# Business start-up concerns!



## LFAthleticscom (Feb 14, 2013)

While doing some research on starting my business legally I came across a link on Google to t-shirt forums. After reading all of the topics and member questions I've found myself with even more questions, and I could really use some help!

1) If I am going to be selling t-shirts online from my website (using PayPal feature) to personally package and ship to customers from a P.O. box, do I have to have a business license? And if so what exactly would I have to file under?

2) If I am going to be selling t-shirts at shows or events like cage fighting or boxing events, would I need a business license to sell and distribute those, or what exactly would I need to legally do that?

3) I am going to be selling my t-shirts from a third party business known as Spreadshirt, and I have already verified with them that once I purchase their t-shirts it is completely okay to resell them from my online store when they arrive to me, how would I go about tagging, branding etc those t-shirts, or am I not allowed?

4) Do I need to register a trademark, patent, and license before I start my business, or which one should I go about doing first? which one should I not worry too much about if it is not relevant (so to speak)?

5) If I wanted to create a sales rep rewards program and offer my reps either cash prizes or clothing products in return for helping me make sales, what legally should I do before going through with a rewards program like that? 

6) How do I go about shipping my packaged merchandise through UPS or other businesses and how do I know what to charge my customers for shipping and handling costs? is that up to me, or the service i.e. UPS?

7) How do I go about sponsoring an event, for example, I want to help raise money for Breast Cancer Awareness month and want to make t-shirts to sell with a percent of those profits going toward an organization, how does that work?

I'm new to the t-shirt forums community, and I'm a young amateur champion boxer with a huge dream to distribute my merchandise as well as get involved with charity events to help millions around the world! Thank you in advance, I'd love to hear back from the community!


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## rlaubert (Aug 14, 2011)

First I am not a lawyer, so this is just information that I have found when setting up my business in PA.
1. Do you need a license. Yes, depending on where you live. Some states, city etc require anyone running a business to be licensed. In addition, some suppliers will require it to get wholesale pricing. This also means that you must collect sales tax on your in-state sales.
2. On-site venues are all different. In some states you must get a temporary license to sell even at flea markets if you are from out of state. Best bet here is to contact the venue well in advance and see what the requirements are. They will also be able to answer questions on setup, costs and number of people that attend the events. This will help you determine if it will be cost effective to be there. For example if you know that a venue has 500 people and you sell to 5% of them that means you will sell 25 t-shirts. If you sell them at $20 a piece you make $500 gross sales. If the license is $100 and your cost is $150 your profit is only $250. It may not be worth your time to be at that venue.
3. I really can't answer this. But I would have to question why you would buy someone else designs at close to retail and then try to resell? You can easily find printers that will print your designs much cheaper and therefore make/keep more of the money.
4. Basic answer is no. In fact some licenses, trademarks etc require you to be in business and using it before you can complete the process. Again, in this area I would check with a lawyer. My brand and tagline are not registered, however, I have some protection because they are in use by the company.
5. No reward program is going to entice the sales reps. Offer them a commission. I pay between 15-20% of wholesale cost to independent sales representatives that are selling my t-shirt line.
6. Uline.com has packaging materials. I use the Polybags. I can fit 4 shirts per bag. For shipping I use both the USPS and UPS. USPS is $5.70 for up to 2 shirts. Shipping cost are usually paid by the wholesale customer, retail customers I pay for standard shipping and customer pays for rush or priority shipping.
7. For fund raising events it is best to work with the organization that is sponsoring the event. You will get more publicity and sales that way. 
Hope that answers your questions. Good luck.
One piece of advise. Before you start, research who your market it, what they like, where and what they buy. Don't depend on YOUR tastes and desires. Too many people here come up with ideas, designs and purchase the shirts from a printer only to find out they don't have the demand for them or can't figure out how to reach those that might want the shirts they have designed. The t-shirt business is not about what you like or want but what the customer likes and wants.
Also remember that the average retail price of a custom printed t-shirt is going to be in the $20-25 range. More than that and you will lose alot of sales as being too expensive. Yes, there are venues where you can get much more, but those are niche markets. Again, you need to know who your customers are.
Best of luck.


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## LFAthleticscom (Feb 14, 2013)

Thank you so much! That was a lot of really good advice, but I have one quick question! How would I legally reward them commission? Wouldn't that be considered a "job" if i'm paying them a rate for sales, or could I just use the percents as a "donation" type thing for helping me make sales? I just don't want to have to write all of that down when i'm filing taxes at the end of the year as losses or anything? Am I overlooking that just a little too much?


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## rlaubert (Aug 14, 2011)

They would be 1099. If you pay them more than $600 per year you have to give them a IRS Form 1099 at the end of the year. They are not employees as they are independent and work for multiple people. So no withholding, benefits etc.


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## kimura-mma (Jul 26, 2008)

LFAthleticscom said:


> do I have to have a business license? And if so what exactly would I have to file under?


Yes, you should register your business with your state. Try Googling "starting a business in (your state)" and you will find some resources with links to all the paperwork you need to submit.



LFAthleticscom said:


> If I am going to be selling t-shirts at shows or events like cage fighting or boxing events, would I need a business license to sell and distribute those, or what exactly would I need to legally do that?


Yes, you should have a business license. And as Ray mentioned, you may also need a temporary license if the event is in a different jurisdiction than where your business is registered. You should be able to get more specific info from the event's promoters.



LFAthleticscom said:


> how would I go about tagging, branding etc those t-shirts, or am I not allowed?


It is legal to re-label the shirts. Whatever info is on the labels you remove must be replaced with the same info.

If you are going to be re-labeling, it's a good idea to get your own RN number:
https://rn.ftc.gov/pls/textilern/wrnreq$rn.call_rn?p_mode=INS

The legally required info to be on garment labels are Country of Origin, Fiber Content, Wash Instructions and RN Number or Full Corporate Name.

For more info on re-labeling laws, check out:
Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts | BCP Business Center



LFAthleticscom said:


> Do I need to register a trademark, patent, and license before I start my business, or which one should I go about doing first? which one should I not worry too much about if it is not relevant (so to speak)?


You definitely don't need a patent. That is for inventions.

The business license can be done through your state, as mentioned above.

You can register your brand name or logo at:
United States Patent and Trademark Office
Or you can use a local trademark attorney or a legal service such as LegalZoom.

A trademark registration is not a requirement. So you're probably better off waiting a little bit. Focus on production and marketing first. Then when you get your brand off the ground and have sold some product, you can submit your trademark application at that point.



LFAthleticscom said:


> How do I go about shipping my packaged merchandise through UPS or other businesses and how do I know what to charge my customers for shipping and handling costs? is that up to me, or the service i.e. UPS?


USPS will be the cheapest way to ship. Their First Class option is about $2.25-2.75 for up to 13 oz, which should be up to 2 t-shirts. You will have to buy your own envelopes, but you can buy them in bulk for about $.50-.75 each.

If you need to ship several t-shirts, USPS offers a $5 flat rate box.

You determine what to charge customers for shipping. Just make sure you cover all related costs, such as the shipping, packaging, labels etc.

Some e-commerce solutions will offer real time shipping prices based on weight and location. So you can use that feature if available to you. Or just use a flat rate price based on the average cost of shipping.

If you only expect to ship 1 or 2 shirts at a time, your shipping costs should be minimal. Think about offering FREE shipping and $1-2 more to the retail price of the shirt than you were original planning. Consumers LOVE free shipping.



LFAthleticscom said:


> How do I go about sponsoring an event


Contact the event directly.



LFAthleticscom said:


> I want to help raise money for Breast Cancer Awareness month and want to make t-shirts to sell with a percent of those profits going toward an organization, how does that work?


What you do with the money you make at an event is separate from sponsoring the event itself. Do some research on this topic and maybe consult an accountant or attorney who understand the laws and regulations of fundraising and donating to charities.


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## binki (Jul 16, 2006)

I would take a different approach. Rather than go to all the expense of starting a business why not start it as a hobby? If you don't make any money then you will be reclassified as that anyway by the IRS. Once you start showing a profit you can do all the 'proper' stuff.


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## rlaubert (Aug 14, 2011)

Problem with a hobby is that you can't get wholesale prices without registering the business and collecting sales tax (in states that require it). You are also limited in building your brand in some/most cases. Such as trade names, business names etc.

But you are correct, it could be a good way to go if you aren't sure if it is a viable business idea and during the learning stages.


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## binki (Jul 16, 2006)

He can still copyright designs and purchase from sites like shirtsupplier.com without a sellers permit. I can't see spending thousands of dollars to enter an already crowded market only to find out you can't sell anything.


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## rlaubert (Aug 14, 2011)

What costs thousands of dollars. Most states the business licenses, sales tax licenses etc are free or low cost. No need to incorporate to be sole prop. No federal requirements that cost money. Actual start up cost would be equipment and supplies that even a hobby would require.
Where are the thousands in cost coming from? Just want to know.
Thanks


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## binki (Jul 16, 2006)

registering a trademark costs several hundred to several thousand depending on how many problems you run into,
city businesss license $50+,
county tax assesment on FFE (California thing, don't know if other states have this) of 1.xx% per year,
State garment manufacturers license (again a CA thing) several hundred to $1000/year,
county filing fee for dba/sole prop along with 4 weeks of notification in the local fish-wrap several hundred,
plus any home business permits you may need from your local city or county. This can be anything from a nominal fee to waste permits, zoning variances, etc. if you actually do production work at your home.
business bank accounts are normally not free
It does add up.


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## rlaubert (Aug 14, 2011)

Wow, glad I don't live in CA. PA has no fees at all for starting a business. Sales tax is free and DBA I don't remember but I think it was free or maybe $50. Trademarks are required and if I remember correctly, you have to be using it before you can trademark.
In PA, PNC Bank has free business accounts (I have two of them, different businesses).
Nothing else was required for a home base business. But each state and city are different.

Thanks


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## binki (Jul 16, 2006)

It is pretty brutal here. In our city a home based business can only occupy up to one room and cannot be in the garage or seen at all from the street. That goes for commercial vehicles as well (seen from street). 

We are a C-corp and by the time we get done paying or fees and licensing each year we are out several thousand before one penny is earned.


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## 20vK (Jul 9, 2011)

My work permit where I live is over $6500 each year. That's before paying any company fee's, permits etc.

It's like paying tax, but all at once and before you have earned anything. 

Brutal.


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## binki (Jul 16, 2006)

Maybe we should both move to PA!


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## 20vK (Jul 9, 2011)

Ha ha ha ha ha!!!


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## LFAthleticscom (Feb 14, 2013)

I can't thank all of you enough, I am going to have to refer back to this forum when things become more serious on the business end, my products have had an increasing demand which I started only a month ago! I can already see a huge market for these products and merchandise and will do all that I can do with the information and circumstances given to me. Thank you again!


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## binki (Jul 16, 2006)

Good luck. You already have an advantage of selling from the inside of the boxing arena. Getting leads is half the battle and you already are there.


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