You finally made the decision to start your own clothing business… this calls for a celebration, right? That’s what most people would think, but before you can start making toasts and thanking everyone for motivating you, there are some legalities you have to follow before you can officially open for business.
Some of these legal requirements vary from state to state, but to have an operational business in the US, there are definitely some licenses and permits you’re going to need, as well as insurance requirements. If you’re not sure where to start in opening your clothing business, here are some legal factors to consider beforehand.
Legal Requirements to Meet Before Starting Your Own Clothing Business
Register Your Design or a Trademark
Registering your business name and logo is a great way to make your brand officially yours and it protects it from being used by another business. This also helps your customers establish a familiarity and loyalty to your brand because it promotes consistency.
Once you’ve registered your logo or business name, you can then confidently use it to promote your brand! Everything from business cards to custom woven labels, you can put your brand on every garment you have and every promotional strategy you have.
Just be sure to do a check every now and then to make sure no other businesses are using your name. You have to conduct his type of check for your own business as well, to make sure you’re not using another clothing business’ name… Not doing so can result in one of the many litigation cases that small businesses face on a daily basis.
Determining Your Business Structure
Before you can “open up shop,” you first have to determine the type of business structure you want to use. You can establish your business under these common business structures:
- LLC (Limited Liability Company)
- Sole Proprietorship
This legal requirement is something you want to figure out at the very beginning simply because it plays a significant role in how much you pay in taxes and the liability you face… Your business structure truly plays a role in the longevity of your business in the event that unforeseen circumstances come into play.
Apparel Registration Certificate
If you are manufacturing your own clothing line (buying fabric, cutting it, sewing and assembling it), then you’re required to register your business with the state and acquire an apparel registration certificate. If you hire contractors to do the manufacturing for you, you’re also going to need the apparel registration certificate, and you may also need to register in the state where you hired your contractors from as well.
Acquire the Appropriate Business Insurance Policies
Just as you have health and car insurance policies to protect those assets, your business will need the same types of protections in place. Business insurance isn’t necessarily a requirement for certain businesses, but it’s a form of protection that’s better to have and not need than to need and not have.
Even if you run your business from home, there are still factors that would require you to have business insurance. For example, if you have employees, you’re required by law to carry worker’s compensation insurance.
Also, if you’re renting out an office space or take out a small business loan, more often than not, you will be required to carry proof of insurance to ensure you’ll be able to cover any damages incurred to the office space and that you’ll be able to repay the loan if any business interruptions happen.
If you’re running a brick-and-mortar store, or have an office space where you’re manufacturing your line, you will need a permit from your local fire department to meet their guidelines on safety for employees and surrounding businesses.
By having your own retail space, you’re also going to need other permits like building, occupational, and alarm permits as well… Just check with your local, county, and federal laws to make sure you’re obtaining all the necessary permits to operate your business in your location.
In running your own clothing business, you’re going to take care of all legal matters first and foremost before you can begin the “fun” part of entrepreneurship. According to entrepreneur.com, knowing the business structure basics is the most important decision to make when starting a business, but there are, of course, other important aspects as well.
These are just a few important legal considerations that come with entrepreneurship but there are many more requirements. So before you jump head-first into starting your own clothing business, make sure you have all the legal aspects checked to ensure you can run a successful clothing business without any forthcoming legal repercussions.