Are you a salon owner who is torn between hiring permanent employees and settling with hair salon independent contractors? Well, the hair salon industry is quickly becoming a multi-billion industry, and the choice will highly determine if you are on the right track to making good money or losses. To help you make the right decision, this article will cover in detail what a salon independent contractor agreement is and the pros and cons that come with this option.
Understanding a Hair Salon Independent Contractor Agreement
As mentioned above, a hair salon independent contractor agreement is a document that lays down the legal understanding between a salon owner and a self-reliant hairdresser. The hairdresser in the contract acts as a self-reliant stylist who is responsible for acquiring his or her customers.
This, in other terms, means that the owner only provides the shelter, the tools, and training in exchange for an agreed-upon commission of the hairdresser’s sales.
What to Expect in a Hair Salon Independent Contractor Agreement?
A legally and adequately drafted hair salon independent contractor agreement has to include a contract between the Salon Company and the hairdresser. The legitimately binding contract protects the salon company and your independent stylist. It is also the document that the IRS utilizes as evidence that the hairstylist is not an employee but an independent contractor.
The agreement must also include the lease/ rent rates and how a cancellation in case of any can take place. It also expounds on the duration of the contract and what the contractor will get in exchange for the chair rental. You also have the option of letting the stylist use the salon reception and phone.
You have to keep in mind that the agreement must also outline your obligations as the salon owner. These obligations include paying the salon’s taxes, protecting the salon’s property from damages, and carrying out the recommended repairs.
The contract should also make it clear that it’s the responsibility of the hairstylist to clean up the workstation and display his or her liability insurance and license.
Who is Responsible for Paying the Taxes?
An independent hairdresser is responsible for all taxes regarding his or her employment. As the owner, you will only be accountable for your business and property taxes. The hairdresser is also responsible for his or her liability and health insurance.
What about Retail Products?
To set things straight, you can include a paragraph in the agreement that prevents the hairdresser from selling any product that will, in any way, compete with your retail products.
You cannot force the hairdresser to sell your retail merchandise to his or her customers. But you can choose to hold a monthly contest to encourage your independent hairdressers to sell your merchandise. The competition works in that the highest seller wins a gift or gets a reduced weekly rent payment.
Who is Responsible for Setting the Prices and Collection of Money?
Independent hairdressers are responsible for collecting and setting their prices. They also maintain their business books. The clients will pay the stylist directly. This means you do not have to provide the hairdresser with a paycheck, nor will the stylist’s customers pay you.
Most preferably, each independent hairdresser will use salon software when receiving payments through their mobiles.
The Upsides and Cons of this Agreement
Hair salon independent contractors are always responsible for handling their taxes, paperwork, and clients. Choosing this option, therefore, means that the salon will be full of colleagues and not just employees. It also means you are not in any way obliged to pay salaries making your overhead salon costs more manageable since you are collecting rent. You don’t have to offer health insurance, retirement plans, or paid vacations.
Renting out the chairs offers a capacity salon. Your stylists, being business-oriented, will want to bring in as many customers as possible. Their determination and zeal to grow their business through working hard ensure you get to enjoy more profits.
You also get a lesser turnover since every independent stylist will be building a clientele base that is unique and different from each other.The agreement eliminates the possibility of having to cover for appointments and making schedules when the stylist fails to show up.
However, many salon owners usually feel like a hair salon independent contractor agreement can make you lose control. This is because you cannot control what happens between clients and the stylist. You also cannot implement the procedures and techniques that you prefer. And since each stylist is working independently, there will be a competitive environment rather than a collaborative team in your salon.
The Bottom Line
Thank you for reading. We hope that this piece has provided you with a good idea of what you should expect from choosing a hair salon independent contractor agreement. The important thing is to ensure the agreement identifies the necessary and vital aspects so that both you and the stylist are on the same page.