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While there is a higher need for costumes during the Halloween season, many customers require costumes all year. A costume shop provides clients with costumes, wigs, and makeup for special occasions, theatrical performances, holidays, and festivals. Successful stores provide a mix of things for rent and buy, depending on the requirements of their clients.

 Costume Rental

Follow these ten steps to start a costume rental business:

Plan your Costume Rental Company

Create a legal entity for your costume rental business.

Tax registration for your costume rental business

Create a Business Bank Account and a Credit Card

Create an accounting system for your costume rental business.

Get the Permits and Licenses You Need for Your Costume Rental Business

Purchase Costume Rental Business Insurance.

Create a brand for your costume rental business.

Make a website for your costume rental business.

Configure your Business Phone System

Starting a company entails more than just registering it with the state. This basic guide to launching a costume rental company has been put together by us. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.

STEP 1: Make a business plan.

A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:

What are the initial and continuing expenses?

Who is your intended audience?

How much money may you charge your customers?

Fortunately, we have done a lot of the legwork for you.

What are the expenses of starting a costume rental business?

A site must be determined before making any company acquisitions. Setting up business near a theatre, school, or church is an excellent approach to begin establishing a devoted client base. Start creating and populating your area after you’ve decided on a place. Ample storage and display cabinets will aid in keeping everything organised. These are often available utilised, allowing you to reallocate a piece of your spending. If your present floor plan does not include changing rooms, speak with a respected contractor about improvements. Contractor prices will be determined by building specifications, local codes, and the complexity of the job, which may range from $3,000 to more than $20,000. Before you sign a lease, have a general contractor assess the property and discuss your requirements. This will protect you from unanticipated problems and guarantee that you budget effectively.

Whether you merely provide rentals or want to sell, your firm must be set up like a retail location. A cash register, credit card machine, computer system, and business software will build the groundwork for a profitable store. Set aside $3,000 to $4,500 from your budget to buy or lease these products.

You will also need the following items:

People will be drawn in by your name and logo design.

Company cards

A basic website costs between $1,500 and $3,500 to construct. Invest in an Ecommerce site if you want to sell goods online. This has the potential to treble the cost of your first website, but it is an excellent approach to enhance income.


Costumes, wigs, cosmetics, and jewellery are on hand. Pieces range in price from a few dollars to many hundred dollars.

Total start-up expenditures range from $5,000 to $27,000, assuming no substantial storefront changes are required.

What are the continuing costs of running a costume rental business?

Payroll and inventory will be your main overhead expenditures, apart from ordinary operating expenses. Each new trend necessitates the acquisition of new outfits and accessories. This, along with the necessity to replace parts that have been lost or damaged, means you’ll need to build your collection on a regular basis. Specific expenses vary based on the kind and quality of costumes chosen, as well as the quantity ordered.

Who is the intended audience?

Most people need to shop for a costume at least once a year. However, the majority of your business will come from certain niches such as theatre organisations, schools, churches, and musicians. Because they are frequently highly close-knit communities, maintaining a favourable reputation among these groups can aid your business’s success.

How does a costume rental company earn money?

Costume shops make money by selling and renting out costumes. Rental costs are chosen by shop owners and vary depending on the item. Customers must pay a deposit in addition to the rental cost in the event that the item is lost or destroyed. Profits on sale items vary based on wholesale pricing; browse around and develop partnerships with wholesalers to reduce inventory expenses.

How much money may you charge your customers?

The cost of renting a costume ranges from $35 to $250. Customers pay a daily fixed price. Consider giving unique pricing and promotions to accommodate extended leases.

How much money can a costume rental company make?

Smaller firms earn between $35,000 and $50,000 each year. Shops in metropolitan locations are often bigger, allowing for a greater profit margin, with the potential for a profit of up to $250,000. One businesswoman began her company from her home. She was able to work part-time and make a profit of $27,000 in her first year by focusing on princess parties.

How can you increase the profitability of your company?

Successful entrepreneurs are always looking for new ways to increase their company’s profits. Other costume store operators have used the following tactics to guarantee a more prosperous business:

If you love the process, think about creating your own costumes and accessories to sell or rent to others. While your initial and continuing costs may rise as you invest in dependable equipment and high-quality cloth. The profit margin on your own inventions, on the other hand, is far bigger than on products obtained wholesale.

Organize community workshops or classes in which you educate people how to create their own costumes.

Expand your company to include the sale and/or rental of theatrical and party decorations and props.

Offer delivery service if your company plan entails catering to the performing community. Just be sure you keep track of shipping and maintenance costs and charge a reasonable delivery price.

Online costume and accessory sales

Consider providing franchise opportunities.

STEP 2: Establish a legal entity

Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.

If your costume rental company is sued, becoming a legitimate business organisation, such as an LLC or corporation, safeguards you from being held personally accountable.

STEP 3: File your taxes

Before you can begin for business, you must register for a number of state and federal taxes.

To register for taxes, you will need to get an EIN. It’s really simple and completely free!

Taxes on Small Businesses

Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).

These guides will teach you more about small company taxes:

Taxes on LLCs

LLC vs. sole proprietorship

Corporation vs. LLC

S Corp vs. LLC

How to Form a S Corporation

S Corporation vs. C Corporation

There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.

STEP 4: Establish a company bank account and credit card

Personal asset protection requires the use of distinct business banking and credit accounts.

When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.

Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.

Establish a business bank account.

Opening a business bank account is not only required when asking for business financing, but it also:

Separates your personal assets from the assets of your firm, which is required for personal asset protection.

It simplifies bookkeeping and tax reporting.

Create a net 30 account.

Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.

Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.

Apply for a business credit card.

Obtaining a business credit card benefits you in the following ways:

Put all of your company’s costs in one location to separate personal and business spending.

Build your company’s credit history, which will be important for raising funds in the future.

STEP 5: Establish business accounting

Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.

STEP 6: Obtain all required permissions and licences

Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.

Requirements for Federal Business Licensing

If you build your own costumes, be sure to follow the Federal Trade Commission’s labelling standards for apparel goods.

Requirements for State and Local Business Licensing

To run a costume rental company, several state permissions and licences may be required. Visit the SBA’s reference to state licences and permits to learn more about licencing requirements in your state.

STEP 7: Obtain commercial insurance.

Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.

There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.

Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.

STEP 8: Establish your brand

Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.

How to Promote and Market a Costume Rental Company

Because the costume industry fluctuates, your marketing approach should be concentrated and evaluated for improvement on a regular basis. A strong online presence, especially on social media, is an excellent method to reach out to prospective clients.

Concentrate on the previously listed specialty groups. Direct mailers and advertising in school yearbooks and play programmes are efficient ways to get your name out in the community. Many of these specialty groups are quite close-knit. Spend the time becoming engaged and getting to know them on a personal and professional level. Participate in parades and put up booths at local special events – networking might be your most effective marketing weapon.

How to Keep Customers Returning

September and October are busy months in the costume business, with products flying off the shelves faster than personnel can replenish them. You’ll need to be imaginative if you want to create a strong client base that produces income all year. Look at other costume stores in your region. What do they lack? What do they have an excess of? What market prospects are they ignoring? You have an advantage over the competition by providing products that the community lacks. Above all, continually providing high-quality goods and services will aid in client retention.

STEP 9: Create your company’s website.

After you’ve defined your brand and designed your logo, the next step is to build a website for your company.

While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.

The following are the primary reasons why you should not put off developing your website:

Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.

Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.

STEP 10: Install your company phone system.

Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.