How to Start an Online T-Shirt Business

Start an online t-shirt business by following these 10 steps:

1. Plan your Online T-Shirt Business
2. Form your Online T-Shirt Business into a Legal Entity
3. Register your Online T-Shirt Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Online T-Shirt Business
6. Get the Necessary Permits & Licenses for your Online T-Shirt Business
7. Get Online T-Shirt Business Insurance
8. Define your Online T-Shirt Business Brand
9. Create your Online T-Shirt Business Website
10. Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

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

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

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.

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:

• Printing
• 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.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

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.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

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.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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

Sublicensing

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.

• Learn more about sublicensing and rights obtainment

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.

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.

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.

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:

• Creativity
• 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.