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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

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salon business

Salon business

RegulationsBusiness laws

Insurance

salon business1
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 business2
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 business3
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 business4
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 business5
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 business6
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 business7
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 business8
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 business9
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 business10
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 business11
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
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.
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