The global fashion industry has been huge for centuries, with different countries and cultures around the world having their own unique fashion styles. In recent years, the industry has become even more globalized, with many brands and designers now operating in multiple countries.
This year, the industry’s worth promises to reach a staggering $1.7 trillion, which will be a 100% increase compared to 2019.
If you’re thinking of starting your own fashion business, it’s important to choose the right legal structure. The type of business you operate will determine the taxes you pay, the level of liability you’re exposed to, and a number of other factors.
But before we get into that, let’s take a look at why now is the perfect time to start a fashion business.
Why It’s Smart to Start a Fashion Business Today
There are a number of reasons why starting a fashion business today is a smart move. For instance:
The industry is growing rapidly. As we mentioned, the fashion industry is currently worth a few trillion dollars and is expected to grow even further in the coming years. This makes it a great time to get involved in the industry.
There’s less need for brick-and-mortar stores. In the past, starting a fashion business usually meant opening a physical store. However, with the rise of e-commerce, this is no longer the case. Now, you can sell your products online without ever having to open a store.
You can reach a global audience. Thanks to the internet, you can now reach customers all over the world with just a few clicks. That simply wasn’t possible in the past when fashion businesses were limited to their local markets.
What to Consider Before Starting a Fashion Business
Of course, starting any business comes with its own set of challenges and risks. When starting a fashion business, there are a few things you need to keep in mind:
You need to stand out from the competition. The fashion industry is extremely competitive, so you’ll need to find a way to stand out from the rest. This could mean offering unique designs, having a strong social media presence, or something else entirely.
Furthermore, you need to be up-to-date with the latest trends. In the fashion industry, trends come and go quickly, which means you need to be constantly on the lookout for new trends so you can offer your customers the latest and greatest products.
You need to have a good understanding of the business. The fashion industry is more than just designing and selling clothes. You also need to understand things like marketing, manufacturing, supply chain management, and more.
Selecting a Legal Structure
When starting a fashion business, you’ll need to choose a legal structure for your company. The most common types of business structures are sole proprietorships, partnerships, and limited liability companies (LLCs).
● Sole Trader/Proprietor
A sole proprietorship is the simplest type of business structure. It’s easy to set up and requires very little paperwork. Furthermore, you’ll have complete control over the business.
The downside of a sole proprietorship is that you’ll be personally liable for the debts and liabilities of the business. This means that your personal assets, such as your home or savings, could be at risk if the business fails.
A partnership is similar to a sole proprietorship, but with two or more owners. Each partner will share in the profits and losses of the business, as well as have a say in how the business is run.
Like a sole proprietorship, a partnership exposes the partners to personal liability. However, this can be reduced by having a limited partnership, in which some partners have limited liability.
● Limited Company
A limited company is a legal entity that’s separate from its owners. That means the owners have limited liability, which means they’re not personally responsible for the debts and liabilities of the business.
An LLC is more complex to set up than a sole proprietorship or partnership. Different states have different regulations and to ensure you’re doing things right, you should seek professional assistance.
For instance, a New York LLC must file articles of organization with the state and have a minimum of two members.
Starting a fashion business can be a great way to tap into the trillion-dollar industry. Thanks to the internet, it’s easier than ever to reach a global audience and sell your products. However, you need to be aware of the challenges involved, such as intense competition and the need to constantly stay up-to-date with trends.
When setting up your business, you’ll also need to choose a legal structure. The most common types of business structures are sole proprietorships, partnerships, and limited liability companies (LLCs).
Before making any decisions, it’s important to seek out a professional who can help you understand the regulations in your state and choose the right business structure for your needs.