Clothing Brand Legal Requirements: 4 Key Things You Should Know When Starting A Clothing Company
If you’re looking to start your own clothing company, you’re probably wondering about all of the legal details that need to be taken care of.
- Should you form an LLC?
- What is a DBA?
- When should you trademark your company name?
- When should you consult a professional attorney?
You’re probably asking yourself these questions and so many more. Try not to stress – I recently sat down with attorney Dana Ball from Avanta to discuss all things “legal” for clothing brand owners. We chatted about everything from forming an LLC, to contracts, to trademarks and copyright, to disputes with employees, and so much more.
Today, I’m breaking down what I learned about clothing brand legal requirements: 5 things you should know when starting a clothing company. Not only does Dana shed her expert insight on these topics, but she also generously provided some helpful resources for you! You can find those at the end of the post.
Read on to learn the basics about:
- General Best Practices
- LLC Formation
- Trademarks & Copyright
- Documentation
1. Clothing Brand Legal Requirements: General Best Practices
When you start a business, you are always at risk of getting into legal trouble. This is true for all companies of all sizes. If you are aware of as many legal situations as possible, you can be prepared for the situations that will arise at some point in your business (contract disputes, tax audits, employee issues, etc.) The more prepared you are for legal issues, the faster they will go away.
Let’s break down 3 general best practices for all small business owners:
- Double check the laws in your state as what you read online for one small business will not be the same for you. Legal details vary state to state, so it’s always a best practice to research the laws where you live.
- Keep detailed records and documentation of all business-related expenses, conversations, changes, and more. Not only will these records come in handy for standard things like tax-prep, but they will also be crucial if you ever need them in a legal dispute.
- Consult a professional attorney to double check legal details in your business or to help you set them up from scratch. Again, I highly recommend Dana’s services for this one!
2. LLC Basics For Clothing Companies
Here’s an easy breakdown of what an LLC is and why you need one as a clothing brand owner: An LLC (Limited Liability Company) is a legal business entity. You will register your business as an LLC in order to protect your personal assets if you ever get into a legal dispute (think lawsuits and tax-related issues). This means that if you get sued, the other business cannot obtain your personal items or money from the lawsuit.
If you do not register your business as an LLC, the other business could be granted compensation from your own personal assets (your home, your personal bank account) if they win the lawsuit.
What is a DBA?
A DBA (Doing Business As) document simply provides the name that your company chooses to conduct business under. A DBA does not provide any legal protection the way an LLC does. This is why it’s absolutely critical that you properly register your clothing company as an LLC – in order to protect your personal assets in the event of a legal issue.
Your clothing business will be registered under one LLC. But you may register as many DBAs as you want.
Important: DBAs are only valid in your state. Again, DBAs do not provide any legal protection – they are moreso a representation of your branding. So if you sell clothing in a different state, and you don’t have the items trademarked (more on this later), your DBA is not stopping anyone from trying to copy your work and sell it as their own.
However, it is important to register DBAs for brand names that you wish to show ownership over. The more proof of ownership you have in your business, the easier it is to fight legal trademark issues down the road.
3. Clothing Brand Legal Requirements: Trademarks & Copyright
As a fashion designer, you probably already know how important it is to show ownership of your work. You need to trademark the most important and valuable assets in your business to show that you own them.
Let’s define “assets”: assets are not just physical property like your computer or sewing machine, but also your intellectual property such as your business name, logo, and designs. You have the option to trademark or copyright your physical and intellectual property as the clothing brand owner.
Trademark v.s. Copyright: When To Use Each
Trademark: The highest level of ownership you can obtain for a business asset. The process can take up to one year (and your attorney will want specific details about your business entity, so make sure you form your LLC correctly before trying to obtain a trademark). Once an asset is trademarked, you legally own it, and you can prevent others from selling it as their own.
When to obtain a trademark: Dana recommended obtaining a trademark for only the most important and valuable things in your business, such as your brand name and your logo. Filing for a trademark costs money and takes time, so it’s not worth doing for literally every single thing in your business. That’s where copyright comes in –
Copyright: Another level of ownership, but not as legally complicated (or expensive) as a trademark.
When to obtain copyright: You can copyright your fashion designs, patterns, and other intellectual property. You can even copyright digital resources (such as a style guide or color palette template) that you might offer as a business owner, even if you don’t officially register them.
As the business owner, you can (and should) be taking actions to show ownership of your assets. If someone else tries to steal your fashion designs and sell them as their own, you need to have multiple records of proof that you “own” your work.
4. Documentation: How and Why To Document All Business Details
Of course, as aspiring (or current) business owners, I’m sure you understand the importance of keeping detailed business records: transactions, recurring subscriptions, income, tax documents, bank statements, and the list goes on. However, an area of business that people can forget to document is communication.
A simple best practice to keep in mind is to keep a clear record of all business communication. This is easily done through email, text message, and letters, but what about verbal communication? Should you document this? And if so, how?
How To Document Verbal Communication
Email follow-ups are the best way to document verbal communication. It records a timestamp, the parties involved, and the details of the situation. Dana explained how emails are commonly used in court, and that they hold up as solid proof!
Each time you have a verbal conversation related to your business, Dana recommends sending a follow-up email. Your email will solidify the details and protect your position in a future dispute.
For example, you could send an email to the person stating, “Hi [person’s name], I’m just confirming that today we discussed [important details of the agreement]. Let me know if you have any questions.” This not only documents the exact details of a verbal conversation, but it also gives a timestamp and allows the other person a chance to revise the details. If they don’t respond with questions or concerns, they are consenting to this verbal agreement.
This method could be the key to protecting yourself someday if a legal dispute arises.
Getting Your Clothing Brand Legal Requirements Done Right The First Time
Starting a new business can be scary in many ways, but most people would probably say that the legal details are most daunting. After all, you need to be certain that your business is formed properly from the start. Dana really drove that point home in our conversation about clothing brand legal requirements.
So, if you’re looking for more support from an attorney, I highly recommend learning more from Dana or searching for an attorney in your state.
And if you’re in need of step-by-step support in your clothing company journey, I invite you to check out my signature program for fashion designers, Fruition. Inside this course and coaching program, I walk you through literally every step of starting your own clothing company from home (yes, even the legal stuff!) with no fashion degree needed!
Learn more about Fruition here to see how I can guide you through all phases of starting and scaling your fashion business.
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