Q&A

What are the pros and cons of a booth rental situation?

Q.

I’ve worked as an employee, but now I plan to work as a nail tech on a booth rental basis for the first time. I’m wondering what the main benefits and disadvantages of this type of arrangement are, and how I can get the most out of it to maximize my earnings.

A.

Congratulations on your new adventure! You made a good decision to become an employee right out of school. Your employer should have trained you and taught you the ropes. Now onto the next step. First you must realize the cost of doing business in a salon when you rent.

Do you have enough clients or money saved to pay your expenses while you build your business? The rent of your space must be paid (normally weekly) whether you have clients or not. Where will this money come from? Your supplies, advertising, telephone, insurance, cleaning supplies, and taxes will be your responsibility alone, not the salon owner’s. Over the years I have heard many booth renters wonder if they will get sick days, vacation days, workers’ comp, maternity leave, unemployment benefits, etc., while they are working. You must be aware that these benefits are for an employee, not a booth renter.

When you rent your space, you own your business, just as if you rented a small building and put a business in it. There is no boss to tell you what to do, but then again there is no boss to take care of the responsibilities of owning a business.

You’ll need to contact an accountant to explain your tax obligations. For example, as an employee your employer paid half of your social security and Medicare and you paid the other half. As a booth renter, you will have to pay your part plus the part your employer used to pay. But then again, all money used to operate your business is tax-deductible, which will help you with your tax burden.

As for the advantages of renting versus being an employee, it is a personal choice. What would be better for you? Do you enjoy the thought of being in charge of your own schedule, your own sick/vacation/personal time, your own menu and service prices, the time you want to spend with each client, what clients you want to service, what products you want to use, what clothes you wear, how to set your area up, your advertising, specials/promotions/discounts, etc.? If you are outgoing, willing to get out there and advertise, and not scared of the sacrifices you will have to make, then go for it. Your success rests squarely on your shoulders.   

— Diana Bonn is a nail tech at Identity Salon in Muncie, Ind., and a member of the Indiana State Board of Cosmetology.

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