Create your own printable contract — FREE! Download Printable Contract (. Formatted and ready to use with Microsoft Word, Google Docs, or any other word processor that can open the . Hair Salon Booth Rental Agreement Stylist, listed above, is renting a booth/station from Owner, also listed above. The rental period will begin on {date} and end {when it will end}. Stylist will pay a fee of {amount} every {week, month} for this rental space. Payment must be made {by a certain date, by check, etc.}. Stylist will be an independent contractor, not an employee of the salon. Stylist will conduct his/her business during the normal business hours of the salon. Owner will provide {list of what owner will provide for Stylist}. Stylist will be responsible for {anything stylist will be responsible for during the rental period}. Stylist will, at all times, dress professionally and in a manner befitting the atmosphere of the salon. Stylist will maintain a clean and orderly workspace, free of material that may be considered offensive or inappropriate for the environment.
Suitability of the material is subject to Owner's discretion. Stylist {is/is not} permitted to sublet the rental space. Stylist is responsible for any damage to the rental space caused by his/her customers, guests, or by himself/herself. This agreement is enforceable under the laws and regulations of the state of {State}. Stylist Name Stylist Signature Owner Name Owner Signature Create your own printable contract — FREE! Index of Printable Contract Examples are not to be considered as legal advice. All content is for informational purposes, and Savetz Publishing makes no claim as to accuracy, legality or suitability. The site owner shall not be held liable for any errors, omissions or for damages of any kind.
Booth Rental Agreement 1 Booth Rental Agreement 2 32 KB View Details Salon Booth Station Rental Lease Agreement TemplateGoogle Sheet / DocA long standing custom in the hair salon industry is owners of salons leasing out booths to hair stylists. If not properly documented and exercised appropriately, the owner opens the door for many legal issues. Booth rental is legal in many states but you must adhere to several contractual compliance requirements to completely separate your salon from the renter. In addition, the Internal Revenue Service requires a far more restrictive arrangement to allow separation of the salon owner from the tax obligations of the booth renter. This article is written to assist the salon owner in meeting these various requirements. In addition, the Internal Revenue regulations are described and explained so the reader can understand what to do and how to carry out these rules. Contents1 Independent Contractor or Employee 2 Separation Requirements3 IRS Compliance 4 Suggestions
The underlying issue in the salon industry relates to the independence of the stylist. The stylist is mostly concerned with two personal goals. First is the greater increase in income via separation from the salon as an employee. The secondary goal is more independence in setting their personal schedule e.g. what days to work and hours of operation. For the owner of the salon you must realize that you have two governing bodies that must recognize the stylist as an independent contractor in order for this to work. The first is your respective state law and court case history related to the contractor/ subcontractor relationship. The second body that must recognize the relationship is the Internal Revenue Service. The one mutual requirement that exists in law and in the tax code is a ‘Contract’ between the parties. This contract should include the following elements: Control over the End Result Govern by the Board of Cosmetology/Professional Regulation
Collection of Customer Payments Rents can be fixed or have a fixed component and a percentage of the sales the renter collects. The key here is that renter provides an accounting of some sort to validate the sales volume in which a rental percentage is paid. The preponderance of the total rent should be fixed in nature so as to maintain a true appearance of independence for the stylist. Identify in the contract what the rents covers, such as their particular spot in the salon, utilities, access and costs for receptionist to receive all customers and for scheduling. I urge you to have a written contract and a compliance program in your salon. The contract is signed by both parties and should have a life of one year with automatic renewals unless terminated with proper notice (time and statement). For compliance issues, I encourage you to have the stylists insurance binders copied to your business address. Their binders should have the salon listed as additional insured and have you as an individual listed as an additional insured.
Monitor the business license and the corresponding Board documents as identified above. In addition to the above requirements, the IRS has an additional set. For the independent contractor, they must prepare a Form 1099 identifying the rents paid to the salon. This is often confusing as in many salons, the customer payments are collected up front and the salon issues a 1099 to the booth renter identifying their respective earnings. YOU CAN’T DO THIS. The IRS is adamant in making sure the independent contractor collects their own fees for the services they render. Look at the outcome of this particular Revenue Ruling: Revenue Ruling 73-591, 1973-2 C.B. 337 Facts: Salon agrees to furnish, repair, and maintain all equipment; hair stylist is paid on a percentage of gross receipts; no credit work or free work can be done without the approval of the salon owner; working hours are set; hair stylist furnished a report each day to the owner reflecting the day’s receipts.
Here’s another with a slightly different variance from 73-591: Wolfe v. United States, 77-1 U.S.T.C ¶ 9346 (D.N.D. 1977) Facts: Hair stylists are paid on a percentage of gross receipts; hair stylists handle own clients; hair stylists provide own supplies; appointments are made through one receptionist; hair stylists set their own hours and have their own keys to the shop; money from services is paid to the salon; hair stylist decides what prices to charge; hair stylists are responsible for bounced checks; and hair stylist are not required to work on salon’s customers. Based on many rulings and court cases, it is obvious that the requirement for collection of payments has to be done at the booth and not up front. The stylist must control their income just like any other business. If the salon fails to comply then the salon owner opens their business up to employment tax consequences. This can be extremely expensive given the fact that you did not collect the money or have control over the money to pay the respective taxes.
You must maintain a preponderance of the evidence that the booth renter controls their own destiny. In general, I don’t encourage the booth renting format in a salon. Nor do I recommend any combination of renters and employees. I strongly encourage owners to use a pure employer employee relationship. A really good model for compensation is illustrated in this article: Hair Stylist Compensation Model . My primary concern is that the salon owner exposes their business to a lawsuit by not only the stylist, but by the stylist’s customers. The customers are generally not aware that their stylist is a booth renter. In addition, the IRS strongly encourages the employer employee relationship and will use any form of discovery to negate an independent contractor status. However, if you are going to use this tool as a revenue source, then make sure that it is only available to your more experienced and mature stylists. Generate a contract, require insurance, mandate licensing compliance and vouch the documents (make sure they exist on the premises).