What legal steps must you take to start a clothing line?

It depends where you live. Contact your state about the normal usual processes that any business goes through. However, if you live in one of three states (NY, CA, NJ) there are specific laws that govern sewing businesses.

NJ and NY aren’t too bad, here’s information on those two:

NY: http://www.fashion-incubator.com/archives/apparel_manufacturing_in_new_york/

NJ: http://www.fashion-incubator.com/archives/apparel_manufacturing_in_new_jersey/

California is another story altogether. It is hard there, and expensive. You can get fined a lot of money (thousands of dollars) if you don’t get a license. They’re very strict and they don’t have a sense of humor about it. The worst part about it is, even if you don’t live in the state but are only using contract sewers there, you have to get a license. Here’s three articles about it. Oh, and you have to take a test and pass it plus pay $800 for the license. And even with a license, you can’t sew out of your home or hire others who do. Sorry for the bad news (don’t shoot the messenger).