We Answer: Does A Clothing Line Need A Business License?

So, you’ve graduated from college with a major in fashion design, paid your dues in the industry, and you’re ready to start a fashion brand of your own. Well, now is the perfect time for you to make those dreams come true. After a couple of years in which the market was chaotic, things have been looking up for both the economy and fashion. However, if you are going to take the proverbial plunge and start a new clothing line, there are a few things that you must be prepared for. Some certain rules and regulations apply to anybody who wants to start a business in the United States. For instance, will you need a business license?

A clothing line does need a business license. Depending if you have a physical location or not there are seven licenses and permits that you must obtain to start a clothing line in the United States. These seven licenses and permits include the following: Articles of Organization or Incorporation, Federal Employer ID Number, Seller’s Permit and Certificate of Authority, Apparel Registration Certificate, Fire Department Permit, Sign Permit, Insurance

In this article, we will break down each of these licenses and permits that you will need if you plan to start a clothing line in America. I will go into further detail regarding how you can obtain these permits and licenses in hopes that it will make your dreams of starting a clothing line of your own come true. Let’s read along to see what you will need to acquire to get your clothing line off the ground as quickly and efficiently as possible.

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Table of Contents

Articles of Organization or Incorporation

When you decide to take that leap of faith and start your clothing line, the first decision you will have to make is whether you want to start a Limited Liability Company (LLC) or incorporate your business. If you want to form a corporation, you will need to file Articles of Incorporation. If you choose to establish a Limited Liability Company (LLC), you will need to file Articles of Organization. Both articles serve the same purpose, which is to help you get your business started legally. These articles will need to be files whether you have a physical location or if you exclusively sell your merchandise online. You can file these with your local Secretary of State, or you can hire a business formation service if you prefer to have a professional handle these things for you.

Federal Employer ID Number

After you have decided what type of business structure your brand will be registered as and you have filed the appropriate articles, your clothing line will need to get a Federal Employer ID Number. This number is issued for tax purposes and can be obtained through the Internal Revenue Service (IRS). Again, this is something that your business must have, regardless of if you have a storefront, if you have an e-commerce, or both. is some debate as to whether all businesses need an EIN. If you find yourself wondering if your clothing line needs an EIN, there are questions you can ask yourself about your business.

If you can answer “yes” to any of these questions, you will need to get an EIN:

Do you have employees working for you?
Is your business operating as a corporation or a partnership?
Do you file any of the following taxes: Employment, Excise,. Alcohol, Tobacco, and Firearms?
Do you withhold income taxes?
Do you have a Keogh Plan?

Seller’s Permit and Certificate of Authority

If you establish your clothing line in a state where sales tax is required, or if you remotely sell your merchandise in any state where sales tax is required, you will need to procure a Certificate of Authority, otherwise known as a seller’s permit. One of the most common misconceptions about seller’s permits is that you do not need to get one if you are strictly an e-commerce business. However, depending on your state’s rules and regulations, you may be held responsible for paying sales tax on the merchandise that you sell. Be sure that you are well educated on whether your state requires you to have a seller’s permit or not. Remember, as long as you sell a product that requires you to collect sales tax, you must have a seller’s permit. This applies to online businesses and physical storefronts.

The process of getting a seller’s permit is typically uncomplicated, and can be done by following these steps:

Gather all of the legal information about your business, including your Articles of Organization or Incorporation, and your Employer Identification Number.
Go to the Sales and Use Tax section of your state’s Department of Revenue website.
Read all of the rules and regulations to determine whether or not your business is liable to pay sales tax in your state.
If online registration is available, follow the instructions to register for your seller’s permit.
Contact your state’s Department of Revenue if you have any further questions.

Apparel Registration Certificate

If you plan to manufacture merchandise for your online store or for a physical location, many states will require you to get an Apparel Registration Certificate before starting your business. According to the website Imprint Next, this includes any “cutting fabric, sewing, assembling, pressing, and other business processes.” If your clothing brand hires contractors to do your manufacturing, you will have to get the Apparel Registration Certificate in the state in which your business operates as well as any other state where your contractors manufacture your apparel.

However, obtaining your Apparel Registration Certificate is not an easy process. You will have to pass a background check, and your state may also require you to pass an examination before issuing you the certificate. You will also have to have several documents on hand when trying to get your Apparel Registration Certificate. Some of these documents that may be required are your employer identification number, proof of worker’s compensation insurance, and your Articles of Incorporation or Organization. To apply for this certificate, you will have to go to your state’s Department of Labor website.

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Fire Department Permit

The fire department permit is another permit that you will have to get from your local municipality. Fire department permits help to regulate many things, including using, handling, maintaining, and storing flammable materials. This permit also governs the installation or removal of equipment that pertains to conditions caused by the previously-mentioned flammable materials. Another example of a regulation that is enforced by a fire department permit is the maximum number of occupants allowed to be in an enclosed area at one time. Of course, this permit only applies to brick-and-mortar locations.

You can usually get the application for a fire department permit by going to your local city or town hall. Generally, the fire department and the Emergency Medical Service in your area will conduct regular inspections to see if your business complies with the codes that are listed in the fire department permit. They have the right to revoke your fire department permit at any time if you fail the inspection. However, they will usually allow you some time to comply before revoking your permit. That’s why you need to conduct inspections of your facility regularly to ensure that you are always ready to pass an inspection.

Sign Permit

Your sign is the most important aspect of your business. It allows people to know who you are, what you are selling, and how to contact you. However, you may not have known that most cities and towns will require you to have a sign permit if you plan to put up a sign. Generally, the planning division of your city or town is responsible for assigning sign permits to local businesses. To apply for one of these permits, you will have to contact your local city or town government, either by the website or by going to your city or town hall. If you only sell your clothing online, this won’t apply to you.

To apply to obtain a signed permit, follow these steps:

Most cities or towns will require you to fill out a paper application, although some of them will allow you to do this online.
According to Starfish Signs, you will have to provide “complete elevations, a site plan, and fabrication plans for the sign.”
You will have to prove that you either own the property where you plan to put the sign or have written permission from the owner of the property.
Structural calculations and other engineering details will be required.
You may also be required to pay a deposit if there is a chance that your sign will be installed over a public right of way, or if there is a chance that damages May incur as a result of installing your sign.

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Insurance

While Insurance may not be a permit or license that you need to acquire to start a clothing line, it may still be required by your city, county, or state for you to do business. At the bare minimum, your business should have general liability insurance to protect your business against any potential claims of bodily injury, damage to property, or personal injury. Some liability insurance policies even cover data breaches, non-physical liability claims, and product liability.

Be sure to check with your insurance agent to see what type of insurance you are required to have for your clothing line, as well as how much coverage you should purchase for your business. Keep in mind that it’s a good idea to purchase product liability insurance, even if you don’t have a storefront that requires general liability insurance to protect your property.

Conclusion

So, there we have it. If you want to start a clothing line of your own, there are several permits and licenses you will need to accrue before going into business. First, you will have to file your Articles of Organization or Incorporation. Next, you will have to get an Employer Identification Number. Once you have this, you will need to get your seller permit, which is also known as a Certificate of Authority. Next, you will need to get your fire department permit from your local city or town government.

After you have gotten all of these permits and licenses, you will need to get a commercial sign permit if you plan on putting up a sign for your business. Finally, while it may not be required in all states, getting a good general liability insurance policy is always a good idea to protect your business against situations that can arise, ultimately causing you to lose your business.

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