The beauty industry offers plenty of ways for stylists and salon owners to shape their careers, which to us is amazing for everyone to find their craft the way they want to without any stiff rules. Whether you’re stepping into your first salon or managing your own, it’s essential to know the ins and outs of different working models—like being an employee, booth renter, or independent contractor. Each setup comes with its perks, challenges, and legal considerations.
In this blog, we will be breaking down the distinctions between these models, focusing on booth renter vs independent contractor, and comparing common business setups like salon booth rental vs commission salons. By the end, you’ll have a clear understanding of which model works best for you.
The Employee Model in Salons
What is a Salon Employee?
Salon employees work directly for the salon owner and are typically paid an hourly wage, salary, or a combination of commission and hourly pay. They are under the management of the salon owner, who sets their schedule, provides the tools and supplies, and shares the services they will perform.
Responsibilities of a Salon Employee
- Following the salon’s policies, pricing, and service standards.
- Reporting to the salon owner or manager.
- Using salon-provided tools and products to deliver services.
- Building and maintaining strong client relationships.
Pros for Stylists
- Guaranteed income through hourly wages or a salary.
- Tips provide additional earning potential.
- The salon owner handles taxes, benefits, and operational costs.
- No need to purchase products or tools.
Cons for Stylists
- Limited autonomy over work schedule and pricing.
- Lower earning potential compared to other models.
- Less flexibility to build a personal brand or independent client base.
Best For
New stylists entering the industry or those who prefer stability and don’t want to handle the responsibilities of running a business.
The Booth Renter Model
What is a Booth Renter?
Booth renters lease a designated space within a salon to run their own business. They are independent contractors who operate as mini-businesses under the umbrella of the salon.
Responsibilities of a Booth Renter
- Paying rent for their station and potentially additional fees for utilities or shared amenities.
- Providing their tools, products, and supplies.
- Managing their schedule, clients, and pricing.
- Handling taxes, insurance, and licensing.
Do Booth Renters Need a Business License?
In most cases, booth renters are required to obtain a business license as they operate as independent businesses. The exact requirements depend on local and state laws, so it’s important to check with your local licensing authority.
Pros for Stylists
- Full control over pricing, services, and schedule.
- The opportunity to build a personal brand and loyal client base.
- Higher earning potential since you keep all revenue after covering booth rent and expenses.
Cons for Stylists
- Financial risk: You must pay rent even during slow periods.
- Managing taxes, licenses, and business expenses can be overwhelming.
- No employee benefits such as health insurance or paid time off.
Best For
Experienced stylists who are ready to take the next step in their career and operate independently without the overhead of owning a full salon.
The Independent Contractor Model
What is an Independent Contractor?
An independent contractor is someone who provides services to salons or clients on a freelance basis. They are not employees and are typically hired for specific tasks or timeframes. Unlike booth renters, independent contractors do not lease space in a salon—they might work in multiple locations or even offer mobile services.
Responsibilities of an Independent Contractor
- Managing their tools, products, and business expenses.
- Setting their pricing, schedule, and policies.
- Paying self-employment taxes and securing appropriate insurance.
Pros for Stylists
- Complete flexibility to work for multiple salons or clients.
- Full control over the services offered and pricing.
- Freedom to specialize in niche services.
Cons for Stylists
- No guaranteed income or stability.
- Responsible for all business-related costs and legal compliance.
- Building and maintaining a steady client base requires effort and marketing.
Best For
Stylists who enjoy freelancing, working in multiple locations, or specializing in mobile services.
Salon Booth Rental vs Commission Salon
Two of the most common models for salon owners are booth rentals and commission-based salons. Understanding these setups can help salon owners choose the right structure for their business while also helping stylists decide which model aligns with their career goals.
Salon Booth Rental
- Definition: Salon owners rent out booths or spaces to stylists who operate as independent contractors.
- Pros for Salon Owners:
- Guaranteed rental income regardless of how busy the stylist is.
- Less involvement in managing day-to-day operations for each stylist.
- Cons for Salon Owners:
- Limited control over branding, service standards, and pricing.
- Potential for conflict if booth renters operate too independently.
- Best For: Salon owners who prefer a passive income model with lower management requirements.
Commission Salon
- Definition: Stylists are hired as employees and earn a percentage (commission) of the revenue they generate from services.
- Pros for Salon Owners:
- Greater control over services, pricing, and branding.
- Ability to create a cohesive team culture.
- Cons for Salon Owners:
- Financial risk during slow periods since employees must still be paid.
- More management responsibilities, including payroll and training.
- Best For: Salon owners who want to create a unified team and oversee all aspects of the business.
Key Factors to Consider When Choosing a Model
For Stylists
- Income Stability: Employees have stable earnings, while booth renters and independent contractors take on financial risk.
- Flexibility: Booth renters and independent contractors have more freedom to set their schedules and pricing.
- Career Goals: Employees may benefit from salon-provided training, while booth renters and independent contractors enjoy entrepreneurial opportunities.
For Salon Owners
- Control vs. Independence: Commission salons offer more control over services and branding, while booth rentals allow stylists more independence.
- Management Style: Consider whether you prefer managing employees or simply renting out space.
- Financial Goals: Booth rentals offer predictable rental income, while commission models can lead to higher profits during busy periods.
Legal and Tax Implications
For Salon Owners
- Employees are subject to labor laws, and the salon owner is responsible for withholding taxes, providing benefits, and managing payroll.
- Booth renters and independent contractors are responsible for their taxes, but salon owners must ensure they are properly classified to avoid legal issues.
For Stylists
- Employees have taxes deducted automatically.
- Booth renters and independent contractors must handle self-employment taxes, licensing, and insurance independently.
Conclusion
The beauty of the salon industry will always be that it offers a variety of working models to suit different goals and preferences. No matter, if you’re a stylist deciding between employee, booth renter, independent contractor, or a salon owner considering salon booth rental vs. commission, understanding the distinctions, is key to making the right choice.
Evaluate your financial goals, career aspirations, and desire for independence before committing to a model. For salon owners, clear contracts and open communication are essential to creating a successful working environment for all parties.
