Having studied the financial ratios of businesses operating in beauty and wellness industry you’ve understood the advantages of salon business and made up your mind on opening up a beauty salon business. First of all – congratulations on your decision. Now, while you’re working on your business plan, it is important to understand the legal and regulatory requirements of the town where you will open your business. Simultaneously working on the licenses and permits will not only help you save time but also ensure that you’re running a legitimate set up and avoiding trouble with authorities. Below we enumerate the licenses and permits that are required to open a beauty salon. However, please do note that this is not an exhaustive list, and we encourage you to seek the detailed requirements from your local regulatory authorities.
Business Registration License
As the name suggests, a business registration license is the first and foremost document that you will require if you plan to run any commercial enterprise. This license is granted by the commercial authority of your state or your city business council and come with a limited validity period. The license is to be displayed at your salon and will have to be periodically renewed by paying the requisite fee.
Subject to the services that you will be providing in your salon, you will require to obtain a cosmetology license for your beauty salon. Each and every beautician or stylist at your salon must have his or her own cosmetology license. Often these licenses are issued by the State and are subjected to periodic renewals. Subject to the local laws, you may have to also display the licenses of your employees at your salon such that the inspectors and customers can easily view it.
A tax registration is essentially a unique identification number (UIN) given to your business. Whether you’re are depositing direct taxes (i.e., income tax) or indirect taxes (i.e., sales tax, VAT or GST) the UIN allows the Tax authorities to fetch your records. Often in many countries this UIN is dependent on the nature of your company. For instance, an LLP and a corporation may have different type of UIN codes. The UIN of your business will depend on the nature your company.
Employer Identification Number
If your business model involves hiring staff, it is imperative that you get an Employer Identification Number (EIN). Your EIN will be linked with the social security ID of your employees. Should a staff quit your salon, it is your responsibility to have the records updated with the Tax Authorities. The EIN helps the Tax Authorities in tracking the payroll taxes, and social security benefits.
Most beauty salons have an alternate revenue stream from retailing products, and so would yours. Based on your client’s requirements you may be re-selling products of either one or multiple brands. Therefore, it is imperative for you obtain a reseller permit from the brand. This helps to certify that you’re retailing a genuine product and that you’re authorized to collect payment and statutory sales taxes on the behalf of the brand.
Whether you’re modifying the interiors or the exterior of your salon, you will need a builder permit from your local city council or municipal authority. Failure to obtain the permit may lead to the legal issues including being sued by the city council.
Consent to Operate from Health Department
A beauty salon must, at all times, be immaculately clean with every hygiene and sanitation process being followed. The consent to operate permit is given by the health department of your local jurisdiction after conducting a thorough inspection of your premises. Often rated on a scale of 5 stars, these certificates must be prominently displayed. Needless to state, that higher rating helps build the customer confidence that they’re coming to a beauty salon that can be trusted for its hygiene levels.
We hope that the above generic list of licenses and permits help you answer legal and regulatory requirements of your question regarding how to set up a beauty salon business. It must be borne in mind that the above-mentioned list is not an exhaustive list, and you may be required to obtain additional permits. Certain jurisdictions such as United Kingdom, require you to obtain additional permits for entertainment such as a background music being played in your salon. Thus, it is always recommended to check with your local chamber of commerce.