Salon business regulations business law

Salon businessRegulations Business laws Insurance... Salon business♦ Corporation – Ownership shared by stockholders – Charter is required by state – Subject to taxation & regulation y st

Salon business

Regulations

Business laws

Insurance

Salon business

♦ Local regulations

– Building renovations ( local business codes )

♦ Federal laws

– Social security, unemployment compensation,

cosmetics and luxury tax, OSHA

♦ State laws

– Sales tax, licenses, employee compensation

♦ Income tax laws

– Both federal & state government

♦ Insurance

– Malpractice, premises liability, fire, burglary & theft &

Salon business

♦ Salon ownership & operation

– Individual ownership

• Privately owned business

– Proprietor is owner & manager – Proprietor determines policy – Proprietor receives profits & bears all losses

– Partnership

• Privately owned by two or more parties

– More capital is available – Combined ability and experience

• Makes it easier & possibly more successful – Profits are shared

• Not always equally – Partners assume each other’s unlimited liability for debt

Salon business

♦ Corporation

– Ownership shared by stockholders

– Charter is required by state

– Subject to taxation & regulation y state or province – Managed by Board of Directors

– Profits shared by stockholders

• Profits proportionate to number of shares owned – Stockholder cannot lose more than original investment

Salon business

♦ Purchasing an established salon

– Written purchase agreement

• Advice from both an accountant & an attorney is advised – Inventory statement

– Investigate to make sure no default in the payment of debts

– Correct identity of owner

– Use of salon name & reputation

• Called “Blue Sky”

– Non-compete clause

Salon business

♦ Drawing up a lease

– Exempt equipment & fixtures that are separate from lease

– Agree on necessary renovations

– Option to sublease

♦ Protection against fire, theft, lawsuits

– Keep premises secure & locked

– Purchase insurance

• Liability, fire, malpractice, burglary – Do not violate medical law

• Refer clients as needed to a physician – Know cosmetology law & sanitary codes in your state

Salon business

 Keep accurate records

ignorance of the law is no excuse

 Business operation

 Sufficient investment capital

 Efficiency of management

 Good business procedures

 Cooperation between management and employees

 Trained & experienced salon personnel

 Pricing of services

Salon business

♦ Allocation off money

– A good accountant & accounting system are valuable

♦ Average expenses

♦ Importance of record keeping

– Good records are necessary to meeting

requirements of local, state/province, & federal laws regarding taxes & employees

Salon business

♦ To determine income, expenses, profits, loss

♦ To assess value of salon for prospective buyer

♦ To arrange financing

♦ For various reports

– Income tax, social security, unemployment & disability insurance, accidents, payments of some leases

Salon Business

♦ Weekly/monthly reports

– Make comparisons with other years

– Detect change in demand for services

– Check on use of material

• As compared to the types of services rendered

– Control expenses and waste

Salon Business

♦ Daily records

– Allows owner to know how well business is functioning

• Sales slips

• Appointment books

• Petty cash receipts

– Check with accountant to determine how long to keep these documents

Salon Business

♦ Purchase and inventory records

– Help maintain perpetual inventory

– To prevent overstocking

– Alert you of pilfering

– To establish net worth of business at year end

• Consumption supplies are used in daily operations Retail supplies are sold to clients

– Plan future orders

– Service records

• Keep record of all treatments given & merchandise sold

Summary

♦ There are many considerations in

establishing a business that range from

selecting an efficient salon layout, to

inventory control, to payroll record

maintenance, to filing accurate tax returns,

to maintaining a loyal, happy clientele A great deal more research and planning will

be required than simply mastering the

contents of this chapter.