Before welcoming hair stylists into your new salon, consider writing a booth rental agreement. Rely on the contract to avoid unpleasantness if the business relationship turns sour. Well-crafted booth rental agreements offer protection should the need to terminate arise. More important, with a booth rental in place from the beginning, booth renters know exactly what to expect during day-to-day operations. Independent contractors use the booth rental agreement as a guide to meeting expectations and resolving workplace issues. Research booth rental agreement templates available online. Speak with an attorney to draft an agreement, if you prefer. Consider employee classification for possible tax implications. Set monthly rental rates and booth sizes. Be specific on measurements. Consider the kinds of equipment the salon supplies and the equipment to be supplied by each renter. Create a specific dress code with a list of banned fashions such as ripped jeans or other inappropriate attire.
Spell out expected conduct of booth renters. Include specifics for the allowance of food and beverages within the salon and unacceptable conversation topics in family friendly salons. Describe renter duties such as keeping common areas clean or maintaining towel supplies. Set expectations when it comes to answering phones, booking appointments and greeting customers. Outline sales percentages for retail products sold in the salon. Make clear expectations for minimum monthly sales, if any, and clearly explain incentives for certain sale levels. Set guidelines for staff participation in salon events, marketing and staff meetings. Clarify who is responsible for rescheduling appointments or finding coverage. Outline clearly the steps each renter must take to terminate the contract. Include the time frame for submitting notice and the expected cleanliness of the booth. Seek professional advice from a lawyer or accountant when in doubt. The Stylist's Toolbox: Salon Owner's Guide to Booth Rental Agreements
Louisiana Board of Cosmetology: FAQs for Salon Owners You May Also Like Banquet facilities and party rental stores will find a chair rental agreement to be a necessary document for conducting business. Salon owners often rent out empty space to independent contractors. The empty space is rented as a salon booth where salon professionals... The booth rental method simplifies the financial aspect of owning a salon. You provide the space and charge each stylist a set... Hairdressers have several options when looking for employment. They can start their own salon or cut hair in their homes as an... Whether you are lending a car to your friend or involved in a business transaction, recording the transaction on paper can legally... Renting out booth space at a bazaar is a cost-effective method of generating income for profit and nonprofit organizations alike. Cosmetologists who rent booth space at a salon are considered independent contractors and can treat rents paid as a deduction for income...
Traditionally, salon workers were considered employees of the salon owner. Compensation might include a flat hourly wage or turning over a percentage... In the beauty salon industry, one of the most common arrangements between professionals and salons is the booth rental agreement. Are You Really Getting A Deal From Discount Stores? How to Create a Rental Agreement How to Do a Booth Rental in a Salon The Questions to Ask Before Renting Booths in Salons How to Figure Taxes for a Booth Rental Tax Write-Offs for a Salon Booth Rental What is a Timeshare Lockout Unit?Renting a chair in a salon, or even renting a room, is commonplace within the hair industry. A survey in 2004 suggested there were more than 100,000 self-employed hairdressers in the UK. Some hair salons rent a single chair, often to extend the range of services they are able to provide, whereas some salons have 100% of the premises occupied on a self-employed basis. Like all forms of employment there are positives and negatives to renting a chair;
David Wright, who advises Habia and a range of salons on their legal business, answers some of the key questions. I employ three hairdressers, but have space for a fourth. I am considering renting the fourth chair – what sort of financial arrangements can I have?There are basically three types of arrangement: Of course, the hairdresser will also do his/her calculations and the arrangement needs to be mutually beneficial. If I rent a chair do I need any sort of contract?The hairdresser is not an employee so they do not get a contract of employment. They are providing a service for you and receive a contract of service. This is normally for a fixed period of time, for example one to three years, although they normally also include a notice clause. The contract is vital as it will cover the nature of the service provided. In addition, you need to cover every area which might be the cause of future confusion. For example who provides the products? Who pays for salon promotional materials?
Are there any additional costs? Who pays for energy costs and maintenance? Renting a chair seems a safe option for my salon, but are there potential pitfalls? You are right, renting is attractive in that you have none of the potential problems with staff, like recruitment, discipline and covering maternity. In addition, you do not have the costs of income tax and National Insurance. There is insufficient space for me to highlight all the potential pitfalls but, for example, the person is not your employee, but your salon’s reputation can be affected if they provide a poor service. On the other hand, if they are very successful then their earnings can be substantial and this sum could have been your profit if you employed them. Finally, it is far more difficult to limit their activities if they choose to leave. It is frequently argued that the clients are their clients. In simple terms, they can be seen as actually being in competition with your business. I have read that the Inland Revenue sometimes frowns at the idea of someone being self employed in a salon.
You are right, the Inland Revenue is sometimes sceptical, but many thousands successfully do this without a problem. Sometimes there are issues when a salon closes or there is a major disagreement and the person argues they are really an employee. There have been many tribunal cases on these issues and there is a range of features that tribunals consider determining if the person is an employee or not. Clearly, the individual will pay their own tax and National Insurance. As they are self-employed they are free to trade elsewhere. In theory you have contracted for their services so the individual may be free to let someone else (subject to specified qualifications) deliver the service on their behalf. The person is more likely to be viewed as an employee if they have to wear your uniform and have fixed hours in your salon. I want to extend the range of services in my salon but don’t want the risk of employing someone. Is renting the space the route for me?