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 complications start the moment the business tries to do anything: a minor cannot reliably sign contracts, open a business bank account, or serve as the organizer who files the formation paperwork. In almost every case, an adult has to be built into the structure from day one, usually as a custodian under the Texas Uniform Transfers to Minors Act or as a named manager of the company.
What the Texas Business Organizations Code Allows
The Code governs LLCs formed in the state and treats membership as a matter of capacity rather than age.1Texas Secretary of State. Information on the Texas Business Organizations Code A person can be a member or acquire a membership interest unless they “lack capacity apart from this code.” No separate Texas statute bars minors from owning property or business interests, so ownership itself is not the obstacle.
Filing the paperwork is. The organizer who signs and files the Certificate of Formation must have the legal capacity to enter into contracts.2State of Texas. Texas Business Organizations Code BUS ORG 3.004 Texas sets the age of majority at 18 and treats contracts signed by minors as legally unstable, so the organizer should be an adult — typically a parent, guardian, or other trusted adult acting on the child’s behalf.3State of Texas. Texas Civil Practice and Remedies Code 129.001
Why a Minor Can’t Actually Run the Business
Contracts signed by someone under 18 are voidable by the minor. The minor can walk away at any point while the other side stays bound, which is why vendors, landlords, and lenders are reluctant to deal with a company where a child is the decision-maker. The arrangement is one-sided, and businesses on the other side of a deal know it.
Banks apply the same logic. Account signatories must be at least 18, so a minor acting alone cannot open a business checking account. Without a bank account there is no clean way to collect payments, pay expenses, or track income. These are not edge cases. They are the daily mechanics of operating any business, and they all break when a minor tries to handle them directly.
Using a TUTMA Custodian to Hold the Membership Interest
The practical fix is the Texas Uniform Transfers to Minors Act, found in Chapter 141 of the Texas Property Code. TUTMA lets an adult custodian hold and manage property for a minor without the formality of a trust, and an LLC membership interest qualifies as custodial property.
What the Custodian Can Do
A custodian under TUTMA has the same rights and authority over the custodial property that an unmarried adult owner would have over their own property.4Texas.Public.Law. Texas Property Code 141.014 – Powers of Custodian For an LLC interest, that includes signing contracts, opening and managing bank accounts, voting the membership interest, and dealing with vendors. The custodian owes a fiduciary duty to the minor and must manage the interest prudently and in the child’s interest, not their own.
How to Name the Custodian
TUTMA requires specific wording 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 exact form in the operating agreement, in the Certificate of Formation if it identifies members, and on bank accounts. Banks and third parties rely on the designation to confirm the custodian has authority to act.
When Custodial Control Ends
TUTMA defines a minor as someone younger than 21, not 18. The custodianship does not end when the child turns 18. Full legal control of the membership interest transfers to the young adult at 21. Families planning for a transition should know this timeline, because the young owner may feel ready to take over the business well before the statute hands it over.
Pair the Custodianship With a Manager-Managed Structure
Structuring the LLC as manager-managed rather than member-managed adds a second layer of protection. The Texas Business Organizations Code lets an LLC designate one or more managers to run operations while members hold ownership but step back from daily decisions.6State of Texas. Texas Business Organizations Code 101.251 If the company agreement and certificate of formation do not address the question, management defaults to whoever the certificate of formation identifies.
Naming an adult manager in the operating agreement keeps the minor’s limited contract capacity out of the way of day-to-day business. The manager signs contracts, handles hiring, pays vendors, and manages banking. The minor still owns the LLC and benefits from its profits. The custodian and the manager can be the same adult, or they can be different people if the family wants to separate ownership stewardship from operational control.
Forming the LLC When the Owner Is a Minor
Most of the formation process looks like any other Texas LLC. A few steps change because of the owner’s age.
- 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 records the minor’s ownership using the TUTMA custodian designation. If the LLC will be manager-managed, the agreement states that clearly and names the manager.
- The federal EIN application asks for a “responsible party,” meaning someone 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 is 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 a compliance step that would otherwise apply here.9Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting
Taxes and the Kiddie Tax Trap
A minor who owns an LLC still owes tax on the income it generates, and the treatment depends on whether the income is earned or unearned. A single-member LLC is a disregarded entity for federal tax purposes, so income and expenses flow through to the owner’s return.
The kiddie tax 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 the 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, which is often substantially higher.10Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income
What counts as unearned is where families get caught. Wages, salary, and self-employment income are not subject to the kiddie tax. If the minor is genuinely working in the business, that income is taxed at the child’s own, usually lower, rate. If the minor is a passive owner while a custodian and manager run everything, the IRS is more likely to treat distributions as unearned investment income and apply the kiddie tax. Working with a tax professional before the first return matters, because the difference in treatment can be significant.
Emancipation for Older Teens Who Want Full Control
Teenagers who want to run their own business without a custodian can petition a court for removal of the disabilities of minority, which is the Texas term for emancipation. A minor is eligible if they are at least 17, or at least 16 and living apart from their parents, guardian, or managing conservator. The minor must also 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, managing their own income and property, and making the legal decisions a parent or guardian had been making. An emancipated minor can serve as the LLC’s organizer, sign contracts that are not voidable, open business bank accounts, and run the company without a custodian. This path is not realistic for a young child with a side business, but for a 17-year-old with an established income it can replace the custodial setup entirely.