Starting A Sewing Business – Get Set Up Legally

Once you know what you’ll sell, how you’ll sell it, and where you’ll sell it, it’s time to get your legal ducks in a row.

You do not have to figure all of this out today.

Most sewing businesses start small and handle these steps one at a time. Think of this page as a checklist to work through; not a same-day to-do list.

Legal Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. Laws vary by location and individual circumstances. Always consult with a qualified legal or tax professional regarding your specific situation.

1. Choose Your Business Structure

Your business structure affects:

• Whether you must register your business
• How you file income taxes
• Whether you’re personally liable if something goes wrong

The most common structures for small sewing businesses are:

Sole Proprietorship
Owned and operated by one person. This is the most common structure for handmade businesses because it’s simple and inexpensive to set up. The downside? You’re personally responsible for business debts and lawsuits.

General Partnership
Similar to a sole proprietorship, but owned by two or more people who share responsibilities and liabilities.

Limited Liability Company (LLC)
Offers limited personal liability protection. If the business owes money or gets sued, business assets are typically at risk — not your personal assets. It costs more to set up but provides more protection.

Corporation
A more formal structure with stricter rules and record-keeping requirements. Typically used for larger businesses or those raising investment capital.

Most small sewing businesses start as sole proprietorships, but it’s worth researching what makes sense for you.

If you plan to sell products that carry higher risk (for example, children’s clothing or products that could pose safety concerns), you may want to consider forming an LLC or corporation to help limit your personal liability.

2. Register Your Business Name (If Required)

If you operate under your legal name (e.g., Jane Smith), you may not need to register a separate business name.

But most sewing businesses choose a creative name. If that’s you, you’ll likely need to register it.

Before committing to a name:

• Make sure it doesn’t infringe on another business or trademark
• Consider doing a name search
• Check domain availability
• Secure social media handles

Also, you can’t use “LLC,” “Inc.” or “Ltd.” in your name unless you’re legally registered as one.

3. Separate Your Business Finances

Even if you’re a sole proprietor, this step is important.

Open a separate business bank account.

This makes it easier to:

• Track income and expenses
• File taxes
• See if you’re actually making a profit
• Protect yourself if you’re ever audited

Keeping personal and business finances separate is one of the simplest ways to feel organized and professional from the start.

4. Tax Registration & Sales Tax

If you’re selling products to make a profit, you’re running a business — which means you’ll need to report your income.

Depending on where you live and sell, you may need:

• A tax ID number
• A sales tax permit
• To collect and remit sales tax

Sales tax rules can vary depending on:

• Your location
• Where your customers are located
• Whether you ship products

If you’re set up as a sole proprietor, partnership, or LLC, business income is usually reported on your personal tax return. Corporations file separate business returns.

Take the time to understand what applies in your area and keep good records throughout the year.

5. Keep Good Records

Good record-keeping makes everything easier.

Track:

• Material costs
• Packaging costs
• Equipment purchases
• Craft show fees
• Mileage
• Income

Save receipts and stay organized from the beginning. It saves stress later.

6. Licenses & Permits

You may need one or more permits to legally operate.

Depending on your location and business model, this might include:

• A general business license
• A seller’s permit
• A home occupation permit
• A zoning permit

Check with your local government to see what’s required.

7. Understand Product Regulations

Regulations are designed to protect consumers.

Depending on what you sell, you may need to follow rules related to:

• Packaging and labeling
• Fiber content labels
• Product safety
• Import/export regulations if shipping internationally

If you plan to sell children’s items, sleepwear, or regulated products, be sure to research the specific safety standards required.

8. Trademark & Copyright Awareness

In most cases, small sewing businesses don’t need to register trademarks or copyrights right away.

However, you should:

• Avoid using logos, characters, or brand names without permission
• Avoid selling items made with trademarked characters (e.g., Disney) unless properly licensed
• Check the licensing terms of any sewing pattern you use

If a pattern says “for personal use only,” you cannot legally sell items made from it.

It’s also wise to avoid fabrics with trademarked characters unless you confirm licensing terms from the manufacturer.

9. Insurance

Insurance may not be legally required, but it’s often a good idea.

Some craft shows require liability insurance. Retail stores may require it if you sell wholesale. Banks may require it for loans.

Product liability insurance can protect you if someone claims injury or damage from your product.

If you sell higher-risk items (like children’s products), insurance is especially worth considering.

10. Contracts & Policies

As your business grows, having clear policies protects both you and your customers.

Depending on how you operate, you may need/want:

• Website terms of use
• Privacy policy
• Return and exchange policies
• Custom order agreements
• Wholesale or consignment contracts
• NDAs if working with contractors

Clear policies help prevent misunderstandings and make your business feel professional.

Setting up your sewing business legally doesn’t have to be complicated — but it does require intention.

You don’t need to tackle everything at once.

Start small.
Work through this checklist.
Build properly from the beginning.

When your product line is focused and your structure is solid, you’ll feel far more confident selling — whether at craft shows, locally, or beyond.