Troubleshooting Legal Problems

Do young entrepreneurs need a business license in Pennsylvania?

The proposed “Free the Lemonade Stand” bill successfully passed through both Pennsylvania legislative bodies in July. It now will move to the Governor’s office where, hopefully, it will soon be signed into being.

This bill was first presented in the Pennsylvania House by Rep. Johnathan Hershey in April, then approved by the Senate in July. The bill aims to do away with minors’ need to secure a permit to operate a small business. Without it, children have to secure a permit to sell baked goods, lemonade and any number of other items — even if they only stand to make a relatively small profit by doing so. 

What restrictions are associated with this bill?

Although this bill has passed, it didn’t do so without several restrictions. The bill generally affords anyone under 18 years of age immunity from securing a permit to run an enterprise. This rule only applies to children who make under $5,000 off their sales and only those who operate less than 84 days annually.

Minors must also only operate their business in either an un-zoned or a largely residential area (if it is zoned). It can’t be set up in an area where it might directly compete with a company that has a legal obligation to secure a business license. 

How this bill has changed the playing field for young entrepreneurs

Young business owners and their parents have had to worry about local officials fining them for running their small enterprises. One family was charged $500 in another state for running a lemonade stand. 

This bill’s advocates argue that the passing of this bill paves the way for our youth to learn critical skills such as bookkeeping, marketing and business operations without having to fear penalties. They argue that the passing of this law may encourage other children to become innovative, which may jump-start their entrepreneurial careers in the future. 

Running a small business isn’t easy. Understanding what not to do to avoid legal complications can be just as important as knowing your plans for the future.