Salon business regulations business law

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 & business interruption 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