A long standing custom in the hair salon industry is owners of salons leasing out booths to hair stylists. If not properly documented and exercised appropriately, the owner opens the door for many legal issues. Booth rental has both legal and IRS compliance issues that need to be addressed. Booth rental is legal in many states but you must adhere to several contractual compliance requirements to completely separate your salon from the renter.
Booth rental is a form of revenue for a salon owner whereby the salon owner acts as a landlord. It is legal in most states; however booth rental is fraught with issues related to legal compliance and employment tax consequences if not properly managed.