Which Job Description is Right For You?

A Salon Owner:
• Leases or owns the salon property
• May hire employees, rent out booths, or work solo
• May provide equipment and supplies for employees
• Has discretion over salon decor, marketing, hours of operation, retail lines
• May provide benefits for employees

An Employee:
• Receives a salary and/or commission (plus tips)
• Can be required to work certain hours, follow certain procedures, adhere to a dress code
• May receive training, performance goals, and evaluations from the salon owner
• Has payroll taxes withheld from her paycheck
• May receive benefits like vacation and health insurance

You might prefer to be an employee if you enjoy the following: Being part of a team; Receiving training and feedback; Relying on a salon owner to help build your  business, and Bearing less financial responsibility.

A Booth Renter:
• Pays a fee (rent) to lease a space in a salon
• Sets her own prices and collects money directly from
her clients
• Determines her own service offerings
• Pays for her own supplies
• Pays her own taxes and insurance
• Does not receive any benefits

You might prefer to be a booth renter if you enjoy the following: Being your own boss and making decisions independently, Wearing many hats, Having the challenge of building a clientele.

Next page: Salon Statistics


Source: 2010-2011 NAILS Big Book

Average Weekly Income (for nail techs and owners of all types)

$150 or less: 20.9%

$151-$250: 12.4%

$251-$350: 13.9%

$351-$450: 21.1%

$451-$550: 10.9%

$551-$650: 9.1%

$651-$750: 6.8%

More than $750: 14%

Which Best Describes Your Compensation System?

I am the salon owner/manager 
I am a booth renter. I pay rent to the salon and I keep all of my service fees. 27.9%
I am a booth renter. I pay rent to the salon and I keep a percentage of my service fees. 1.6%
I am an employee and I recieve a salary. 1.6%
I am an employee and I receive a salary plus a percentage of my service fees. 2.0%
I am an employee and I receive just a percentage of my service fees. 11.6%
I am an employee and my compensation is based on the number of clients I serve. (I receive a higher commission if I bring in more clients.) 3.9%
Other 15.2%


Commission rates vary, though 55.7% is the average for services.

33.5% of nail techs receive a commission or other incentive for selling retail  products.

For more industry statistics, visit www.nailsmag.com/market-research.

Next page: How to estimate your true income

[PAGEBREAK]How to Estimate Your True Income

The big question: Will I make more money as a booth renter or an employee? It may seem at first glance that you will earn more as a booth renter — after all isn’t it better to receive 100% of your service fees without someone else taking a cut? But when you calculate the overhead a booth renter faces (she has to pay rent, buy her own supplies, and buy her own insurance), you’ll find the initial numbers are deceiving. Use the worksheets on the right to estimate your true take-home pay as either an employee or a booth renter. Consult a financial advisor for more details and help with your personal situation. (Learn the difference between a booth renter and an independent contractor.
Go to www.nailsmag.com/classification.)


Line 1. Annual Gross Income ______________
Line 2. Annual FICA (social security and Medicare taxes) (5.65% of line 1*) ______________
Line 3. Estimated annual federal and state income tax (15% of line 1**) ______________
Line 4. Annual cost for tools not provided by employer ______________
Line 5. Total of lines 2-4 ______________
Line 6. Annual take-home pay (subtract line 5 from line 1) ______________



Line 1. Annual Gross Income (gross service and retail income and tips) ______________
Line 2. Annual space rental ______________
Line 3. Annual tools, supplies, cost of retail product ______________
Line 4. Annual phone ______________
Line 5. Annual liability insurance ______________
Line 6. Annual Marketing and advertising ______________
Line 7. Annual misc. expenses (accountant, mileage, bank fees, etc.) ______________
Line 8. Total of lines 2-7 ______________
Line 9. Adjusted gross income (subtract line 8 from line 1) ______________
Line 10. Annual SECA (self-employment contributions tax) (13.3%** of line 9)
Line 11. Estimated annual federal and state tax (15% of line 9*) ______________
Line 12. Total of lines 10-11 ______________
Line 13. Annual take-home pay (subtract line 12 from line 9) ______________

* This rate applies only to the 2011 tax year. Ordinarily the rate is 7.65% for FICA and 15.3% for SECA.

**This is just an estimate. The actual amount will vary depending on your tax bracket.


Want more tax info? You can download the following publications from the IRS website at www.irs.gov/formspubs/index.html or call (800) 829-3676.

> Publication 1779, Independent Contractor or Employee Brochure

> Publication 531, Reporting Tip Income

> Form SS-8, Determination of Worker Status

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