Nail Salon Booth Rental vs Commission vs Hourly: A Guide for Owners and Techs

Nail salon booth rental means a licensed nail tech pays the salon a set rent for a station and runs their own small business from it. The tech keeps what clients pay, sets their own prices and hours, and buys their own supplies. That is different from commission or hourly pay, where the tech works for the salon as an employee. Which setup is right depends on how much control each side wants and on the employee vs contractor rules in your state.

Key takeaways

• Booth rental: the tech pays rent, keeps service income and runs their own book of clients.
• Commission and hourly: the tech is usually an employee, and the salon controls pricing, schedule and supplies.
• The IRS looks at behavioral control, financial control and the type of relationship, not just the job title.
• In California, a licensed manicurist booth renter must meet specific conditions in Labor Code section 2778.
• Put everything in a written booth rental agreement, and have an attorney or accountant review it.

This is general information, not legal or tax advice; check with an accountant or attorney.

Booth rental vs commission vs hourly: how each one works

Most salons work with nail techs in one of three ways, or a mix of them.

Booth rental

The tech rents a station, usually for a weekly or monthly fee. The tech books their own clients, charges their own prices and collects their own payments. The salon owner acts more like a landlord than a boss. The owner gets rent whether the chair is busy or not.

Commission

The tech works for the salon and earns a share of the service sales they bring in. The salon sets the menu and prices, books clients and supplies the products. Because the tech is an employee, the salon runs payroll and handles employment taxes.

Hourly

The tech is an employee paid for the hours they work, sometimes with a commission or bonus on top. It gives the tech a steadier paycheck and the owner the most control.

Pros and cons for the salon owner

• Pros: predictable rent, less payroll work, no need to buy supplies for that station, and the tech brings their own clients.
• Cons: you give up control over prices, hours and how services are done. Your salon may feel less like one brand. If a renter leaves, their clients often leave too.
• Risk: if you treat a renter like an employee, for example by setting their schedule or their prices, they may legally be an employee. That can mean back taxes and penalties.

Commission or hourly staff take more management, but you control the client experience. That matters if you are building a single salon brand. See how to open a nail salon for more on this choice.

Pros and cons for the nail tech

• Pros of booth rental: you set your own prices and hours, keep your service income and choose your own products. You own your client list.
• Cons of booth rental: you pay rent even in a slow week. You buy all your own supplies, handle your own taxes and find your own clients.
• Pros of commission or hourly: the salon brings in clients, supplies the products and handles the business side. Payroll taxes are withheld for you.
• Cons of commission or hourly: less control over your schedule and prices, and your income depends on the salon’s menu and traffic.

Before you rent a booth, make sure you can fill your book. Our sibling guide on how to get more nail salon clients has practical ideas.

Employee vs independent contractor: what the IRS looks at

Calling someone a “booth renter” does not make them an independent contractor. The IRS says that, in general, employers must withhold and pay income, Social Security and Medicare taxes on wages paid to employees, but not on payments to independent contractors. To decide which one a worker is, the IRS looks at three kinds of evidence:

1. Behavioral control. Does the business control, or have the right to control, what the worker does and how they do the job?
2. Financial control. Who controls the business side, such as how the worker is paid, whether expenses are reimbursed and who provides tools and supplies?
3. Type of relationship. Is there a written contract? Are there employee-type benefits such as a pension plan, insurance or vacation pay?

The IRS says there is no set number of factors that makes a worker one or the other. You look at the whole relationship and document how you decided. If it is still unclear, the business or the worker can file Form SS-8 to ask the IRS for a decision. The IRS notes that it may take at least six months to get one.

California rules for nail salon booth rental

California has its own, stricter test. According to the state’s employment status FAQ, AB 5 took effect on January 1, 2020. For many workers it uses the “ABC test.” Licensed barbers, cosmetologists, electrologists, estheticians and manicurists can instead be judged under an older test, called Borello, if extra conditions are met. The FAQ says this applies to manicurists only before 2025 and from January 1, 2026 through December 31, 2028.

California Labor Code section 2778 lists those conditions. The section was last amended by AB 1514, effective January 1, 2026. For a licensed manicurist, esthetician, electrologist, barber or cosmetologist, the individual must:

• Set their own rates, process their own payments and be paid directly by clients.
• Set their own hours and have sole discretion over how many clients and which clients they serve.
• Have their own book of business and schedule their own appointments.
• Keep their own business license for the services they offer.
• If they work at the salon’s location, issue a Form 1099 to the salon or business owner they rent their space from.

Section 2778 also lists general factors the salon must be able to show, such as the tech having a separate business location (which can be their home) and holding any required business license or tax registration. The law states that this part becomes inoperative for licensed manicurists on January 1, 2029.

Meeting these conditions does not make someone a contractor on its own. It means the Borello test is used to decide. The rules also change, as the 2025 gap for manicurists shows, so ask an employment attorney before you set up booth rental.

What to put in a nail salon booth rental agreement

A written agreement protects both sides. Templates vary, so have an attorney review yours. Most booth rental agreements cover these points:

1. The parties and the space. Names, business names, license numbers and which station is rented.
2. Rent and term. Amount, due date, late fees, length of the agreement and notice to end it.
3. What rent includes. Utilities, Wi-Fi, laundry, storage, front desk help and use of shared areas.
4. Licenses and insurance. Each party keeps its own licenses and liability insurance, and shows proof.
5. Independence. The tech sets their own prices, hours and clients, books their own appointments and collects their own payments.
6. Supplies and products. Who buys what. In a true booth rental, the tech supplies their own tools and products.
7. Sanitation. Both sides agree to follow state board rules. Everyone in the salon has to meet them, renters included.
8. Access and keys. Hours the building is open, keys or codes, and parking.
9. Client records. Who owns the client list and booking data.
10. Ending the agreement. Notice period, moving out and returning keys.

Supplies and sanitation for booth renters

A booth renter runs their own station, so they buy their own disposables. State sanitation rules still apply. In California, items that touch a client and cannot be disinfected, such as buffers, pumice stones, toe separators and emery boards, must be thrown away after one client. New single-use items are stored in a clean, covered place labeled “New.”

Many renters keep costs simple with disposable pedicure kits, so each client gets a fresh file, buffer and other single-use tools in one pack. Files are also sold by the case in our nail files category. For a full station checklist, see our nail salon supply list. When you set your prices, build them from these costs. Our sibling guide to building a nail salon service menu shows how.

FAQ

Is booth rental legal in California for nail techs?

It can be. For a booth renter to fall under the salon exemption, Labor Code section 2778 says the tech must set their own rates and hours, collect their own payments, keep their own book and business license, and issue a Form 1099 to the salon they rent from. The state FAQ says the exemption covers manicurists from January 1, 2026 through December 31, 2028.

What is the difference between booth rental and commission?

In booth rental, the tech pays the salon rent and keeps their service income. With commission, the tech is an employee who earns a share of their service sales. The salon sets the prices, books clients and provides supplies.

Do booth renters need their own business license?

In California, keeping their own business license for the services they offer is one of the section 2778 conditions for a booth renter. Check with your city or county for local license and tax registration rules too.

How much should a salon charge for booth rent?

It depends on your rent, utilities, location and what the booth includes. Add up what each station costs you to run, then check what nearby salons charge.

Who pays taxes in a booth rental setup?

A true booth renter is self-employed and handles their own taxes. The salon does not withhold taxes from their income. If the relationship is really employment, though, the salon may owe employment taxes. Ask an accountant to review your setup.

Nail salon booth rental gives techs freedom and gives owners steady rent, but it only works when the tech truly runs their own business. Know the IRS factors and California’s section 2778 conditions, and get a clear written agreement. Booth renters stocking a station can browse our salon disposables, sold by the case. Questions? Call +1 (669) 696-7724 or reach us through our contact page.