Licenses You Need To Start A Clothing Line

Artists and designers dream of starting their fashion line which is more now than ever before. Yet, before you can make your dreams a reality, you need to ensure that all legal procedures or documentation are followed to a tee. An owner’s worst fear is finding out that a license was incorrectly filed or forgotten about.

So, what licenses and permits are required to start a clothing line?

The licenses you need to start a clothing line are a permit to sell and collect taxes, FEIN number, fire department permit and sign permit (If opening a physical location), insurance, and a apparel registration certificate. 

Regulations can differ by state and city which means that it is essential that you check your city’s requirements to ensure that you are following their specific requirements. These are just seven licenses and permits that we found to be required in most cases for a clothing line to be sold. You can also consult with a professional in your chosen city to double-check what is required.

Sole Proprietorship

When it comes to any business, especially a new small business, a sole proprietorship is the most commonly chosen way to structure the business. So that means that this may be one of the first items you will want to look into for your clothing line.

A sole proprietorship is used when an unincorporated business is run and operated by only one person. You are the only one liable for the business, including its gains, losses, debts, and so on. This is the overarching title for this type of business and each state has its licenses and permits requirements to go along with it. 

So check out the link included to see what specific items are required for your clothing line based on your state of residence. There is no use in paying for unnecessary licenses or permits if they do not apply to your current situation, as you do typically pay to obtain these documents. This registration can typically run you anywhere from two hundred to seven hundred dollars on average.

Permit to Sell and Collect Tax

A vital permit to obtain is the permit to sell and collect tax since clothing and apparel are deemed to be taxable goods. Thus, requiring you as a seller to charge taxes on the items. However, once you obtain these permits, you will not be required to pay sales taxes on any raw materials needed to make your fabrics.

This means that while the permit may cost you between ten to a hundred dollars to obtain, it helps you save money as well. Especially if you have plans to scale your clothing line and end up buying pounds upon pounds of raw materials. It will be nice to not worry about taxes on them.

Reasons Why People Fail at Starting a Clothing Line

FEIN Number

A FEIN Number is also known as a Federal Employer ID Number, which is required for any partnership or business that has employees. This means that this license does differ from a sole proprietorship as that is a solo run endeavor, whereas a FEIN Number is required if your business is paying another individual besides the owner. 

Obtaining this number is not a costly process as it will only be about eighty to a hundred dollars depending upon the state. The number will be used on payroll and tax documents to identify your business and ensure that things line up money-wise. 

Fire Department Permit

One of the pricier permits that you will need to obtain is the fire department permit. This is for any retail space you may obtain to sell your clothing lines, such as a storefront, or any manufacturing space you may occupy.

The permit certifies that you met the fire department’s guidelines and requirements, ensuring that the space is safe for the neighbors and any employees you may have. This will cost roughly four hundred dollars to obtain.

If you are looking to own a space, there are additional permits to take into consideration such as a building permit, occupational permit, worker’s compensation insurance, and so on. 

Sign Permit

Another item to consider if you are planning to have a storefront or sign in front of your building is a sign permit. These are relatively inexpensive, costing between twenty to sixty dollars on average. 

It just confirms that your sign follows your city’s requirements for sizing, location, lighting, etc. If you are renting a space, you will also need to provide proof that your landlord has approved of your sign and is okay with it.

Insurance

One of the largest costs you will have while creating your clothing line and a major legal requirement for you to deal with is insurance. Especially if your have employees to help you market the business, a project manager to keep track of everything, people helping to create the designs or clothing items, and more. 

Items like disability insurance, general liability insurance, and health insurance are just a few of the insurance-related items to consider. Again, depending upon your team’s size, location, your intents and purposes, and the number of full-time employees will all affect this cost. 

This is one reason why some businesses tend to lean towards independent contractors or freelancers when it comes to items such as social media, marketing, virtual assistants, and so on. Since you are not required to offer them insurance and health benefits if they are independent contractors. If you do have a decently sized team of full-time workers though you could be looking at anywhere from thirty to forty thousand dollars annually for insurance. 

How To Start a Clothing Line As a Teenager

Apparel Registration Certificate 

Your apparel registration certificate will be one of the very first business expenses you will have about your clothing line. It costs around eighty dollars and allows you to manufacture items within your state. For clothing, the manufacturing terms include sewing, assembling, cutting fabric, pressing, and more. 

So this certificate will be required for any clothing line you are creating. If you hire employees in other states as well to manufacture for your clothing line you will also need to register for this certificate in those states as well.

A Lot To Consider 

As you can tell there are many obstacles that small business owners must deal with. From the numerous fees they pay to the paperwork to apply for the permits, and state requirements to name a few. Whether you are an individual doing it all yourself, you have a storefront, you hire one other person, and every decision impacts your clothing line requirements and needs.

This is why consulting with a professional and getting a second opinion on permits and what’s required is highly recommended to ensure that you are running your clothing line to the best of your ability. Without wasting money on unnecessary items of course.  These are just seven of the most common permits and licenses required for a clothing line but your area may require other ones as well.

The list of requirements will vary as you scale your business which is why having a consultant or two is essential while owning a business. 

The seven most commonly required licenses and permits required to start a clothing line are sole proprietors, permit to sell and collect taxes, FEIN number, fire department permit, sign permit, insurance, and apparel registration certificate. However, each state has its requirements and stipulations so please consult a professional as well to ensure you are good to go.

Related Questions 

Will items such as signage permits make a big difference to my clothing line?

If you are planning to have a storefront or manufacturing space with a sign, then yes it matters and you can get fined if you do not have the proper paperwork. However, if you are working on the items in your garage, then no the permit should not matter in your case. 

Will I have to pay for a consultation if I wish to meet with a professional?

Yes, you will need to pay a consultation fee to whoever you are meeting with. Typically consultants are well known and highly successful in their line of business, so this is a case of you pay for what you get. If you want someone who knows what they are talking about then you will need to be willing to pay a higher cost for their services. It’s a small price to pay overall though to ensure that your licenses and documentation are in order. 

Is it better to begin my clothing line solo and add people to my team as I grow?

That is generally the best practice when starting a new business. However, if you have big plans for your line and see yourself scaling at a quick rate, then it would be more cost-effective, to begin with, employees or to at least obtain the permits and licenses needed for when you do have employees. You do not want to get stuck in a situation where you need more help but have to wait on paperwork to go through. 

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.