The number of people who get their nails done on a regular basis has been steadily increasing for years. According to some research, over 22 million Americans get manicures more than four times per week, and millions of others go in for a manicure once, twice, or three times per week. These numbers don’t even take into account all the people who get color added to their toenails. Starting a nail salon is a great way to capitalize on this trend and spread a little beauty into your community. However, you need to meet a few legal obligations before opening a nail salon. To help you get started, here is a look at the most common licenses, permits, and business issues you need for a nail salon.
A business license simply gives you permission to run a business in a certain area. In most cases, you obtain the business license from your town or city, but if you’re located outside of city limits, you usually just need a business license from your county. In some cases, you may also need to obtain a business license or permit from your state, but the rules can vary.
Luckily, you don’t need to worry about any federal business licenses. Only a few businesses including those that deal with alcohol, aviation, mining and drilling, wildlife, fishing, and a handful of others need to worry about federal business licenses. That said, if you want to serve champagne to your clients so they can really relax during their manicures, you need to contact your local government about obtaining a permit to sell alcohol, and you may also need a federal license to do so.
To run a nail salon, you need a cosmetology license, and as you hire nail technicians, they also need to be licensed. These rules also vary slightly from state to state, but all states require some type of cosmetology license if you want to work on people’s nails, skin, or hair.
Generally, to obtain a license, you need to complete the coursework at an approved cosmetology school or go through an apprenticeship. You may also need to complete a certain number of hours of practical experience and pass a written licensing test. On top of that, you may have to complete a certain number of continuing education requirements to ensure you stay on top of the latest trends in the world of manicures, pedicures, and beauty in general.
Any time you open a brick-and-mortar shop, you need several different permits. At a nail salon, in particular, you are hosting customers and working with their bodies as a result you usually need to submit to an inspection from the health inspector. Health inspectors make sure that instruments such as cuticle pushers are properly labeled so you can see if they are soiled or disinfected and ready for use.
You also need to label containers, make sure you take steps to avoid contaminating the nail polish if you use the same bottle for multiple clients, and properly disinfect the whirlpool spa for pedicures. If your salon meets all the requirements, you get a permit from the health department, and if not, you get a chance to make changes or you risk being shut down.
In some cases, you also have to get a permit from the fire department. This permit identifies how many people can be in your nail salon at any one time. In some areas, you don’t need a permit, but you risk fines if you break the rules on occupancy limits.
On top of that, you also need a sales tax permit if you live in a state that has sales tax. Most states assess sales tax on goods and services, and manicures, pedicures, and other spa services are generally taxed. You can obtain a permit from your state’s department of revenue. Then, you simply collect and remit sales tax as instructed. Depending on your volume of sales, you may have to pay annually, quarterly, or monthly.
Employer Identification Number
An employer identification number (EIN) is a federal tax identification number that is required for most businesses. You need to have an EIN before you hire employees, and you use this nine-digit number on payroll tax forms.
Most salons do not employ people directly. Rather, they rent space to people who work as independent contractors. In most cases, you don’t need an EIN to report income paid to independent contractors. However, in the salon world, the reality can be a bit more complicated because you may have to remit (Federal Insurance Contributions Act) FICA tax which includes Social Security contributions and Medicare premiums on your workers’ tips, and to do that, you need an EIN.
Additionally, you need an EIN if your business is a corporation, a partnership, a non-profit, or a few other types of structures. In these situations, you put the EIN on your business’s annual income tax return. Banks require businesses to have an EIN if they want to obtain a business loan, line of credit, or even just to open an account. In most cases, you can obtain an EIN fairly quickly, and you can start using it as soon as you get the number. But to be on the safe side, you should apply for this tax ID as soon as possible.
Generally, you don’t need any special permits to hire employees. However, as indicated above, you do need an EIN if you plan to hire people. If your employees are going to be doing nails, they also need the right cosmetology license for your state. Keep in mind that you have to meet the regulations set by the health department in your state, but you also have to keep your employees safe by staying compliant with regulations set up the Occupational Health and Safety Administration (OSHA).
As soon as you have the right permits and licenses in place, you can open your nail salon and start to have a bit of fun. From helping clients choose the best colors to watching the happy looks on their faces when they’re done, running a nail salon can be a rewarding and profitable way to tap into a growing industry.