Salon & Spa Tax Tips: Booth Rent vs Employee Models

Business Model Affects Taxes

Salons typically operate under two models: booth rental (stylists are independent contractors) or employment model. Each has dramatically different tax implications.

Booth Rental Model

If stylists rent booths, the salon reports rental income. Stylists handle their own taxes. Simpler payroll but less control.

Employee Model

The salon pays payroll taxes (FICA, FUTA, state unemployment). More expensive but better quality control and potentially more profitable long-term.

Deductible Expenses

Products, equipment, booth rent, continuing education, and professional licensing are all deductible. Track everything. See salon tax estimates by state.