Choose the Form of Business Ownership that Will Work Best For You

Choose the form of business ownership that will work best for you. This decision will be made with the advice of both your accountant and lawyer. In the conduct of your business quite often you will be working with both your accountant and lawyer. Therefore, you should be certain that these two individuals can work well together.

Three Major Forms of Private Ownership:

Sole Proprietorship-- (One Owner)
Liability: Unlimited personal liability for businesds debt
Advantages: Owner retains all profits
Easy to form and dissolve
Owner has flexibility
Disadvantages: Unlimited financial liability
Financing limitations
Management deficiencies
Lack of continuity

Partnership--(Two or more owners)
Liability: Personal assets of any operating partner at risk from creditors.
Advantages: Easy to form
Can benefit from complementary management skills
Expanded financial capacity
Disadvantages: Unlimited financial liability
Interpersonal conflicts*
Lack of continuity
Difficvult to dissolve

Corporation--(Unlimited number of owners)
Liability: Limited
Advantages: Limited financial liability
Specialized management skills
Expanded financial capacity
Economics of large-scale operations
Disadvantages: Difficult and costly to form and dissolve
Tax disadvantages
Legal restrictions

This chart is from the textbook--"Contempory Business" by Boone & Kurtz, Chapter 5

*Special note on partnerships--
Quite often in salon business, the business partners are close friends and/or relatives. While there are advantages in that you all get along well, there can be disadvanages. It is imperative that a partnership agreement be made up defining each individual's roles and responsibilities. You will want to review this regularly.

In the Begining You Must Have a License

Get a License

Salon Licensing is controlled by each individual state and varies state by state.

To obtain licensing information online go to: www.__.gov

(In the blank space, enter your

state's 2 letter abbreviation .)

For example: www.nc.gov for North Carolina; www.tx.gov for Texas

Look under Cosmetology Professional Licensing and/or Cosmetology Salon Owners' License. Most of the time nail salons licensing information is under cosmetology. Barbers are usually separate.

You may also contact your local state government representative. These representatives usually maintain staffed local offices within their districts. It is part of the job responsibility (and a very positive function) to assist constituents who want to open new businesses.

Your local municipality may also require a mercantile license or zoning permit.

Suggestion: If you mail anything to your state, send it "certified mail--return receipt requested". It is worth a couple a dollars if you must have proof you sent it.

Special Advice from the author:

Even if you are planning a small one-station, please follow the law and get a LICENSE. The time and money spent is small when compared to the time and money + the worry and embarrassment if you get caught with an illegal operation.