Types of Salon Ownership

by Sam Williams; Updated September 26, 2017
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Salon owners are often people who have worked as hair stylists or nail technicians for many years. After they have built up a customer base, they take their customers with them to their own salon. However, this is not the only method of helping people become beautiful and to feel good about themselves.

Individual Ownership

All profits made by the salon go into the individual owner. Profits can come from renting booths to licensed hair technicians or selling beauty, hair and skincare products to customers. Owners are also responsible for the losses and tax burden the business incurs. The beauticians who rent booths in the shop are responsible for their own tax burden and are considered self-employed. The owner is the creator, manager and marketer for the business. When he retires, the business may have little value without him.

Partnerships

A partnership in a salon means that two people have signed a contract to share the profits and the responsibility in the salon. If a customer is injured by chemicals exposed to their hair or skin, both parties may be held liable. The salon continues to function if one owner is away for an extended period of time. There is another person managing the business who has equal stake in the success or failure in the business. Limited liability company ownership can allow you to work with up to 75 partners in some states. In the book, “Successful Salon Management,” Terry Folawn writes that equal shares of profits and liability are shared amongst partnership owners unless there is a written agreement that states otherwise.

Corporations

Salons have the option to incorporate in a number of ways. First, the primary parties should consider getting advice from a lawyer. You may need a lawyer to help with incorporation documents. Incorporation is ideal for establishments that will have more than two owners. Incorporating limits the liability of the principal members of the corporation in the event a customer’s hair completely falls out or a beauty product you sell gives them a rash. In the book, "Milady’s Successful Salon Management for Cosmetology Students” Edward Tezak writes that individual owners can limit liability by getting incorporated, which is called an "ownership-cooperative corporation.” When there is no single owner and all the hair techs want a piece of the business, you can establish what is called an “employee-owned corporation.”

Franchises

One of the most difficult tasks for new salons is getting customers to visit the salon regularly. Because people’s looks, skin, hair and nails are important to them, they may not be trusting of a new beautician. To combat this consumer fear, a salon entrepreneur may opt to buy into a franchise. The corporate salon franchise ideally already has an established brand and possibly a loyal customer base. They will handle the majority of the advertising costs, so it reduces the expense to the salon owner. The salon owner may be responsible for paying a monthly fee to the franchise for leasing the facility, the brand name, patented equipment or intellectual property use.

References

  • “Start Your Own Hair Salon and Day Spa”; Eileen Figure Sandlin; 2010

About the Author

Sam Williams has been a marketing specialist and ad writer since 1995. He has been published in magazines such as "Reaching Out" and "Spa Search." He served in various sales and marketing positions with major corporations such as American Express, Home Depot and Wells Fargo. Williams studied English at Morehouse College.

Photo Credits

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