This section of the forum is for discussing the business and finance issues of the t-shirt industry. Which business structure to use (sole proprietor, LLC, S Corp, etc), how to handle billing, where to register your business and get the proper licensing, etc.
Does anyone know where to find out how old you have to be to form an LLC in Hawaii? I'm 16 and I'm already a co-owner of a Limited Liability Limited Partnership clothing line business, but I'm almost ready to form another new clothing line completely by myself as a single member Domestic Limited Liability Company. I know I need a FEIN (Federal Employer Identification Number) to both file Articles of Organization for Limited Liability Company (Form LLC-1) as well as to open a business checking account. Regarding business checking accounts, is there normally an age requirement for them as well? The reason why I would need a business checking account is so that I could obtain a debit card to pay for various orders online from mainland companies. Will most of these things require me to be at least 18? Or does being under 18 only restrict me from entering contracts? Do you think I should just have my mom be the official business owner and get all of these things done for me? If I do take this route, how will I be able to obtian a 100% stock in the business? Thank you for the help, I really appreciate it!
Last edited by DEPICTIVE; April 16th, 2009 at 01:02 AM.
Do you think I should just have my mom be the official business owner and get all of these things done for me?
Only if you have to. You've obviously been researching this and taking it seriously; it would be a shame not to be able to reap the rewards of your efforts unless you have no choice.
Unfortunately I don't know what the laws are on age, sorry, so I can't help you.
Quote:
Originally Posted by DEPICTIVE
If I do take this route, how will I be able to obtian a 100% stock in the business?
I doubt you would be able to. For one, that would basically make it a front company. For another, if you aren't allowed to incorporate yourself, etc. then I wouldn't bet on being legally allowed to own stock in the company, let alone a controlling interest.
Sorry that wasn't particularly helpful. Mostly I just wanted to say keep trying and good luck.
Also, trying looking into groups like SCORE, the SBA, etc. and small business information from your local government. They should be able to answer your questions.
To form a corporation in Hawaii, articles of incorporation must be filed with the Hawaii Department of Commerce, Business Registration Division. Hawaii law requires that certain information be included in your articles of incorporation. The following is a summary of those requirements:
Incorporators:
Minimum Number of Incorporators: One or more.
Eligibility Requirements: None.
Duties: Delivering articles of incorporation to the department director for filing.
Corporate Purpose(s):
Hawaii allows a corporation to be formed for any lawful business activity The purpose does not have to be listed in the articles.
Director Information:
Minimum Number of Directors: One or more. At least one director is required, even if the corporation has only one shareholder.
Eligibility Requirements: Directors must be natural persons who are at least 18 years old. The articles of incorporation or bylaws may prescribe additional qualifications for directors.
Listing Requirements: Not required in the articles.
So could I just have a parent incorporate the business and be a director then appoint me as President & CEO?
OR - Should I just have my business registered as a Sole Proprietorship then get Liability Insurance?
You are asking some tough questions. I would be worried about answering them directly because it may be construed as giving legal advice. I would recommend that you find a lawer to consult. Often initial consultations are free or cheap. Ask first what the fees will be.
My lawyer and my accountant both advised me to file as an LLC when I went into business and look at an S-Corp at some point in the future.
I wish I had done what you are doing at your age. My hat is off to you.
I don't know if you need a FEIN to open a business checking account, though - I opened one at my local bank under my SSN (which, for a sole proprietorship, is the same things as your FEIN)
Anyway, why incorporate? Costs money and time. I would operate as a sole proprietorship/partnership until you feel that you could decrease your tax liability or sell stock via incorporating.
__________________
Nate Berkopec, founder of The Factionist
Save more money and wait til you are 18.
Plan out everything you can and make it 100% legit and in that 2 years do the things you can like getting a trademark, website setup, getting a solid line of designs ready, a great logo etc.
there is no rush to do this and i think a lot of people make the mistake of jumping into the clothing biz to fast and aren't 100% ready to do it.
It sounds like you are very smart and have done your research and that is a great start but just relax and plan it out and that years will go by so fast! Just wait til you turn 20 and have that year til you are 21! Now thats a long year!
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I should also preface my comments on legality by saying that a lot of people here seem to disagree with me. To each his own.
I'd disagree with the above poster though about "legitimacy". I think you should get out there and find a way to do it anytime you can. You won't be able to run the business the same way you could as if you were 21, but no one got successful by waiting around!
One more hack - ask your mom to open up a custodial account for you at a bank and get a debit card that way. You don't really need a seperate business account if you keep good books and don't get your personal cash mixed up with your business cash.
__________________
Nate Berkopec, founder of The Factionist
Just wait til you turn 20 and have that year til you are 21! Now thats a long year!
Personally I think this is bad advice. Waiting is boring. Why start living at 20 if you can start at 16 instead?
One of the best ways to succeed in business is to fail, and fail quickly. Learn from those mistakes, and move forward. In the time you spent planning and doing nothing, you could have tested four ideas and be moving onto the 5th. That's a four idea headstart.
Failing when the stakes are low is even better. Losing your entire life savings and being unable to pay the rent at 16... not as big a deal as 26 or 46.
I think if you have the drive and the interest to start a business at sixteen you shouldn't let anything stand in your way.
Personally I think this is bad advice. Waiting is boring. Why start living at 20 if you can start at 16 instead?
One of the best ways to succeed in business is to fail, and fail quickly. Learn from those mistakes, and move forward. In the time you spent planning and doing nothing, you could have tested four ideas and be moving onto the 5th. That's a four idea headstart.
Failing when the stakes are low is even better. Losing your entire life savings and being unable to pay the rent at 16... not as big a deal as 26 or 46.
I think if you have the drive and the interest to start a business at sixteen you shouldn't let anything stand in your way.
You totally missed what I said lol
I meant to prepare more and plan everything out and save up money to launch a solid line. I am not talking about 4 years like you are trying to imply. I say wait 6 months to a year. He has already had a line before so he knows at least more then most people at this point. I think it isn't always a godo thing to just "jump into a business" because people make poor choices that can affect the rest of there life.
Personally if I was in your shoes I would plan for a launch date around December and save up money to add more tees and work on branding your line. I wouldn't wait til your 20 even though that wouldn't necessarily be a bad thing.
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I am not talking about 4 years like you are trying to imply.
You said "Just wait til you turn 20". He's sixteen. That's four years.
Quote:
Originally Posted by TimeWithoutTheE
I think it isn't always a godo thing to just "jump into a business" because people make poor choices that can affect the rest of there life.
True, but the damage you can do at sixteen is limited unless you make some epically stupid decisions. The potential for those poor choices to be a learning experience probably outweighs the potential risk (it certainly does in a smart kid).
You're right that even a precocious sixteen year old is unlikely to be ready. But you don't get ready by sitting on your hindquarters planning.
There's no rush to succeed, but the time to start is now.
I've actually learned quite a bit from a lot of the mistakes that were made while working on the other clothing line I'm currently part of. My family and friends suggested from the beginning that I should start my own clothing line instead of work as a co-owner. But I decided it would be best to do it this way for now. By doing it this way, I was able to learn more about business in general and have a first-hand experience with how the industry works. I was the one who actually made a lot of the decisions, came up with designs, prepared all of the artwork, contacted screen printers, dealt with woven labels factories, found packaging suppliers, and developed the online store. Also, most importantly, by doing it this way, I didn't have anything at risk except my time and possibly my credibility due to the fact that I didn't invest in the business financially.
Here are some of the mistakes I've made and learned from through the other clothing line: (1) Ink Colors! I shouldn't have completely relied on the PANTONE® colors that Photoshop matches. The finished products didn't come out as expected, color-wise. I now own PANTONE® Formula Guides. (2) Garments! We requested the highest quality blanks available. Unfortunately, they were fitted in a way that our target audience doesn't normally wear. After making this mistake, I did a lot more research and found the perfect blanks for the new brand I plan on starting. Coincidentally, it turns out that I already have ~20 shirts in my closet that are printed on the same exact blanks I decided to use! (3) Garment Colors! When I started making designs for the other clothing line, I choose my own base colors. This only caused more stress for me later when I found out that I needed to adjust all of the colors to properly match the garment colors available. Now, not only do I know exactly what blanks I want to print on, but I also have a swatch card straight from the manufacturer to help me evaluate the colors instead of assume the colors I see on my monitor are precise. (4) Design Sizes. 8I Pretty much just designed wherever I wanted on the shirt at large sizes. When I found out that the maximum print size our screen printer had was 19" x 26", I had to take all of the designs I already made and adjust them to fit in that print area and to take advantage of every square centimeter of that screen. Simply resizing the design to fit in the print area didn't satisfy me. By doing that, the new design would be too thin. This time, when I contacted potential screen printers (I think I contacted about 24 of them), I asked them a set of questions, one of them being what their maximum print sizes are, another being how many colors I can use with prints that large. I'm also not completely finalizing any of my artwork until I know exactly who will be doing my screen-printing. (5) Quotes. This is just from personal experience. After order approvals (ones that weren't exactly easy to understand) were made and production began, the screen-printing company (I won't mention any names) contacted us and pointed out that they had made some errors on our orders. I'll avoid getting into the details of those errors. From this, I learned that I need to make my quote requests as accurate as possible. Not only should I include mock-ups, but I should also include the number of colors, dimensions, and print locations.
Those were just some of the first ones that hit me.
I've done freelance web design/programming and graphics since I was about 9 years old. It can get quite stressful, and it wasn't really something I enjoyed doing. That's probably why I stopped doing it. I've always had an interest in fashion though. And thankfully, one day, I realized that I could put that design experience into use by putting them onto garments. Sure, it's two completely different things, but I adjusted quite well after a while.
Anyways, back to the topic.
Would it be a bad idea for me to try reselling an extremely low volume (~120) of clothing without registering the business, just to see how people react to the unofficial brand? Then depending on the results, I might possibly have the business registered as an LLC with my mother as a Director of the company who will appoint me as the President & CEO. I wasn't able to find out how old you have to be to become a Sole Proprietor, so that might not be an option considering the fact that if there is an age requirement that I do not meet, my mother would not be able to become the Sole Proprietor on my behalf and appoint me as a manager.
Any ideas?
I know I still have A LOT to learn, and I know that I'll make some unintentional mistakes here and there in the future. But making those mistakes will be a small price for the vast knowledge I'll gain and imperative lessons I'll learn from making them.
Last edited by DEPICTIVE; April 16th, 2009 at 11:48 PM.
Someone at SBA emailed me telling me that I should check out this page: Teen Business Link
Unfortunately, I couldn't really find anything about age. But then again, I only had a few minutes to browse through it. I'll look more into it when I get home.
Personally I think this is bad advice. Waiting is boring. Why start living at 20 if you can start at 16 instead?
One of the best ways to succeed in business is to fail, and fail quickly. Learn from those mistakes, and move forward. In the time you spent planning and doing nothing, you could have tested four ideas and be moving onto the 5th. That's a four idea headstart.
Failing when the stakes are low is even better. Losing your entire life savings and being unable to pay the rent at 16... not as big a deal as 26 or 46.
I think if you have the drive and the interest to start a business at sixteen you shouldn't let anything stand in your way.
I agree that waiting due to age is a mistake. Caution when entering any business venture is wise though, but it sounds like he has done a lot of homework already and I would be surprised if he is the type to jump in to something before testing the water.
The one thing that I would add is that he should include his parents in on the decision making because I think (again, I'm not a lawyer and not trying to give legal advice, please consult a professional) that since he is a minor that they could possibly be found liable for any of his "mistakes" if they are expensive. If he is careful though he can keep the risk low. I admire his drive and wish I had done it at 16.
Any recommendations for a 16 year old? 
