Here is a step by step video tutorial for how to make fabric labels at home, by Domenica Tootell at Easy Sewing For Beginners. Domenica also includes a step by step photo tutorial along with a downloadable PDF as well.
Her method uses heat transfer paper and is great for making labels for handmade clothing or just for your handmade items in general. I love the look of the twill ribbon labels.
See the full tutorial here: How to Make Fabric Labels at Home at Easy Sewing For Beginners
http://www.easysewingforbeginners.com/project/make-fabric-labels-home/