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Starting up your fashion business

What is the easiest way to start a fashion business?

Say you are an aspiring designer fresh out of fashion school and you want to get into the rag trade; how do you do it? 

The easiest way to start up a fashion business is … to just start.

Most young designers start selling their collections, incurring obligations, making money and entering into contracts in their own name and the law calls this being a “sole trader”.

A sole trader carries on business, generally under their own name (i.e. Jessie Jaymes) or, less frequently, using a separate trading name (i.e. Fast Fashion).  Some businesses continue for some time adopting this very simple model.

Being a sole trader

Perhaps the most important aspect to be aware of is the fact that a sole trader is personally liable for the debts of their respective business. 

That means that whether you start selling collections under your own name “Jessie Jaymes” for instance or under a business name “Fast Fashion”, then in either case, as a sole trader, it is the owner of the business, Jessie, that remains personally liable to pay all the debts of the business. 

Whilst sole traders enjoy virtually no set up costs and benefit from a relatively uncomplicated accounting, legal business and compliance structure, if the business trades poorly for instance or if it is trading well but there is no spare cash, then in this case, the creditors of the business (i.e. the landlord, the suppliers, the distributors or the factory being used) can look to the owner personally to pay them; meaning that in the worst case scenario, in our example can sue Jessie personally and get access to her assets (i.e savings, car, house, furniture etc) to meet the debts of the business. 

Thus, one of the key downsides about trading as a “sole trader” is that the owner remains personally liable for the debts of the business.

For more information about Olswang go to http://www.olswang.com/main.asp?sid=193

 

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