Licensing your clothing brand can be confusing to say the least. But don’t get discouraged. This article will help you sort through the mess!
To Setup your clothing brand:
- Create a Business Plan
- Choose your entity type
- Obtain your EIN, License and Registration
- File your business entity paperwork
- Register with Your City (if required)
- Obtain a Permit to Sell Goods and Collect Tax
- Obtain an Apparel Registration Certificate
- Fire Department Permit if you have a physical location
- Sign permit if you have a physical location
- Obtain Insurance
- Research local requirements
Let us start with a few easy steps to get your clothing line business up and running legally. After you have come up with a name, you will need to decide what business entity type you want to have, then get an EIN, a business license, and register your business depending on what state you are operating the business in.
There are several few states that require any clothing line business to register with the state. That even includes the clothing line brand owners who hire out the making of the clothes to other businesses. There are even some cities that require businesses to registration with them also in order to run a business in the city.
Create a Business Plan
You should write a business plan. A business plan is what will set you up for success. It will make you think about everything you will need for your business model.
Business plans is where you outline your business objectives and goals for the next several years. You usually start with the first five years plan.
If you are thinking of getting any federal grants or looking for investors to help with capital or business expenses, you will need a business plan.

There are seven parts to a business plan.
- Executive Summary
- Company Description
- Products and Services
- Market Analysis
- Strategy and Implementation
- Organization and Management Team
- Financial Plan and Projections
Your clothing brand business plan helps you:
- Specify your business idea.
How big or how small is your business? How will your brand stand apart from other clothing brands?
- Identify the need that your clothing line will fill.
Customers look for fashion based on specific purposes. How will your clothing brand fill that need better than any other?
- Set SMART goals:
SMART stands for Specific, Measurable, Attainable, Realistic, and Timely. In order to run a successful business, you need to know the strengths and weaknesses of you clothing line business. This will help you know where you need to make any adjustments or improvements. Clothing brands might measure things like sell-through rates, markdowns, store capacity, product lifecycles, or stock availability.
- Financials:
When you think about your business finances you have to ask yourself a couple of questions and then do your research to find out an average of what the answers to the questions are. These will give you a baseline on how much money you will need. I discussed some of these in the article How Much Money Do You Need to Start a Clothing Line?
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Here are a few of those questions:
- How much start up money do you need?
- When do you think it will break even financially?
- What will it take to scale the business?

- Relationships and contacts are key:
In any business relationships are important. You should build a contact list and build relationships with other brands, retail stores, vendors, etc. You never know when you will need them or even when you might want to do some joint ventures.
- Anticipate roadblocks and problems:
Roadblocks and problems happen whether you want them to or not. Every business will endure some setbacks. The thing is to be prepared for anything. Even the unexpected you can plan for. Just remember that you will make mistakes and that is okay. It is all a part of owning your own business.
- Measure progress:
You will need to measure, how often you will look at the businesses progress and how to measure the state of your business and how you will make the necessary adjustments.
Business Entity Type
First you will want to select your business entity type. There are several types to consider and each one will determine which federal EIN you choose for your tax purposes. Here are a few options: sole proprietor, partnership, limited liability company, or a corporation. They all have their different pros and cons, fees and tax consequences. You can look at all the types and their differences on the IRS website and if you have any questions consult a tax professional.
Depending on which business entity you choose, you may have to file an “Articles of Incorporation” or “Articles of Organization” with the Secretary of State.

Employee Identification Number (EIN)
Apply at irs.gov to get a free EIN. You will need a EIN to obtain Garment/Apparel Certificate and some different permits.
You will also need to check with your state to determine if your state requires you to get a charter or state ID number.
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Business Entity Paperwork to File
Once you decide what entity you want to set up, then you have to file the appropriate paperwork for that entity. Here are some of those options for you.
- Sole Proprietors
In most states sole proprietors do not have to register with the county or state. However, sole proprietors must register with the county if they do business under a different name (DBA). The DBA is registered as an “assumed” or “fictitious“ name.
The cost to file is anywhere between $200 to $700.
- DBAs and General Partnerships
Most states require businesses that are using a DBA (Doing Business As) under a different trade name to register with the county or state.
General Partnerships will register with the county.
- Formed Entities
Most states require that formed entities register with the state. Formed entities are corporations, limited liability companies (LLC), and certain types of partnerships.
Register with Your City (if required)

City’s can require you to register your business with them. Not every city requires it, so you will need to contact the city where you are operating to find out if they require you to file depending on your business entity.
Obtain A Permit to Sell Goods and Collect Tax
In order to sell taxable goods which includes apparel, you will need a seller’s permit or a certificate of authority. These will allow you to buy the raw materials that you will need to make fabric without paying sales tax. It also allows you to collect sales tax on your products sold to customers. These sales taxes are then paid to the government.
The cost to file is anywhere between $10 to $100.
Apparel Registration Certificate
Some states require that if you manufacture any items, including garments, you register with the state. The manufacturing process includes cutting fabric, finishing, sewing, assembling, pressing, preparing garments and those who contract those services. More than likely, you will need the certificate first before starting to actual make the clothing line and selling them to your customers.
Additionally, if you contract with a manufacturer or a contract vendor from a state that requires registration, you may also need to register with that state.
The cost to file is approximately $70.
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Fire Department Permit
If you have an actual retail shop or warehouse for manufacturing then you will also need a fire permit by your local fire department. You must meet their guidelines which are very strict. The guidelines are for the employees as well as the neighbors’ safety.
The cost to file is approximately $70.
Sign Permit

There are a lot of cities that have struck guidelines for signage for outside your business. These guidelines include lighting, size, and location along with other things. Also, if you rent the building, you may also need written approval from the landlord.
The cost to obtain is approximately $20 to $50.
Insurance
Insurance will need to be obtained. Getting all of the required insurances is expensive and the most expensive of all of the registration and permits that you will need for your clothing line business.
You will need insurance like health insurance, disability insurance, business overhead expense disability insurance, general liability insurance, and even a few others. And if you have employees, you will be required to have workers compensation insurance.
The cost to obtain is approximately $37,000 annually.
Other Requirements
Depending on the city, you may be required to obtain other city and local permits, and licenses.
Some examples are:
- Working from home – may require an occupational permit.
- Having a burglar alarm – may cause you to need an alarm permit.
- Remodeling your space – may require you to need a building permit.
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Related Question
- How much do business insurances cost?
The cost of health insurance is approximately $4,400 per year. The cost of disability insurance is approximately $3,000 per year. The cost of business overhead expense disability insurance is approximately $24,000 a year. And the cost of general liability insurance is approximately $ 6,000 year. This gives a combined total of approximately $37,500 per year.
To learn more about how to start your own fashion clothing line check out my startup documents here
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.

Meet Shawn Chun: Entrepreneur and Fashion Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a designer or boutique owner at a craft fair, farmers market, retail location or anywhere else I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Fashion Business Boss: I want to help fashion business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.