Starting a hair salon from scratch, which is better; pay , pay plus commission or booth rental? Can you tell me the advantages and pitfalls of each
Just starting I see many booth rental ads...but I'm not hot on the idea... I think I'd like more control...??? good idea?
I actually have a good friend who has tried this both ways and she prefers the booth rental method and here's why: When you rent booths to the other hairdressers (including anyone who comes in to do nails or offer any other services), they are each their own boss and they are responsible for their own clients, their own payments from the clients and the payment of their own state and federal taxes -- and because they are independent contractors and not employees then you do not have to purchase worker's compensation insurance or pay into the social security system for each worker (which is money right out of your own pocket). With the booth method, each hairdresser establishes their own prices with their own clientele and you can ask that they be at their booths a certain number of hours each week as part of the contract that they have with you -- but you do have to let them set their own actual hours because if you dictate to them that they must be there at a particular time and you try to control breaks and meal times then you are getting more into the "control" aspect and the IRS and your state taxing authority may then try to claim that they are employees and you will have to pay back taxes and worker's comp premiums for the workers. If you want to hire a hair wash / receptionist / sweep & clean person you can also ask each independent contractor to pay a portion of this person's pay every week as part of their contract with you.
If having a bunch of hairdressers and nail techs, etc running around when they want to is a little unnerving for you, then you could establish it with one or two hairdressers as actual employees (and a hair wash / clean up / reception person) and rent out a majority of the booths to independent contractors. If you have an employee or two you can contact a service to handle the payroll duties for you (such as ADP) and it costs about 8 dollars a week for them to do everything for you such as deduct all taxes and issue paychecks and then tell you what you must pay in worker's comp payments for the employee based upon their hours worked (that is how each state calculates the worker's comp ins payment rate -- by the number of hours worked per employee).
I hope this information helps -- please let me know if you have more questions (because this is such a broad question it is difficult to pinpoint exactly what you want to know).
Researcher, Lawyer, Cook
Hello! Can I answer any additional questions for you ? If not, and you have not yet pressed accept or submit under the answer box, can you please do so at this time so I will be paid for assisting you. ---MARY
I'm just in the planning stages... your information was helpful to me. When I have more questions, I will ask you again... (I already did "accept" your answer.)
thank you once again