Esthetician Entrepreneurship: Legal Requirements & Liabilities of Estheticians Seeking Room Renters
Esthetician entrepreneurs are looking for different ways to work smarter, not harder. Going into business ownership in and of itself into territories unknown are leaving Estheticians yearning for more! They desire more information, better coaching, and outlined layouts to ensure they are covering all bases. Esthetician entrepreneurship doesn’t have to be scary or daunting. Anyone can do it with sheer tenacity, financial acumen (which can be learned!), and willpower to continue on in the face of hardships.
Looking for other sources of income this year are an Esthetician owner’s best asset! Sources of income generation include membership opportunities for your clients with zero commitment requirements, selling services in bundles instead of service by service, selling products on your website with easy-to-use merchant services options (not just one), and potentially renting out space within your storefront to maximize income per square foot.
While many Esthetician entrepreneurs may opt for W2 employees to meet the mission and vision for their company, other Esthetician owners may want the hands-off management of individuals – which is inclusive of sub leasing or renting space within their facilities. There are truly pros and cons to both options; however, when choosing room rentals as an option for your business, there are serious rules and protocols to follow that will ensure your spa business is compliant for any and all legal liabilities.
What does Room Rental look like for the Esthetician Business Owner?
To start, business owners in the spa industry may or may not have rooms to rent. When looking at your current space, to offer a room as rental property, you must ensure it meets several requirements that many renters may look for. Rooms should be closed off from other spaces in the facility with a closed door. Rooms should have some sort of access to storage space, such as a closet. Rooms should have access to additional use of space such as dispensaries with counter space for disinfecting equipment/modalities and a sink with hot/cold running water. Added bonuses would be access to the use of an on-site laundry facility. While not all of these are certainty required, it is definitely something to think about when sub leasing or renting space out to individuals that you want to become long-term tenants.
Prior to renting out rooms, determine whether or not your landlord will allow subleasing as an option. If you own your building, you’re in the clear; however, if your company is leasing its facilities, you will most certainly need to inform the building owner/landlord as you may need additional access for parking for the renter and will be potentially giving out a key to your facilities. These are things to think about prior to getting into room rentals with your spa.
Room Rental Legal Compliance: The Tenant File
If you decide that room renting is the right step for you, compiling a very specific requirement list and Tenant File for your recording-keeping purposes is key. This replaces the “HR File”, as you are not employing an individual, but leasing out space.
LEGAL REMINDER: As someone bringing on room renters, you are only leasing space to the individual. Therefore, you are not able to treat the individual as an employee. Actions such as requiring dress code and hours to work are not legally compliant. Room renters can set their own hours, manage their schedules, wear whatever uniform is suitable to their own business mission, and so forth. Room renters are business owners inside of your company. You are not to share in any merchant services, online booking platforms, and the like. Everything financial and otherwise must be kept completely separate from your business. Understanding this and really thinking through it may cause you to opt out of wanting renters in the first place. Do your due diligence and think about your long-term goals and company vision. Is this what you want within your walls?
To begin your Tenant File, you will want to require the following documentation to ensure you are covering all of your bases. By making sure that the individual and their company is legitimately doing things such as filing for tax payments and covering their assets through proper insurance, for example, you will take the liability off of you if questions were to arise.
The PERFECT Tenant File includes:
A serious LEGAL CONTRACT that is held up in a court of law; regarding all requirements of renting space from your facility
Copy of their Federal Tax ID Number
Copy of their State Withholding Number
Copy of their County Business License
Copy of their Professional License
Copy of their Salon or Booth/Room Renters License from the State Board of Cosmetology
Copy of their Liability Insurance Policy
Copy of their Renter’s Insurance Policy
This list speaks for itself; however, many Esthetician business owners do not think about these items nor do they even have items such as simple contracts signed between their company and individual room renters. I suggest consulting with an attorney regarding legal contracts for renters and/or downloading my editable Salon & Spa Owner Success Bundle here: https://payhip.com/b/i4SE
Esthetician entrepreneurs can be successful in anything they put their mind to, inclusive of room rentals, with the proper business acumen and processes in place before beginning down any path involving other practitioners. Individuals deserve respect and continuity. By being a fantastic and trusted business owner with their “ducks in a row”, Estheticians can be at the forefront of business success for years to come!