Whether you’re dreaming of making it big in the fashion world or hoping to make a solid income designing t-shirts, preparing to start your own clothing line requires a solid legal foundation.
In addition to developing a business plan and taking out a loan, you should protect yourself and any co-owners with a sound business structure, and understand how copyrights and trademarks can protect your brand and products.
Complying with business, employment, copyright, and tax laws will help you stay in business for the long term.
Starting a clothing line means paying a variety of start-up costs that can include office and warehouse space, a website, employees or temporary help, taxes, utilities, shipping, and promotional costs (advertising, cold calls, etc.). Our start-up calculator will help you break down one-time and monthly costs.
Register your business with the state before you do anything else. A limited liability company (LLC) is a common business structure for small businesses like clothing lines or clothing designers, because it protects owners from liability for business debts, and can make contracting with other businesses easier.
Registering as a partnership or sole proprietor will not protect you from personal liability, and prevents you from being able to hire employees. Some clothing businesses register as corporations right away, although you can convert your LLC to a corporation later if needed.
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When your clothing business grows, you’ll hire employees or bring on independent contractors. As the employer, you set employees’ hours, control how and where they do their work, and withhold taxes from their paychecks. In contrast, you pay independent contractors for work, but they control when and how they do it, within reason. They also pay their own taxes.
Independent contracting makes sense when you have irregular work or when contractors could work outside your supervision (for example, stuffing envelopes or delivering merchandise). Otherwise, you may prefer to hire employees, even though you must comply with a variety of other laws.
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When starting a clothing line, you’ll build relationships with many vendors, such as fabric manufacturers, clothing manufacturers, screenprinters, and freight companies. These relationships are built and maintained on personal relationships and commitments to quality, as well as written agreements. You should have an written vendor agreement for each transaction.
Agreements can range from a bill with a delivery date and return policy printed at the bottom to a lengthy formal contract. All vendor agreements should include, in writing, delivery dates, item or service descriptions, prices, and return policy. Business-to-business contracts are often negotiable, so ask about potential discounts or changes.
Clothing designs cannot generally be copyrighted or patented. However, copyright law can protect elements of clothing or fashion that can be physically or conceptually separated from the clothing (for example, a Halloween costume of a copyrighted cartoon character, or an original work of art that is printed onto a belt or scarf).
Using other people’s creative works on your clothes without their express permission and licensing can open you up to lawsuits. Although creative work does not have to be registered with the US Copyright Office for the creator’s basic legal rights to be protected, registration does increase the legal protections.
You may be able to trademark your clothing brand name, style names, or logos, to protect imagery and words that identify your company and products. Owners of unregistered trademarks have some legal rights. But for maximum trademark protection, register your trademark at the state or federal level.
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