Starting a beauty salon, like any business, involves a considerable amount of planning and decision-making. Many soon-to-be salon owners find themselves wondering which organizational structure to choose, as there are a number of options for structuring a salon. Though a typical salon operates as either a sole proprietorship or a limited liability company, there are a number of other considerations at play when starting a salon.
Like most small businesses, salon owners tend to choose either a sole proprietorship or limited liability company organizational structure. Though a proprietorship is the simplest business type to establish, many salon owners opt for the LLC structure. An LLC shields the owner from personal liability in most situations, allowing the business to operate as a separate and distinct entity. The LLC is much simpler to establish than a corporation, does not require a board of directors and need not adhere to complex periodic reporting requirements imposed on corporate structures. The LLC structure also allows for some flexibility in tax reporting; salon owners who operate their salons as limited liability companies may choose between paying taxes as a corporation or allowing profits to pass through for reporting on personal returns.
Regardless of whether the salon owner chooses a sole proprietorship or a limited liability company structure, the salon will likely have at least a few employees. In addition to the owner, who may or may not be considered an employee, the salon will typically have at least one manager or supervisor who works as an employee. Busy salons often have at least one receptionist who takes calls, greets guests and sets appointments. As the salon grows, other employees may also join the organization to handle needs when they arise.
In some organizations, salons hire barbers and stylists to work as independent contractors. Salon owners taking this approach need not pay income taxes or provide benefits for these workers. In addition, salons need not provide the expensive equipment that barbers and stylists use, as independent contractors typically are expected to provide their own supplies.
Even though salon owners typically hire a few employees and staff the rest of the salon with independent contractors, some salons choose to hire barbers and stylists as actual employees. By staffing the salon with employee barbers and stylists, the salon can exert more control over the equipment the staff uses and the hours the stylists and barbers work.
