The Business Organizations Code says a person can be a member or acquire a membership interest unless they “lack capacity apart from this code.”1Texas Secretary of State. Information on the Texas Business Organizations Code No separate Texas statute stops minors from owning property or business interests, so ownership itself is not the problem.
The organizer is different. An organizer, the person who signs and files the Certificate of Formation with the Secretary of State, must have the legal capacity to enter contracts.2State of Texas. Texas Business Organizations Code BUS ORG 3.004 Texas sets the age of majority at 18, and contracts signed by minors are treated as legally unstable.3State of Texas. Texas Civil Practice and Remedies Code 129.001 So the person filing the paperwork needs to be an adult, typically a parent, guardian, or another trusted adult acting for the child.
The Contract Problem That Changes Everything
Contracts signed by anyone under 18 are voidable by the minor. The child can walk away at any point while the other party stays bound. Vendors, landlords, lenders, and business partners understand this, and most will not sign anything with a company where a child is the decision-maker.
Banks apply the same logic. Financial institutions require account signatories to be at least 18, so a minor acting alone cannot open a business checking account. Without one, collecting payments and paying expenses becomes nearly impossible. These are the everyday mechanics of any business, and they all break when a minor tries to handle them personally.
Using a TUTMA Custodian to Make It Work
The Texas Uniform Transfers to Minors Act, in Chapter 141 of the Texas Property Code, is the standard fix. TUTMA lets an adult custodian hold and manage property for a minor without setting up a formal trust, and an LLC membership interest qualifies as custodial property.
What the Custodian Can Do
A TUTMA custodian has the same rights and authority over the custodial property that an unmarried adult owner would have over their own.4Texas.Public.Law. Texas Property Code 141.014 – Powers of Custodian For an LLC interest, that means the custodian can sign contracts, open and manage bank accounts, make business decisions, and deal with vendors on the minor’s behalf. The custodian owes a fiduciary duty to the child, meaning the interest must be managed prudently and in the child’s best interest.
Naming It the Right Way
TUTMA requires a specific format wherever the ownership interest appears. The property must be registered in a name followed in substance by: “[Custodian’s Name], as custodian for [Minor’s Name] under the Texas Uniform Transfers to Minors Act.”5Texas.Public.Law. Texas Property Code 141.010 – Manner of Creating Custodial Property and Effecting Transfer Use this language in the operating agreement, in the Certificate of Formation if it names initial members, and on any bank accounts. Banks and third parties look for it to confirm the custodian’s authority.
When the Custodianship Ends
TUTMA defines a minor as someone younger than 21, not 18. Custodial control does not end when the child turns 18. It continues until age 21, when full legal control of the membership interest transfers to the young adult. That gap matters if the child expects to take over the business at 18.
Consider a Manager-Managed Structure
Whether or not you use TUTMA, structuring the LLC as manager-managed rather than member-managed adds a second layer of protection. Under the Business Organizations Code, an LLC can designate one or more managers to run operations while members retain ownership but step back from daily decisions.6State of Texas. Texas Business Organizations Code 101.251
Naming an adult manager in the operating agreement keeps the minor’s limited legal capacity out of the way of operations. The manager handles contracts, hiring, payments, and vendor relationships. The child still owns the LLC and receives its profits. The custodian and the manager can be the same adult or two different people.
Filing Steps Specific to a Minor-Owned LLC
Formation follows the standard Texas process, with extra care around ownership documentation.
- An adult organizer signs and files the Certificate of Formation with the Texas Secretary of State. The filing fee is $300.7Texas Secretary of State. SOSDirect Filing Fees
- The operating agreement should record the minor’s interest using the TUTMA custodian designation and, if applicable, state that the LLC is manager-managed and name the manager.
- The IRS Employer Identification Number application requires a “responsible party” who controls or manages the entity’s funds. The IRS specifically excludes a minor child beneficiary from qualifying as the responsible party, so the custodian or manager must be listed instead, using their own Social Security number.8Internal Revenue Service. Responsible Parties and Nominees
As of March 2025, domestic LLCs are exempt from filing beneficial ownership information reports with FinCEN under the Corporate Transparency Act, which removes what would otherwise have been an extra compliance step.9Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting
How the Income Gets Taxed
A minor who owns an LLC still owes taxes on what it earns. For a single-member LLC, the IRS treats the company as a disregarded entity, so income and expenses flow through to the owner’s personal return.
The kiddie tax is where families get caught off guard. It applies to unearned income of dependent children under 19, or full-time students under 24. For 2026, the first $1,350 of a child’s unearned income is covered by their standard deduction, the next $1,350 is taxed at the child’s rate, and anything above $2,700 is taxed at the parent’s marginal rate.10Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income
What counts as “unearned” is the key question. Wages, salary, and self-employment income are not subject to the kiddie tax. A child genuinely working in the business and earning self-employment income is taxed at their own, usually lower, rate. A passive child-owner with a custodian and manager doing all the work looks more like an investor to the IRS, and distributions are more likely to be treated as unearned income and pulled into the kiddie tax. A tax professional should structure this from the start, because the treatment differs a lot in dollars.
Emancipation for Older Teens
An older teenager who wants full control without a custodian can petition a court for removal of the disabilities of minority, the Texas version of emancipation. The minor must be at least 17, or at least 16 and living apart from their parents, guardian, or managing conservator, and must be self-supporting and managing their own financial affairs.11State of Texas. Texas Family Code FAM 31.001
If the court grants the petition for general purposes, the minor gains the legal capacity of an adult. That includes signing enforceable contracts, opening business bank accounts, and managing the LLC without a custodian. An emancipated minor could also serve as the organizer. This path does not fit a young child with a small side business, but for a 17-year-old with an established income, it can replace the custodial arrangement entirely.