Business

Can a booth renter make a commission for retail in the salon she rents from?

December 21, 2010

This is an issue that is often misunderstood. The issue of retailing must be addressed within the salon owner/landlord’s contract that should be given to each nail technician to sign and date. The contract is what will protect each party as it defi nes quite a few issues — including retailing. This contract — or the lack of it — is why 99.5% of all rental salon operators could not pass a review or audit by the IRS, the state, or a judge. First off, the salon owner/landlord in this contract has the legal right to all retailing rights. This simply means that nothing can be sold within the owner’s business without going through her front desk. If the renter chooses to sell such products as an additional service to her clients then the renter could earn additional income from that sale. This concept has nothing to do with being in an employer/employee relationship. If the renter does choose to sell retail, then a commission, percentage, or fl at dollar amount can be earned if the owner/landlord has set up her business to allow this. This eliminates a lot of controversy about whether a renter has the right to carry her own products to retail.

Retailing has nothing to do with rent and is a totally separate issue. It is imperative that commissions earned from retail sales are never deducted from rent to be paid.

If, on the other hand, a salon owner makes an exception and grants permission for a renter to have and sell her own retail items, this concept needs to be in writing and incorporated into the contract. Secondly, the renter must be required to furnish the salon owner/landlord with a copy of her state retail license so all taxes associated with that renter’s sales are attributed to her. This will protect the owner/landlord. Here again is why 99.5% of all salon owners and renters get into trouble when it comes to establishing a clear separation between both parties with the IRS, the state, and a judge. -- Ken Cassidy is president of Kassidy’s Salon Management Consulting Company. He can be reached at kassidy122@earthlink.net or www.kassidys.com.

Topics:booth rental retailing taxes

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