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  1. #1
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    Not old enough for a merchant account...

    Hello.

    Being 14 years old and trying to start a business is very hard. There are so many limitations for age, I don't know where to begin. One of my major concerns is how to handle payments... I really don't think that I should use PayPal, since I have experience with people who, for some reason, refuse to use it, which means I ultimately lose a customer.

    I guess I could go with 2CO, since maybe their reputation is better at the moment, but my real issue is with merchant accounts. Of course my parents won't have their names on my merchant account ( ), and I cannot sign up for one, as I am under 18, so I'm stuck in a crisis here: WHAT DO I DO?!! I think that it would be rather unprofessional for my business to grow significantly, but I'm still left in the dust using 2CO or PayPal. I know I need a merchant account sometime in the future, but how do I get one???

    Please, any suggestions would be very much appreciated. Thanks

  2. #2
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    Get a partner that is over 18. Using 2CO wouldn't be that bad, really. I wouldn't mind it if I was a customer, honestly.
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  3. #3
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    Get a partner that is over 18. Using 2CO wouldn't be that bad, really. I wouldn't mind it if I was a customer, honestly.
    Yes, my first reaction was to find a partner over 18, but then comes all the liabilities of having a partner, and all the drawbacks associated with it, i.e. sharing profit in a business that will be extremely marginal to begin with, and maybe for a while.

  4. #4
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    Then again, without a partner, what are your profit chances? You may have better growth chances with a partner than without, and thus more profit. What happens when you need to get dedicated servers or colocation? You won't be able to sign any contracts. It's going to limit your growth. What happens when you need financing to purchase new equipment, licenses, or whatever?

    Just something to think about.
    Alex Llera
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  5. #5
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    Yes, very very true, thank you much.

  6. #6
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    I am also 14. Have your parents co-sign for the merchant account. They will be the owner (not really doing anything), and you will be the partner (actually doing stuff). I went with CDGcommerce , and it all worked out.

  7. #7
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    I am also 14. Have your parents co-sign for the merchant account. They will be the owner (not really doing anything), and you will be the partner (actually doing stuff). I went with CDGcommerce , and it all worked out.
    Hell, this just pissed me off... my damn parents won't co-sign, they say they don't want to be involved in my "business" or "financial affairs". What ********. Jesus man, my parents suck!

  8. #8
    sorry to hear that SniperDevil. I also think that a partnership is the best place for you to start.
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  9. #9
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    That's kinda weird that your parents won't support you in your business. I'm glad my parents always supported me in anything I did.

    Do you have any uncles, aunts, cousins or friends that you trust? You can take in a partner and then just pay then 10% of the net profit for being your partner. The trust factor is a pretty big thing.

  10. #10
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    :/, don't make me feel worse about it, my mom's a lawyer, perhaps that's the reason... I don't know, either way I'm really really bummed about this right now.

  11. #11
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    One thing, my dad just tried to suggest alternatives to avoid having to actually consider doing it, and to make himself feel better... he said "just use paypal, it's fine", like of course he knows everything. Then my mom follows him, so I'm pretty much screwed eh

  12. #12
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    Sorry to hear about your woes, Sniper. Any chance on hitting up a brother, sister, friend over 18?
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
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  13. #13
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    Sorry to hear about your woes, Sniper. Any chance on hitting up a brother, sister, friend over 18?
    Nope, I have none. All my relatives are the same way, I think none of my family trusts me heh.

  14. #14
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    Even be careful with Paypal SniperDevil. If they find you you are underage, they can hold your money until your are 18. You are underage & unfortunately cannot legally enter into any type of a contract.

  15. #15
    SniperDevil - Sorry to hear about your troubles. I have to admit, I can understand your parent concerns. Consider it like this, owning a merchant account is a liabilty. An even bigger one if you're not the one operating it. It doesn't really matter if you fail financially as you won't be the one the collectors run to. Your terrible parents are weighing the risks, and at this point I have to agree with them.

    My suggestion...if you want to open a web hosting business at 14 years old, have your customers write you checks/money orders. You may have to extend a certain level of credit timeline in order to still have instant account setup, but in the long run you would be the one taking the risk. Shouldn't that be the way if it is YOUR business????
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  16. #16
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  17. #17
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    At 14 try dating and having a life.

  18. #18
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    At 14 try dating and having a life.
    omg, some people are so 'arghhhh'

    Why are kids only supposed to date and muck around? If he wants to run a business then let him, don't be so negative

    I am also 14, and I run a hosting business. I signed up for both PayPal and 2Checkout, for 2Checkout i believe I used my mothers name (shes okay with it) or I used my own, I dont really remember, lol.

    Someone suggested that you get your customers to write checks to you....good luck, people dont want to muck around with checks these days.

    Bub

  19. #19
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    you have to be 18 or over to register for a 2CO account.
    I think we have gathered that by now

  20. #20
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    Bub Host - I do hope that you did use your mother's name else you are in violation of the TOS. It is not being "arghhhh" - we are just trying to state some facts. If anything were to happen, the parents would be liable.

    SniperDevil - create a business plan. Create your webhosting plans. Show your parents you are serious. When I was 14 - I wanted to do a lot. I won't tell you what "job" I ended up doing until I was old enough to get a real one - but they might be thinking that you are young & they might not understand the business / internet world.

    I remember reading about the 15 yr old who was e-baying electronics. But instead - he was sending out bricks. It the ones like that that re-enforce the legal are requirement

  21. #21
    Originally posted by Bub Host
    Someone suggested that you get your customers to write checks to you....good luck, people dont want to muck around with checks these days.
    It's that kind of thinking INSIDE the box that is "arghhh". When we started, that was all we accepted (in addition to money orders for those that didn't have checks). You have to understand, that a lot of small to medium sized businesses don't have company credit cards - they have company checks. It's not as uncommon as you think.
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  22. #22
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    I don't think anyone is trying to beat up on the age issue here... the reason why 18 is the magic number is because anyone who is under 18 years of age can't be legally bound to a contract that they sign.

    And especially in matters where there is very real risk exposure and the potential for financial loss to take place, banks, acquirers and anyone else in the financial services realm needs to know that the merchant signing up is authorized and legally bound to the terms of their agreement.

    If the legal age of being an "adult" was 14... then everyone would likely be requiring someone "14 years or older" to be the signers on the contract but that just isn't the case.

    So unfortunately - you will be relegated to getting a co-signer for the moment and/or waiting to conquer the business world until you turn 18 and can do everything under your own name w/o having to involve anyone else.

    I commend you, though, for getting an early start in business. The experiences you learn now will probably be very beneficial down the road and as you continue to grow as a business and individually.
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
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    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
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  23. #23
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    Thank you cdg, to tell you the truth, you really can't start a full-fledged business until you're either A) 18, or B) have parents that are willing to co-sign on merchant accounts, corporation/LLC registration, and the list goes just on. This pisses me off, I think there should be certain exemptions made, like if I wanted to be free from my parents only for financial obligations, I could file something with the court or Secretary of State.

    That would rock, but for now, business sucks being my age!

    BTW, Techark, thank you for your encouraging comment.

  24. #24
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    Why don't you just join as a sales rep of some "more established" hosting companies? I believe all you want are the experience and money out of it?

    I would think, besides all the legal issues and contracts, there are just too many other attached issues which you might not be able to handle yourself. Can you cope with supporting your clients while you are schooling? How about negotiating deals which require meeting your clients during office hours? The list can go on.

    Imagine, however, that you are able to join a good web host and gain more experience for, say 4 more years, you are a super experience web host which you are confident in all sorts of issues and with good service, your reputation can build up even faster and a network of loyal supporters who might want to try out your service.

    Just my thought.

  25. #25
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    Hmm acidbase, not a bad idea, except I for one like to start my own ventures, and be able to control all of the in's and out's of my company.

    Plus, being a 'sales rep' usually means being in the physical location, at the company, unless they use VoIP for their support lines, or if they can somehow put my number in their internal system for call forwarding. Hmm...

  26. #26
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    Bub Host - I do hope that you did use your mother's name else you are in violation of the TOS.
    Just checked and yes I did use my mothers name

  27. #27
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    Does anyone think that if I take coreybryant's advice (which I probably will anyways), I can possibly convince my parents otherwise?

  28. #28
    Originally posted by SniperDevil
    Does anyone think that if I take coreybryant's advice (which I probably will anyways), I can possibly convince my parents otherwise?
    i did just that to convince my wife!!

    not only will it convince your parents that you're serious about this endeavor but it will also show them how professional you are.

  29. #29
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    I think he makes a good point. You should create a good business plan. This will assist you in convincing your parents and also potential "sponsors" who might be interested in your business model.

    You can also be more focused on how you operate your business.
    By all means, follow his advice.

    Good Luck

  30. #30
    I also agree that you should create a business plan. I think it's perfectly understandable that your parents may be skeptical about your business because you are 14. If you have a business plan for them (and yourself), it will show them that you have done your due diligence and they will also be able to understand your endeavor better. Let them know exactly what you are trying to accomplish and how you plan and going about doing it and they may be a little more supportive.
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  31. #31
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    I agree 100%. Show them a business plan and address the key aspects of your business in it.

    Make sure to include a spreadsheet to show your anticipated revenues and expenses (and keep it conservative to show them that you don't have some "pie in the sky" visions to start) and account for the various resources that you will need.

    I think one other good thing to do would be to outline the RISKS involved in the business to show that you are thinking not only of the upside but the downside... and explain what contingency plans you have in place for things like server/network outages, client issues, etc. and how you will address backups, security and so forth. And make sure to address how this business will "co-exist" with your schooling since that will definitely be a concern of theirs.

    Put together a detailed plan and you will stand a much better chance of impressing them that this isn't just some "summer whim" but rather something that you want to seriously pursue.
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
    Many thousands of successful, growing businesses benefit from our expertise every day. You can, too!
    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
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  32. #32
    There may be several ways around this whole situation that SniperDevil is expirencing.

    Depending on your state, you may be able to sign a contract under the age of 18 only if the contract is in that state where the law is allowed. I do know that Oregon, you can sign certain contracts under the age of 18.

    Also, you should go to a credit union and open a checking account and tell them to only issue you a debit card and not any checks. Also tell them that if they can make it so you cannot issue any checks and not allow it so you cannot deduct any money more money that you only have in your account.

    Some credit unions will let you open an account without a parent if you do it this way.

    It will only cost you about five dollars to have your account open. Your acutally buying five dollars worth of the credit unions stock and that brings me on to my next point.

    Like I said, depending on the state, create a corporation or limited liablity corporation. If you cannot create one, have someone or anyone create one for you and then what you do is issue some stock. After the issuing of stock, you should recieve more than fifty-one percent and you will be the owner of the company, thus able to make any and all decisions.

    Some states allow anyone of any age to purchase stock with their own money, some do not.

    After getting a corporation (I would suggest an S or C corporation for you) get a payment system like paysystems or paypal and sign it under the company's name.

    Depending on the state it may cost several hundreds of dollars or may cost fifty dollars as it does here in Oregon.

    So if your lucky enough to live in a state where you can do this it may cost you from one-hundred to a few hundred dollars to get this all done without any parents.

  33. #33
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    The only possible problem that I would envision with the above is that merchant processing contracts typically require not only an authorized signer for the business but also a personal guarantor. And that is another place where the age limitation comes into play.
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
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    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
    Learn more today at http://www.cdgcommerce.com - we look forward to helping your business grow!

  34. #34
    Very true.

    Also, you usually need a drivers license to fax them, along with your social security number with a signature.

    If you can find one that allows people under the age of 18 to allow you to sign SinperDevil, you might want to get a state identification card because that is what I used when I signed up, I just felt the drivers license was to much information to give out to anyone.
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  35. #35
    Honestly looking back on it, I would not do it all over again. Getting from where I was when I began in April of 2003 to where I am now was not easy. If I knew all the steps and what not to do and all that I know now, it would be relitively simple. Everything ended up costing 3 times as much as I thought it would, and it took 5 times longer to be profitable as I thought it would. Start small! Dont be a big spender up front... Good luck with your ventures though!

  36. #36
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    Wow... thank you all for your incredible support, I will now attempt a business plan, although I don't know where to start, since I'm not even sure what I want to do! But, I'll brainstorm some ideas and see what I can come up with as strategies for making money and gaining customers (the money comes with gaining customers, which is the hard part).

    eValueHost, thank you for your advice, although I didn't quite understand what would be accomplished with issuing stock... you mean gaining investors correct?

    I have no idea how to issue stock, and how to make it official. Would I need a lawyer (uh-oh) to do this, and if so, what would my total costs be? I can tell even this business has so many "hidden costs", I guess starting businesses is very hard due to all the regulations and laws regarding this stuff.

    Thank you for your advice and help so far, I hope some people will be willing to answer my current questions.

    P.S. THANKS AGAIN!

  37. #37
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    Business Plan Info

    There is actually a program that you can purchase that will help you create your business plan. It is a fantastic little program.

    If $100 is out of your range, Business Plan Success might be more up your alley. Or even check out Coffee Break Wisdom. And never forget Small Business Administration and Counselors to America's Small Business

  38. #38
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    You really do need someone over 18 most merchant accounts want you to have a business bank account, which you also need to be 18 for. Do you have any friends over 18 who would be interested.

    Hey if your mum is a lawyer then she could help you with your TOS etc

  39. #39
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    You really do need someone over 18 most merchant accounts want you to have a business bank account, which you also need to be 18 for. Do you have any friends over 18 who would be interested.
    Yeah, I read at that SEO site, in fact, that you shouldn't combine personal and business money in the same account (for various reasons), so I guess I'd have to get my parents to open up a business checking account too (let alone get them to co-sign the merchant account).

    How about if I bought an Internet checking account from a Swiss bank? I thought of this last night, as I don't know if they have any age restrictions, and it would be purely Internet banking. Does anyone know anything about this, and is it a good idea?

    Hey if your mum is a lawyer then she could help you with your TOS etc
    Yep, I could, although I don't think she does business law, but she will still be able to help.

    coreybryant: I saw that program, but $100 just to write a business plan seems a little exorbitant at the moment. I've looked at SBA, and perhaps I will just use their tutorials. I'll take a look at Coffee Break Wisdom and Counselors to America's Small Business.


    Thanks!

  40. #40
    The reason I was suggesting to you that you issue stock is that you could own the company if you owned fifty-one percent or more of the company.

    Thus, depending on your state, you might have to have an eight-een-year-old to sign the start up papers and then you can just buy the company from him for one dollar or simply transfer the stock.

    This is of course if you live in a state where it requires an 18 year old to sign the papers.

    Some states in the United States, like Oregon, don't require an attorney at all to file papers and all you have to do is sign some papers, with no minium age I might add, and fax or mail them. I would suggest that you keep one person on the corporation list of titles (CEO, VP, etc) and have him/her sign anything that requires that you must be over the age of eighteen.

    The only problem you would have is lots of businesses, such as merchant accounts, requiring anyone acting on behalf of the corporation to be at least the age of eighteen, but some credit unions, like mine for instance, can have you get a business and/or personal account without a parent co-signing for one.

    How you ask?... Simply tell them that you want your account setup in such a way that you can never withdrawl over a certain amount so there will be no risk of bouncing checks or going into debt.

    This is all if you decide to go it in all alone.
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