I’m at the pre start-up phase of my business and I have a question regarding how I should classify the company? I am designing a specialty line of clothing that will be produced by a contract manufacturer and the items will be sold via my eCommerce site. So would I be considered a developer, manufacturer, wholesaler/distributor or retailer?
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It sounds like the core of your business is designing clothes. Manufacturing and the eCommerce site to sell them are tools you are using, but you are clothing designers? |
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For most practical purposes you are a reseller, or some variant thereof. The bulk of your money is earned by purchasing a product, and reselling it for a higher price. In this case, the product happens to be built/made to your specifications, but you are still primarily a retailer, with a "simple" markup (from an accounting perspective). If you were taking multiple raw materials (eg: pieces of fabric) and assembling them into a new product, then you would have some aspect of manufacturing (and the various accounting issues that go along with it). It sounds "cool" (maybe) to be a "manufacturer" or "designer", but trust me it is easier for now just just be a reseller and let someone else deal with the issues around manufacturing, accounting for raw materials, supply chain issues, etc. |
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Confusing.. I understand your dilemna. I would say you are the manufacturer and distributor of a clothing line because you designed the line. |
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