Whether you’re a prospective booth renter or salon owner, it’s important to know what your rental costs might be. It doesn’t matter whether you’re renting a space in a larger salon or whether you’re renting the building for the salon itself—knowing the cost and knowing your budget is imperative to your success. How Much Does It Cost to Rent a Salon? On average, renting a booth in a salon can cost about $400 to $600 per month. Larger communities like New York City can increase that cost to over a thousand, while smaller communities can be as little as $200. Salon owners renting their building can expect to pay about $1,600 to $4,000 per month for their space. As a salon owner, what can you do to bring in money? As a stylist, what can you expect out of a booth rental? What needs to go into a booth rental agreement? What legal information do you need to know before renting out a booth? Read on to find out more about not just the costs, but the process of renting out a salon booth.
What is booth rental?
For many salon owners and hair stylists, they will be doing something called booth rental. In this case, for salon owners, you would not be hiring employees but rather renting your space out to an independent contractor. For contractors, you are renting a space in an already existing salon—instead of being an employee, you are responsible for yourself, your taxes, and anything in between. In most cases, booth rental means you are agreeing to pay for the space, while the salon owner is to provide utilities and amenities when agreed upon. Booth rental costs and agreements are regulated by the laws of the state, so they could vary—if you’re interested in renting a booth or setting up a booth rental system in your salon, consider looking into the laws before you move forward. Not all states allow booth rental—Colorado, Michigan, New York, New Jersey, Virginia, and Pennsylvania prohibit it.
What do you need to do to rent a booth?
For all parties involved, you must have a legally binding contract to move forward. This isn’t just for you as the salon or the renter—the Internal Revenue Service requires it for tax reasons. This is also the place for you to outline that the stylist is an independent contractor because they will be responsible for all their taxes moving forward. Consider putting together both the written lease agreement and the rental contract. While you do not need both, it will protect the salon owner and the renter if issues arise. The written lease agreement outlines the independent contractor status of the stylists while explaining the rent or lease rate, the length of time the booth will be rented, and how either party can cancel the contract. The written lease agreement also includes the rate for renting the booth and how the renter can pay the salon owner, along with how that payment should be made and what happens if it is not made on time. The rental contract, on the other hand, details more of the amenities and processes that go into running the salon. This contract outlines what the renter gets, like utilities and amenities, if they work in the salon.
What legal information do you need to know when renting a booth?
As a salon owner, if you are renting out a booth in your salon, you do not pay taxes for that stylist. Instead, they must pay for their own taxes as an independent contractor. Salon owners can provide tax information, but otherwise, it lies on the independent contractor. In the same vein, stylists renting a booth are required to have their own health and liability insurance. Because they are functioning independently of the salon, that means the salon’s insurance will not cover them—meaning it lies on the stylist to make sure they’re covered. Stylists must also prominently display their licenses within their booths. To make sure the salon is up to code, clients must be able to see those licenses.
How do you rent a booth in a salon?
There are several steps to go through before you rent your booth in a salon. First, you must meet with the business owner or renter. Without creating that relationship, you cannot move forward in renting out that booth—make sure you ask and answer questions like whether the building is up to code, what the ongoing maintenance is in the building, what kind of insurance they have, and any rules and regulations that come with renting a booth in that salon. You should also familiarize yourself with the rental agreement while also knowing the difference between the lease agreement and the rental contract as described above.
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What is the typical cost of renting a booth?
This number can vary not just from state to state but community to community. On average, a booth rental can cost between $400 and $600 per month. In larger communities, though, that average can skyrocket through the thousands. In smaller communities, it could be as little as $200.
What factors into the cost of renting a booth?
There are many things that can play into the cost of booth rental, including physical location, demand within the salon and the community, and the city itself. The number of amenities included can also factor in—if the salon owner is providing snacks, supplies, towels, etc. they will have to get the funding somewhere—and that typically lies on the renter contract.
How much should a stylist be taking home when renting a booth?
In many cases, the booth rental should only be about 20 percent of what the hair stylist makes monthly. That allows for money to be spent on supplies, amenities, education, software, licenses, and insurance while allowing for about 50 percent take home pay. Remember that that take home pay, though, is still before insurance—you’ll have to budget for that number as you go.
How much will I be paying monthly as a salon owner?
As a salon owner, much of your income is going to be through booth rentals. But how much are you going to be paying for that space? While the price per square foot varies from area to area, it could range from $10 to $25 per square foot. For 2,000 square feet of space, you could be looking at $20,000 to $50,000 annually. This ends up averaging out to about $1,600 to $4,000 per month. This means you need to be bringing in enough income from your booth renters to offset that cost. If you’re at the smaller end of the spectrum at $400 per booth renter, that means you’ll need at least four booth renters to break even. If you’re looking at the more expensive spaces, you’ll need at least ten at that same price point.
How can I make more money as a hair stylist or salon owner?
For both the stylist and the salon owner, helping each other thrive is the best way that both parties profit. For the hair stylist, you need to price your services accordingly, build relationships, and be consistent in your work. By creating a brand, you can also help build up that customer base—but make sure you know your existing customers well. They are your best marketing strategy, as they will share when they get a good haircut—or when they don’t. For salon owners, the best way you can increase your income is by increasing prices for your renters, but you can’t do that without consulting your agreements first. You should also communicate with your hair stylists—you can’t raise your prices without knowing how their work is going. See if you can provide any additional amenities or utilities to make their jobs easier. Making their jobs easier means they may save time in the long run, which means more customers per day—which leads to more income. Regardless of whether you’re looking to rent your own salon or rent your own booth, it’s important to understand the process that goes into both sides. Understand the expectations of either end of the spectrum, and both hair stylist and salon owner can work together to not only increase their profits, but provide the best care, comfort, and service to their clients.
Do hair stylists claim their tips on their taxes? Hair stylists are required to claim their tips on their taxes or face penalties from the Internal Revenue Service. Because the IRS has started to look into hair stylists more and more, make sure you or your stylists are reporting all taxable income to prevent any sort of legal issue. Can a salon owner fire a booth renter? Because the relationship between a salon owner and booth renter is more like that of someone renting an apartment from someone else, no, a salon owner cannot fire a booth renter. The only way to remove a booth renter from a salon is through eviction.
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Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Shawn Chun is an entrepreneur who has owned several types of businesses from a coffee shop to an import and export business to an online review business plus a few more and now creates online resources for those interested in starting a salon business. It is demanding work he loves to do it. Shawn says “I do it for those passionate about their business and their goals. I know how hard the struggle is to obtain and retain clients, finding good employees all while trying to stay competitive.”
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