The ‘rent a chair’ business can be a minefield, but when it’s done right it can benefit both barbershop owners and freelancers.
We spoke to the National Hair & Beauty Federation (NHBF) who grasped the nettle of barbershop ‘rent a chair’ with a warts and all guide on the realities and legalities of this popular barbering business model.
What you need to know? ‘Rent a chair’ barbershop employees are essentially running a separate business inside your business. They are responsible for their own NI, tax, insurance, business stationary, complaints procedures, equipment, products, training and more. Employers can’t dictate their hours, dress, price, behaviour, the products they sell or the services they offer.
What you need to think about before you do it? Employers benefit because contracts can offer flexibility and they don’t have to pay NI, holiday pay, sick pay, maternity or paternity or pensions contributions but they lose control over the standards, hours, price, service and brand.
What you MUST have? A legal, watertight contract between shop owner and chair renter to clearly define responsibilities, finances and most importantly tax (the NHBF offers contracts free to members). The contract must also include how long the chair renting agreement is to last, how the agreement can be ended by either party, what happens if things go wrong, and notice periods. Be detailed and include everything that’s included or excluded.
How you should charge? It’s easy to lose money on renting chairs if employers don’t get the sums right. A blend of a fixed weekly or monthly rent plus service charges (license fee) along with a percentage of the takings may work well. To work out the license fee divide the rent and rates of the shop by the number of chairs. To work out the service charge add the cost of the services provided in the contract such as phone, laundry etc and divide that too. Add these two figures together and remember to charge VAT. These costs are the fixed cost per week or month. Additional revenue will come from the employers agreed percentage of the takings from each client.
How to manage it? The contract along with clear measures of control on how money will be taken and paid plus a shared understanding of the VAT and tax liabilities for both parties will ensure that ‘rent a chair’ models run smoothly.
Always seek professional advice, visit the NHBF.info.
Picture credit: Courtesy of the NHF