How to start a hair salon

A great salon is built on talented stylists, loyal clients and a business model that works for both. Here is how to set it up.

In shortTo start a hair salon, make sure you and your stylists hold the cosmetology licenses your state requires, get any salon establishment license, choose a business model (commission, hourly, booth rental or suite rental), write a business plan, find a location, form a business and get an EIN, build out and equip the space to meet state board rules, set service prices, hire and train stylists, set up booking and retail, and market to build a loyal client base.

Step 1: Licensing

Every state regulates cosmetology. Stylists generally need a state cosmetology license, earned through training hours at a licensed school and passing exams. Many states also require the salon itself to hold an establishment license, pass an inspection and post licenses visibly. Some states require a licensed manager on site. Barbers, nail technicians and estheticians usually have separate licenses. Check with your state board of cosmetology before signing a lease.

Step 2: Choose your salon model

Salon business models
Model How it works Pros Cons
Commission Stylists are employees paid a percentage of service sales Brand consistency, control of service quality and schedules Higher payroll costs; must meet minimum wage and overtime rules
Hourly plus commission Base hourly pay plus commission on services and retail Stable income for stylists; easier compliance More complex payroll
Booth rental Independent stylists rent a chair and run their own business Predictable rent income; lower payroll Less control; misclassification risk if you control their work
Suite rental Stylists rent private suites Rental income; low staffing Little brand control; real estate business

The difference between an employee and a booth renter depends on the actual relationship, not the label. If you set stylists’ schedules, prices or services, provide their products or require them to follow your procedures, they may be employees under federal and state tests. Misclassification can bring back wages, taxes and penalties. Some states have specific rules for booth renters.

Step 3: Write a business plan

See how to start a business for planning basics.

Step 4: Location and build-out

Location checklist
Factor What to consider
Visibility and parking Easy access matters for appointments
Plumbing Shampoo bowls need water, drainage and hot water capacity
Electrical Dryers and tools need enough circuits
Ventilation Important for chemical services such as color and smoothing treatments
Size Space for stations, shampoo area, dispensary, retail, reception and break room
State board rules Some states have requirements for sinks, restrooms and sanitation
Lease Term, build-out allowance, exclusivity clauses

Step 5: Set up the business

  1. Form your business entity. Many owners choose an LLC; see articles of organization.
  2. Get an EIN from the IRS (see how to apply for an EIN).
  3. Get local business licenses and zoning approval for your location.
  4. Register for state taxes, including sales tax on retail products and payroll taxes once you hire.
  5. Open a business bank account.

See our legal requirements checklist.

Step 6: Equipment and supplies

Core salon equipment
Category Examples
Stations Styling chairs, mirrors, stations with storage
Shampoo area Shampoo bowls and chairs, water heater
Color Dispensary, mixing tools, timers, processing equipment
Tools Dryers, irons, clippers, shears (often stylists’ own)
Sanitation Disinfectants that meet state board rules, laundry, closed storage for clean tools
Front desk Booking software, POS, retail displays
Comfort Reception seating, beverage station, Wi-Fi

Step 7: Set prices

Price services based on time, product cost and stylist level:

Pricing considerations
Factor Notes
Service time Longer services cost more
Product cost Color and treatments use expensive products
Stylist level Many salons use tiered pricing by experience
Market Compare with local salons at your price point
Retail Product sales can add meaningful margin

Use the cost of goods sold calculator for product costs and the profit margin calculator to check service margins.

Startup costs to plan for

Startup cost categories
Category Examples
Lease and deposits First months’ rent, security deposit
Build-out Plumbing for shampoo bowls, electrical, flooring, lighting, ventilation
Furniture and equipment Chairs, stations, shampoo units, dryers, reception
Opening inventory Professional color and products, retail stock
Licensing and permits Establishment license, inspections, business licenses
Insurance General and professional liability, property, workers’ compensation
Technology Booking and POS software, website
Marketing and working capital Grand opening and several months of operating costs

Build-out often costs more and takes longer than expected. Get contractor bids before signing a lease, and negotiate a tenant improvement allowance if possible.

Step 8: Hire, pay and schedule stylists

eztime helps salon teams with scheduling, a time clock and digital employee files for license tracking. See our salon management guide.

Step 9: Build a loyal client base

Sanitation and state board inspections

State boards may inspect salons with little or no notice. Daily checklists, such as those you can set up with task management, make passing inspections routine.

Step 10: Track your numbers

Salon metrics to watch
Metric Why it matters
Rebooking rate Shows client loyalty
Client retention Share of clients who come back
Average ticket Services plus retail per visit
Retail per service Retail sales effectiveness
Chair utilization How full each stylist’s schedule is
Labor cost % Commission and wages as a share of revenue

Our guide on employee retention strategies helps keep talented stylists, who often take clients with them when they leave.

Frequently asked questions

Do I need a license to open a hair salon?

In most states, stylists need cosmetology licenses and the salon needs an establishment license from the state board of cosmetology. Some states require a licensed manager. Check your state board’s rules.

Should I hire stylists on commission or rent booths?

Commission gives you more control and brand consistency but higher payroll costs. Booth rental gives steady rent income but less control and misclassification risk if you treat renters like employees.

Can booth renters be treated like employees?

If you control their schedules, prices, services or methods, they may legally be employees. Booth renters must truly operate as independent businesses.

How much does it cost to open a hair salon?

It depends on location, size, build-out and equipment. Plumbing for shampoo bowls and electrical work can be major costs. Build a detailed budget for your space.

How do salons keep clients?

By delivering consistent results, pre-booking the next appointment, sending reminders, keeping detailed client notes and building strong relationships between clients and stylists.

Do commission stylists have to earn minimum wage?

Yes, employees paid on commission must still receive at least minimum wage for all hours worked each workweek, and non-exempt employees are entitled to overtime. State rules may add requirements.

How many stylists do I need to open a salon?

It depends on your space and model. Many salons open with a few stylists and add more as the client base grows. Make sure each chair can be filled with enough clients to cover its cost.

Where to go next

Related guides and tools

Labor rule alerts

Set overtime thresholds and weekly hour limits in EZTime and managers get an alert while there is still time to change the schedule. See current plans and what each one includes on the pricing page.

Disclaimer: This guide is general information only and is not legal, tax or licensing advice. Cosmetology licensing, establishment rules, worker classification and wage laws vary by state and change over time. Check with your state board and qualified professionals.