DO I HAVE TO PAY EI FOR CHAIR RENTERS?

Did you think Employment Insurance and Chair Renters would never come up in the same sentence?

CTV NEWS Saskatoon did a report on how salon owners that rent our chairs are impacted by Employment Insurance fees imposed by the Canada Revenue Agency (CRA).

The report focuses on Stacey Zielinski , owner of The Beach Beauty Bar in Martensville, Saskatchewan. Like many others, Stacey was under the impression that chair renters are independent contractors and therefore are not governed under employment laws and regulations.

Luckily for Zielinski, her tab was not too high, as only 1/5 hairstylists was a chair renter. This got us thinking though, how does this impact the industry?

What does this mean for salon owners who only rent out chairs?

Renting out chairs to hairstylists has always been an attractive option for salon owners. Renting out chairs produces consistent income, removes employee-related issues, and was formerly believed to eliminate the cost of wages and MERCS.  

It is widely believed that the salon owner does not pay money to the renter; but they do however collect money from the renter. Typically, the hairstylist pays a monthly fee to offer services to their growing clientele from an already established salon.  In exchange for this fee, the salon owner allows use of the chair and fixtures during operating hours.

Contrary to popular belief, salon owners are liable to pay Employment Insurance fees to the CRA for chair renters. Normally, independent contractors from other industries are not eligible for EI, however, there is an exception for barbers and hairstylists.

Normally, EI is paid to employees based on the hours worked per pay period. Because chair renters dictate their own hours, the CRA calculates EI fees on the number of days the chair renter offered services in the establishment.

Why is there an exception for barbers and hairstylists?

As it was explained by a CRA representative, this exception was put into place to secure the income of a hairstylist in the event that the salon owner is no longer able to provide the chair renter with a space to work from. Examples are salon owners who are evicted from their rented space or go out of business.  

What is the difference between independent contractors in the beauty industry versus other industries?

Nothing really. We searched for answers but could not find a clear explanation for this exception.

The exception to the exception.

While a salon owner must pay the employer portion of EI fees for independent contractors, this fee is eliminated IF the chair renter is incorporated.

What is the difference between a sole proprietorship, a partnership, and a corporation?

All of the above are forms of entrepreneurship. They differ in a few ways including the annual costs and taxes payable to the CRA. The main difference is that in a sole proprietorship or partnership, the business is an extension of you (and your partners if applicable) whereas a corporation is viewed as an entity external to you.  It even has its own SIN, however, it’s called a BN (Business Number).

There are many benefits to registering your business as a corporation. Learn more.

Where does this legislation come from?

It is believed that this legislation was created to protect the income of women and single mothers based on the occupation’s demographic at the time the legislation was created.

Two conditions apply to this employment insurance regulation:

1. The barber or hairstylist offers services out of the establishment.
2. The barber or hairstylist is not the owner of the establishment.

What if the salon owner also owns the building?

Unfortunately, it doesn’t matter. Salon owners who own the building must also pay EI fees.

What if the hairstylist does not pay EI?

Unfortunately, it doesn’t matter. The onus is on the salon owner to pay the employer portion of a chair renter’s EI whether or not they pay their own premiums.

Does this legislation affect room rentals for esthetics services?

No, this legislation only applies to Hairstylists and Barbers at the time this article was published.

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EXECUTIVE SPA GROUP 

Beauty Industry Resource Centre

(780) 604 2772

Why is it so hard to write a resume?

Writing a resume is difficult when you lack work experience or the training required to do a specific job. However, even when you have experience and/or training, putting the words down on paper can still prove a challenging task.

We recommend breaking down your resume-writing into two components:

• Prep Day
• Typing Day

Prep Day

What is your job goal? Have you narrowed this down to the industry? The particular employer? The more research you do, the better your resume will look.

Now that you’ve thought about your goal, allow yourself some time to think about the skills you think you need to have for your goal. For example, if you want to work at a “ABC Salon and Spa” as a receptionist, ask yourself, “what skills does that receptionist need to have?”

• A good receptionist has a friendly demeanour and a welcoming smile
• A good receptionist knows about services and products sold
• A good receptionist is able to answer questions from clients
• A good receptionist needs to work well with people
• A good receptionist knows basic math
• A good receptionist is able to use point of sales and booking systems
• A good receptionist has good phone manners
• A good receptionist ensures the clean maintenance of the facility
• A good receptionist supports the team

Now that you’ve thought about the skills you would need for that particular position, ask yourself, “what skills do I have that relate?”

Don’t focus so much on your duties at your previous job, as much as the skills you applied there.

If you have little to no work experience, think about skills you may use on your free time. What are your hobbies? Do they include particular skills?

Now that we have a list of your skills to pick from for later, our second task is to think about the personality traits required for your goal.

For example, a good receptionist has the following traits:

• A good receptionist is friendly
• A good receptionist is punctual
• A good receptionist is organized
• A good receptionist is intuitive
• A good receptionist is research-oriented

Now that you’ve thought about the traits you would need for that particular position, ask yourself, “what traits do I have that relate?”

Typing Day

Now that you have well-though-out ideas, organizing them into a resume will be a breeze!

Types of Resumes

1. Chronological resume- your best bet if you have sufficient experience and the training required for your objective
2. Functional resume- an excellent choice for those with little to no work experience
3. Combo resume- best for those with skills from another industry not related to your job goal

Check out these helpful links:

Find a Job: A workbook to help you find the job you want

Work Search Basics

Visit our job bank.

Visit our job bank for beauty industry jobs. It is Alberta Beauty Industry- focused and contains up-to-date job listings in Alberta. 

Post your resume in our Resume Bank.

Our resume bank allows you to upload your information for Alberta beauty industry employers to view. We respect your privacy and confidentiality, employers must have a verified account to view your resume.

Before uploading your resume, consider the following notes for protecting your identity.

Are you an ESG alum?

We will help you with your career goals, including your resume! Call to book an appointment with our Career and Employment Consultant to discuss your career path.

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Are you interested in a beauty industry job but lack the requirements? ESG offers short training courses to help you reach your goals one step at a time.

With ESG, you can custom-design your beauty career by taking the courses you are interested in. If you are joining the beauty industry, we recommend starting off with esthetics basics like Manicures and Pedicures or Waxing and Tinting.

EXECUTIVE SPA GROUP

Beauty Industry Resource Centre

(780) 604 2772

About 70% of our students have long term goals of self-employment.  We offer the following advice to our students: Choose your start-up location in a neighbourhood where you see yourself in the long run.  Clients will follow if you move nearby 😉

In this article, we review different rental options for budding beauty industry entrepreneurs.

RENTING SPACE IN A SPA or SALON

Renting a room (or chair) in a spa or salon is a good way to get your toes wet in the world of commerce. This option allows a certain amount of independence, it’s like renting a room  in a house where a family lives. For example, you may be able to set your own hours, but will be limited to their hours of operation.

A benefit of this arrangement is cross-promotion.  Renting space from an existing beauty business could give you access to a pool of existing clients. People who rent space in a spa/salon usually do so with the hopes that their business will also be visited by that spa/salon’s regular clients.  Cross promotion is mutually convenient ONLY when you rent from an establishment that offers different services than you.

Be prepared for conflict if you offer the same services as your landlord!

What can I expect my rental fee to be?

Your rental fee will depend on multiple factors.  The location of the establishment and the size of the room you will be renting are primary factors. The best way to conduct your research is to inquire about other places renting nearby (even if you are not interested in those locations).  

Also ask what is included in the fee. Things to consider are:

• How will your clients pay? Will you be getting your own pos or will you be using theirs? 

• Will their receptionist be greeting your clients? 

• Will you be using their washer/dryer?

• Who will clean the common areas?

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RENTING SPACE IN A COMMUNITY

Renting space in a community such as My Lofts or Citizen Salon Studios is a new concept worth exploring! This option is good for service providers with a small-medium client base. It allows for more independence and is an excellent choice for service providers whose goal is to earn a comfortable income.

Renting space in a community is like living in a furnished condo with utilities and amenities included. Rent is understandably higher as it can include equipment, furniture, and services such as online booking and marketing. It also includes maintenance of common areas.

Another pro of renting space in a community is the love and support from your neighbours. You all have something in common- an entrepreneurial spirit and your love for the beauty industry!

On the other side of that coin, your neighbours are also your competitors. There’s nothing wrong with a little competition! We advise our students to see competition in a positive light- it keeps us on our toes and reminds us daily to treat our clients like important guests J

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RENTING SPACE ALONE

Renting a store front space is a goal for service providers who want to run an entire operation. This option requires a larger financial investment and an existing client base.

This option is like renting an entire house for yourself and your family (staff). It is maximum commitment for maximum independence. You are responsible for every aspect of your business.

We do not recommend renting an entire spa/salon in hopes to rent out rooms/chairs while you build your clientele.  Do not overextend yourself! What if you aren’t able to rent ‘that chair’ or ‘that room’ in time?

Making sound financial decisions during the start-up phase is what will take your business into year 2. Try not to rely on credit and keep your overhead as low as possible for as long as possible.

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Are you interested in self employment? ESG offers short training courses to help you reach your goals one step at a time.

With ESG, you can custom-design your beauty career by taking the courses you are interested in. If you are joining the beauty industry, we recommend starting off with esthetics basics like Manicures and Pedicures or Waxing and Tinting.

EXECUTIVE SPA GROUP

Beauty Industry Resource Centre

Welcome to the beauty industry Ericka!

Ericka trained in Manicures and Pedicures and Lash Extensions just a few months ago yet she is already growing branches in the tree that is her beauty industry career!

Ericka is committed to her goals of becoming a Hair & Esthetics SUPER TECH!  Ericka, we wish you much success and may your tree be fruitful!

Special thanks to the team @TheRockSalon for giving her this amazing opportunity!

Are you looking for a beauty industry job?

Find your next employment opportunity on our job bank!

Our job bank is easy to use. Search by job category:

•esthetician
•hair stylist
•nail technician
•spa manager
•spa receptionist
•spa assistant
•lash technician
•plus more!

PLUS! Be on the look-out. We’re bringing back our resume bank 🤗

You’ll be able to post your resume to help employers find you! 

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Are you interested in this job but lack the requirements? ESG offers short training courses to help you reach your goals one step at a time.

With ESG, you can custom-design your beauty career by taking the courses you are interested in. If you are joining the beauty industry, we recommend starting off with esthetics basics like Manicures and Pedicures or Waxing and Tinting.