Start an online t-shirt business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your online t-shirt business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an online t-shirt business?
The costs for opening an online t-shirt business are minimal. With a website and a few integrated apps from an online e-commerce business platform like Shopify, even without an initial investment, you can have a business up and running in a matter of hours. You can also easily connect your business to a t-shirt printing company and a shipping company within minutes. There are also companies that combine both services.
What are the ongoing expenses for an online t-shirt business?
Ongoing expenses for an online t-shirt business include:
- Employee Salaries
- Packaging and Shipping Costs
- Advertising and promotional deals
- Royalty, license, and sublicense fees for the use of designs created and copyrighted by others. Some are flat-fee contracts, while others may charge a set price for a specified number. Royalties are often paid as a percentage of gross receipts from sales of the product design.
Who is the target market?
Preferred customers are all people who enjoy wearing t-shirts.
How does an online t-shirt business make money?
An online t-shirt business makes money by advertising and selling t-shirts on a business website. Many t-shirt businesses also make money by creating and selling original artistic designs as well as custom designs or wording requested by individual customers. The price charged usually allows for a profit margin of between 50 and 75 percent after the expenses of materials, printing, and shipping are deducted.
How much can you charge customers?
The average price consumers pay for a custom t-shirt averages between $20 and $40 dollars.
How much profit can an online t-shirt business make?
An online t-shirt business can become profitable enough to offer franchise opportunities. Online businesses can also expand into the retail market. For example, the well-known Life Is Good brand of T-shirts, hats, and other merchandise is now sold by more than 4,500 retail stores in the U.S. alone. Partnering with other companies such as Hallmark and Planet Dog, they have achieved annual sales of over $100 million dollars.
How can you make your business more profitable?
After establishing a brand and gaining popularity online, many online t-shirt business owners decide to establish a physical business location as well. It is often easier to follow and cater to local trends with a physical location, even if it is only a temporary pop-up shop or a rented kiosk. Some owners also expand their businesses to include other types of clothing to increase revenue. Once you have registered and copyrighted a number of designs, you will also receive additional revenue from copyright and royalty fees. Businesses that have earned sufficient operating capital can also reduce printing costs and increase profits by investing in their own printing equipment. Once they have, they can earn additional income by contracting with other businesses to provide printing services.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Online T-Shirt Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your online t-shirt business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a custom t-shirt business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
A custom T-shirt businesses may may also wish to look into applying for a resale certificate, which enables wholesale purchase of t-shirts intended for resale without paying sales tax.
In addition, certain local licensing requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Protecting Your Logo and Designs
To prevent competitors from knocking off their brand or designs, custom t-shirt printing businesses should strongly consider trademarking their logo and applying their designs for copyright protection.
- Learn more about trademark and copyright protection for your online t-shirt business
Love a design that you didn’t create? You can contact the rights owner or manufacturer and negotiate a sublicense to use the image under a royalty or fixed fee arrangement. It is never a good idea to use a design without authorization from the rights holder as this could have serious legal ramifications for your business.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
Get a logo using Truic's free logo Generator No email or sign up required
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Use a Premium Logo Maker
How to promote & market an online t-shirt business
Posting your original designs on social networks like Facebook, Twitter, and Reddit is a good way to build your brand name. Reddit is especially helpful because one of the paths to success for online t-shirt businesses is finding a niche, something Reddit specializes in through the use of subreddits. Subreddits are sub-categories within larger categories. You can even use social media to conduct market research by administering polls to your target demographic to test their responses to your designs before producing them.
How to keep customers coming back
There are a number of ways to attract customers to your online store. One effective strategy is offering a free item with each customer’s first purchase. Another is hosting a competition with prizes. Effective e-mail marketing can be helpful, but more than 93% of consumer purchases are influenced by social media. Positive customer reviews are among the most powerful advertising tools available today, especially in competitive businesses like t-shirt sales. Providing high quality materials and workmanship combined with great customer service is still the best way to gain repeat customers who will be happy to spread the word.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start An Online T-Shirt Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Those who enjoy keeping up with current trends do exceptionally well in this business. A single timely slogan or artistic design that becomes popular can generate substantial profits. The ever-popular smiley face is a good example.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at an online t-shirt business?
- Market research to track competitors’ offerings and pricing and ensure that copyright laws are not violated
- Graphic design and customization
- Pricing merchandise
- Negotiating with vendors for the best prices on materials and services
- Creating sales promotions and advertising campaigns
What are some skills and experiences that will help you build a successful online t-shirt business?
Some of the top skills and abilities that can help someone build a successful online t-shirt company include:
- Artistic design skills
- Basic math and accounting skills
- Knowledge of screen printing, heat transfer, and direct-to-garment printing methods
- Interpersonal communication skills for negotiating with vendors and maintaining relationships with customers.
What is the growth potential for an online t-shirt business?
Online businesses can also expand into the retail market. For example, the well-known Life Is Good brand of T-shirts, hats, and other merchandise is now sold by more than 4,500 retail stores in the U.S. alone. Partnering with other companies such as Hallmark and Planet Dog, they have achieved annual sales of over $100 million dollars.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
You will need to have a team in place before your online store opens for business. Initially, your team will consist of a material vendor, a printing supplier and a shipping company.