Jacqueline Kennedy, wife of the 35th President of the United States, John F. Kennedy, testifies to the power of good hair and a deft hairdresser. Be that as it may, opening a hairdressing salon requires more than scissor skills. Opening any new business is a daunting task. It involves planning, preparation and yet more planning. Of course, the rewards may well be worth it. If you would like to open a hairdressing salon but are unsure what legal issues you need to consider before the doors open, this article offers some practical advice to guide you.

1. Business Structures for a Hairdressing Salon

The first question you need to think about is how you would like to structure your hair salon. Are you planning to operate as a sole proprietor?  Or does the company structure appeal more? And what type of company? It is necessary to consider these questions at the outset because your answer will determine some of your legal obligations before opening. For example, if you plan to operate as a company you will need to register with the Australian Securities and Investment Commission (ASIC) and get an Australian Company Number. As a company, you will have certain obligations under the Corporations Act 2001 (Cth). That means that you need to both know about them and meet them.

If you are unsure how best to structure your business, think seriously about speaking with a qualified professional.  They can offer you practical and independent advice tailored to your needs. Remember that the right structure is like a perfectly fitting shoe – good for you. Make sure you apply for an Australian Business Number (ABN). An ABN puts you on the Australian Business Register.

2. Finance

Starting a business requires capital. You need to think about how you will obtain sufficient capital. If you would like a business loan, you will need to speak with more than one bank. Your aim is to find a loan that you can service and which suits how you work.  Do not hesitate to ask questions.  Be clear about your obligations under the loan document.

You should also consider discussing your loan with your lawyer before you sign it. Your lawyer can read it and clearly explain your obligations and rights under the document. Remember that their advice is independent of the bank.

3. Qualifications

As an employer, you must be aware that your staff need adequate skills.  Hairdressers are required to hold a Certificate III in Hairdressing. Apprentices and Trainees require different qualifications depending on their levels.

Ensure that you know what your staff must have regarding qualifications before you open your doors. Not only will the knowledge help you manage risk, but it will also guide your efforts to hire appropriate staff.

4. Responsibilities

As the proprietor of a hairdressing salon, you must know your responsibilities regarding:

  • The handling and storing of chemicals; and
  • Hygiene.

Hairdressing salons both handle and store chemicals that are potentially hazardous to staff and the public. These include Paraphenylenediamine, Formaldehyde and Hydrogen Peroxide.  As the owner, you must put in place safe and appropriate work practices. That means ensuring materials are stored and handled according to the manufacturer’s Material Safety Data Sheet and the procedures advocated by Safe Work Australia. Your insurer is also likely to require you to have these practices in place, so make sure you are informed at the outset and stay aware of any developments in this area.

All state and territory governments have Hygiene Standards for hairdressing salons and barbers.  The standards are necessary because some of the treatments available in these businesses can damage skins, thereby creating a public infection risk.  As proprietor, you must know the standards inside out and must abide by them.  They are easy to read and find.  For example, NSW Health produces a Fact Sheet for hairdressers and barbers available on their website.

The standards cover details such as your premises, your equipment, suitable hygiene procedures and staff hygiene. You must follow these procedures because they are law and because it will protect your employees and customers.  

5. Taxation

As a business, you will pay Income Tax and Goods and Service Tax (GST). Your business, therefore, needs a tax file number.

For GST, you must register with the Australian Taxation Office.

You will need to stay on top of all your tax reporting obligations, including BAS Statements and PAYG obligations.

6. Employer Obligations

As an employer, you must always pay your staff all of their entitlements. You need to know about relevant awards and issues like long service leave and holiday pay. You must make all superannuation contributions required by law.  

You should have suitable employment contracts with your staff. It is a good idea to get professional assistance drafting them so that they reflect your needs and best practice.  

As an employer, it is your responsibility to ensure that your workplace is safe and free from harassment and bullying. If you do not know what your obligations are or what represents best practice, the website for Fair Work Australia is an excellent general resource. If is advisable also to speak with a lawyer about your obligations.

7. Setting Up

You will need to find suitable premises for your salon. Once you find them, make inquiries of the local council as to whether you can operate your salon in that area. You are likely to need development approval.

If you plan to renovate the premises, you will also need your plans approved and a building permit as well as certification once work is complete.  

Whether you plan to lease or purchase the hair salon premises, have a qualified lawyer read over your contract. They can then explain to you your rights and obligations under the contract. Information now could prevent unpleasant surprises later on. You should also understand the legal obligations if you sell your hair salon.

You will also need insurance. That includes Public Liability Insurance and insurance to cover the work undertaken by staff. Speak with insurance companies and find out what they can offer you. Contact LegalVision’s business structuring lawyers to assist you. Questions? Call us on 1300 544 755.

Carole Hemingway

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