To ensure you operate legally, you must be aware of the laws in your own jurisdiction. This includes employment, business, and tax laws at the city, county, and state level. And those are on top of federal regulations.
Don’t panic, you don’t need to hold a degree in business or certification as an accountant. As you consider opening up your own shop, the best way to start delving into the business end of things is to ask another barber who has experience with this. Many cities also have designated officials who can help you navigate the process of officially establishing your own business.
To form your own barbershop business you will likely need to work with at least two agencies: your city or county’s business office and your state’s board of barbering/cosmetology.
Getting a City or County Business License
Your city or county’s business department is responsible for issuing you a business license. Getting a business license can be easier than you might think, and typically involves filling out a one or two page application. Before you apply for your business license, you will need to know what type of business you are forming. If you are forming anything more than a sole-proprietorship – and even if you are forming just that – you may want to get advice from an accountant:
- Sole Proprietor – Use this model if you’re planning to be the sole owner and operator of your barbershop; you won’t have any employees and you will be doing everything.
- LLC-Limited Liability Company – Use this model if you’re planning to act as the main boss and hire employees. On your taxes you can report your earnings as personal income, while at the same time maintaining a certain degree of protection from things like lawsuits. If you are planning on opening a franchise (buying a shop under corporate governance, like Supercuts or Fantastic Sams) you may want to use this model too.
- Corporation – Use this model if you’re planning to start a large barbershop business, opening multiple locations, hiring many employees, and attracting investors.
While we’re on the subject of licensing- there’s a good chance you’ll be required to get insurance (liability and other types like building, fire, flood, etc) along with your business license. Even if this isn’t a requirement, you should definitely get liability insurance and strongly consider insurance for your business.