How can a self-employed hairdresser and salon owner protect themself when they rent a chair?
Renting a chair in your salon can be an ideal solution for a self-employed hairdresser looking for a more permanent space, or a salon owner looking for an extra stylist. While it can be a good idea, it’s essential that you set boundaries before you start.
Check out our top 8 things you should know before renting out a chair in your salon.
1. Agree on the terms of the agreement before you start working together
Hairdressing can be a relaxed industry, and you often work with friends. But, as you may already know, there can be disadvantages to this.
When it comes to renting a chair, failing to agree on a structure before you start work can be a recipe for disaster (and many a lost friendship!) Between the owner and the self-employed hairdresser, you will have to set days that the chair will be available to avoid stepping on each other’s toes.
In most cases, you will either agree on a fixed monthly rental cost or you could also agree on a split of income. This is usually 60/40, where the stylist receives 60% of the ticket value (before VAT if applicable).
2. Products & Equipment used by the self-employed hairdresser
As you’ll be sharing the space, set out some rules! For instance, who will be providing the products and equipment the self-employed hairdresser uses?
A self-employed hairdresser may have a preference on which products they want to use with their clients. Sometimes a business owner may not like this due to affiliations with a particular brand or consistency. Likewise, if the salon owner is sharing their equipment and products, you need to set this out from the start. This will avoid confusion and embarrassment for both parties.
3. Product Sales
The sale of products is a key income stream for a salon. Make sure you have a clear structure on how product sales will work.
If someone is self-employed, they could start selling their own products in the salon. If you don’t want them to be doing this, make sure your Contractor Agreement specifies that they can’t.
Usually, you will discuss this as part of the agreement terms. Often, a percentage of product sales generated paid to the stylist. This is typically around 10%.
4. Client Ownership
Another area of possible conflict is who owns the client and the client data list.
If the renter is self-employed, they usually have ownership of their own clients. This includes those which they generate and serve from the salon moving forward.
In your agreement, include client ownership and protection of existing customer data. This will avoid things becoming blurry months or years down the line.
We recommend also keeping separate booking systems and databases to avert potential confusion.
5. Social Media / Use of Brand & Defamation
Another area that is often overlooked is the use of your brand and social media posting. As a salon owner, you need to decide now if you’re happy with the self-employed hairdresser using your brand on their social media.
This will allow you to keep control of the portrayal of your brand on social media. Specify the terms both now and in the future when the agreement has ended.
Set out the future rules in advance to protect your business in the event the arrangement goes wrong.
Similarly, if you’re the stylist renting, make sure you’re clear on what you’re allowed to post. Before you hit social media, ask if the owners are happy for you to use their logo and branding to promote your service.
6. self-employed Hairdresser Insurance
Hello! It’s time for our favourite subject! It’s also one of the more important points to consider when going into a venture like this.
This shouldn’t come as a surprise, but the question “who handles your Hairdressing Public Liability Insurance?” needs to be clearly addressed in your agreement terms.
Usually, if the salon provides all equipment and products, the stylist can be added to the existing insurance policy as a contractor.
However, if the stylist is going to use their own products and equipment, they will have to arrange their own insurance policy.
If you rent a chair, you should also consider whether you will carry out any other work outside of the salon.
If the answer is yes, you will definitely need your own cover. This is because the salon’s policy will only cover you for work carried out for the policyholder.
We usually recommend that any self-employed stylist always buys their own insurance.
This is because, even if the salon’s policy covers you, you might not be covered for everything you need.
Having your own cover gives you control over your insurance and means you can work elsewhere with no issue.
If either side is unclear on whether they need cover, you can speak to one of our team at Insync Insurance on 01200 309516.
7. Accountancy advice and VAT
Before you rent out a chair, speak to an accountant.
Make sure you have a clear plan in place regarding taking sheets, VAT returns as well as a payment structure.
As a self-employed hairdresser or salon owner, you should be familiar with looking after your own accounts. However, HMRC has firm guidelines around the charge and collection of VAT for chair rental. It’s vital that you are familiar with them and comply from the start of your agreement.
8. Get a formal legal agreement
To make sure that the agreement is upheld – make it legally binding. A legally binding Independent Contractor agreement can save a lot of trouble in future. By making it legally binding, you are each protecting yourselves in the long run.
A small expense at the beginning can save potential heartache and considerable costs further down the road. You are now on your way to starting your new partnership! We wish you the best of luck.
Insync Insurance is a great supporter of the Hair & Beauty industry. We specialise in all areas of salon insurance, from hair salons to mobile hairdressing insurance.
Why not compare self-employed hairdresser insurance online? Click the link below to book your free self-employed hairdresser insurance review.