Regardless of where your business is in its life cycle, if you decide to offer a product that you would rather not produce yourself, a “white label” brand might be just the solution. Excellent examples of businesses offering products under these agreements abound in such fields as food, furniture and others, where one company will produce products for another who, in turn, will sell that same product under their own name.
White Label, the Label You Will Never Find
There are countless companies offering products around the world using white label agreements with other companies. Production of these products is carried out after a confidentiality agreement form has been put into effect which prevents the original maker from claiming to have made the product. Many companies obtain these forms from FindLegalForms.com.
A Few of the Many Benefits of White Labeling
1. Lower or no production costs. Regardless of the specific product involved, entering into a white label agreement with a maker can allow a company to offer a product without the need to create the production facilities and related operational manpower to create that product. Further, this type of an agreement can allow businesses to offer virtually any product and any number of products without concerns over actually producing them.
2. Ability to offer additional product lines. With white label agreements, companies can offer virtually any line of additional products as their own or multiple product lines without concern over claiming to be a maker or engaging the expenses.
3. Websites benefit. With the introduction of the Internet age, websites can offer products for sale without creating the production capabilities or the labor to create them. There are many websites that operate under this business model, allowing them to often be not more than one person who operates the website while another produces and ships the product under the website’s name.
It is important to note that under the current tax laws there are important benefits to using white label agreements that allow companies to produce products and hire labor without the associated costs, since with the production and labor in-house, these are considered to be costs of doing business, and not tax-deductible. On the other hand, if these products are produced under a white label agreement, all of the associated costs are considered an expense, which can be deducted from taxes.
White labeling is also a viable business model in the production of services as well as products. For example, many large banks enter into white label agreements to perform check processing services for smaller banks, which also eliminates the need for having their own facilities. These types of services often hire their workers under independent contractor arrangements.
Regardless of the product or services offered, white label agreements have proven themselves as viable business arrangements that can result in profitable enterprises for all of the parties involved in them. Further, the successes these companies have enjoyed using the white label business model will no doubt lead to a continuation of the practice.