Salon Business, Ethics, and Professional Practices
Business structures
Sole proprietorship (one owner, personal liability), partnership (shared liability), corporation and LLC (limited liability), and S-corporation status for tax treatment. Compensation models differ sharply: salary (employer withholds taxes and carries insurance), commission (a percentage split, still an employee), and booth rental (self-employed independent contractor who pays rent, files self-employment tax, and carries their own insurance). Misclassifying a booth renter as an employee - or vice versa - is a compliance trap.
Money and records
Price for profit, not just for competitors: direct product cost plus overhead plus a living wage plus profit margin. Keep accurate client records (formulas, patch tests, consent, allergies) because they protect both client and licensee. Carry general liability and professional liability coverage. Occupational Safety and Health Administration rules govern hazard communication and Safety Data Sheets for every chemical in the salon; the EPA governs disinfectant registration.
Ethics and professionalism
Ethics in practice means informed consent, confidentiality of client information, honesty in advertising and retail recommendations, avoiding conflicts of interest and kickbacks, respecting scope of practice, and continuing education. Professional communication includes consultation, paraphrasing the client's goal, and documenting refusals - for example, declining a service on damaged hair and explaining why.
Worked example
A $60 service at a 40% commission returns $24 to the stylist. Add product cost of $4 and overhead of $18 per hour, and the salon keeps $14 before taxes. Traps: quoting commission as profit, or assuming a booth renter's rent is their only cost - they also owe self-employment tax and insurance.