17 Jul Top 5 Tips – Rent a Chair
“Rent a Chair” is common place across the hairdressing industry. The salon owner will rent or hire out one of the salon chairs to a self employed hairdresser for an agreed period, who then utilises that space to serve their own clients. It’s a very popular way for salon owners to grow their business but there are also plenty of pitfalls so it’s important to plan in advance to avoid these:
1. Confirm the arrangement
There are three main types of arrangement to consider:
- Charge a flat weekly rental rate
- Share a percentage of the takings i.e. 60/40 split.
- A combination of both of the above
Failing to agree the basic arrangement properly can lead to lots of problems down the line. Also consider the employment status of the hairdresser using the chair, in HMRC’s eyes, are they really self employed? If they are a disguised employee then you will be liable for tax, national insurance and a great deal of employment legislation.
2. Get a Contract
It’s absolutely essential to get a legal contract in place from the start so that both parties know their responsibilities and what is included in the rental charge. There is so much to think about!
- agree what days/hours the chair can be used
- agree the length of the contract – 1 year, 2 years? Also agree what happens at the end of the contract period. Can the contract be terminated earlier?
- what happens to clients appointments if the chair hirer is ill?
- who provides the hair products, towels and equipment?
- who actually takes ownership of the client?
- who is responsible for equipment damages or breakages?
- who is responsible for marketing and attracting new clients to the salon?
- does the agreed rent include laundry, use of salon receptionist, heating etc?
- agree the pricing – if the chair hirer prices are significantly less than salon prices, this may be an incentive for existing salon clients to move across to the chair hirer.
- how are client payments taken and who is responsible for managing these?
- how are tips managed and distributed?
- can the chair hirer sell their own salon products to their clients?
3. Get the right person
Whoever rents the chair space within your salon will not be a employee, therefore you will have limited control over their performance compared to your usual employees. Make sure they’re the right fit for the salon.
The chair hirer may wish to choose their own products, dictate their own working hours, set their own prices and possibly even attract a completely different type of clientele to yours, which may have an impact on your reputation. Make sure the hairdresser fits your salon both now and in the future. Watch them at work, obtain references and consider an initial probation period to make sure the arrangement is suitable for both parties.
The hairdresser hiring the chair should hold their own public liability insurance as a self employed person. If providing products and equipment under the arrangement, the salon owner should also make sure that the chair hirer is also included under their insurance policy as a contractor. In case things go wrong, it’s essential to make sure both parties are adequately insured.
5. Speak to your accountant
We couldn’t forget this one, could we?! Have a chat with your accountant to make sure that both parties account for the income and expenses correctly. Rent a Chair has a big impact on VAT so it’s vital that you fully understand what you need to do and that you’re doing everything correctly from the start.