Legal Question in Business Law in California

I am a minor opening an online business under an LLC co-signed by my parent. I am able to open a checking account through the local credit union with my parent. I want to use a Business Paypal account to accept payments and then transfer the money to my checking account. The problem is that my parent doesn't want it to look like they are making the money (the Paypal account is theirs). As long as the money is moved to my checking account, will it all be reflected as my earnings? Or because it initially goes to their Paypal, is it their earnings?


Asked on 5/30/15, 5:57 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

It isn't that simple. First of all, if the on-line business produces typical amounts of revenue and profit, the IRS probably isn't going to notice. However, if the business does attract IRS attention, it will, in addition to checking the funds flow, inquire into whether the minor or the parent or both is/are really operating the business and pocketing the income. Nevertheless, I'd say that if parent and child both keep their books and their tax reporting in exemplary condition, clarity and honesty, and keep such books on a current basis rather than hustling them together at the last day before an audit, that nothing bad and plenty of good will result from the minor's business-operating experience.

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Answered on 5/31/15, 8:32 am


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