Managed Payroll · Salon & Spa
Booth renters, W-2 stylists, commission splits, tip reporting, and state cosmetology wage rules all live in the same building. BEG manages all of it at $25-$45 per employee per month. Fully managed, no migration required.
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The Cost of Running It Yourself
How It Works
We map your current worker roster: booth renters, commissioned stylists, hourly employees, and tip earners. You get a fixed monthly cost before anything changes.
We configure your payroll to handle the correct worker type for each person, commission split structures, tip credit rules, and state cosmetology wage requirements. No migration required.
Every pay cycle, every tip reconciliation, every quarterly filing, and every year-end W-2. Fully managed by BEG. Your front desk touches nothing.
What BEG Handles
The IRS uses a multi-factor test to determine whether a salon or spa worker is an independent contractor (booth renter) or an employee. The test looks at behavioral control, financial control, and the type of relationship. A booth renter who is told which hours to work, required to attend staff meetings, or restricted from working at other salons is likely a misclassified employee. BEG reviews each worker arrangement and configures payroll to reflect the correct classification, reducing your exposure to worker reclassification assessments, back payroll taxes, and penalties from state labor agencies that frequently audit beauty industry employers.
Commission-based compensation for employed stylists and estheticians requires payroll to calculate the commission amount from service revenue, apply the correct split percentage, and reconcile the result against minimum wage for each pay period. If a commission employee earns less than minimum wage in any workweek based on commission alone, the employer must make up the difference as a draw or advance. BEG manages commission calculations, draw reconciliation, and the minimum wage floor check every pay cycle so you are never in violation at the end of a slow week.
Tip credit rules allow employers in states that permit it to pay tipped employees a cash wage below the standard minimum wage, as long as tips bring total hourly compensation up to or above minimum wage. If tips are insufficient in any workweek, the employer must pay the difference. The IRS also requires employers to report employee tips as income and pay FICA taxes on the reported tip amount. BEG manages tip credit calculations, ensures the minimum wage floor is met each pay period, and handles tip reporting to keep your filings accurate and your FICA obligations met.
Several states have established minimum wage rates for cosmetology workers that differ from the general minimum wage, and tipped minimum wage floors vary significantly by state. Multi-location salon and spa businesses operating across state lines face a patchwork of wage rules that must be applied correctly at each location. BEG monitors state wage law changes and applies the correct minimum wage floor for each state where you have employed workers.
The beauty industry has among the highest employee turnover rates of any sector. Managing a roster of W-2 stylists and estheticians who start and stop throughout the year means onboarding new hires into payroll quickly, processing terminations cleanly, and producing year-end W-2s for the full roster of current and former employees. BEG manages new hire setup, mid-year terminations, and W-2 production so your year-end process does not become a research project through old records.
Comparison
| Capability | BEG Managed | In-House | Software Only |
|---|---|---|---|
| Booth renter classification review | ✓ | Depends on expertise | ✗ |
| Commission split payroll | ✓ | Manual calculation risk | Partial |
| Tip credit compliance | ✓ | Compliance risk | Partial |
| State cosmetology wage rules | ✓ | Requires research | ✗ |
| High-turnover W-2 management | ✓ | Staff-time heavy | Self-service |
| Year-end W-2 production | ✓ | ✓ | Self-service |
| No migration required | ✓ | N/A | Migration often required |
| Fixed all-inclusive monthly cost | ✓ | ✗ | ✗ |
The Math on Waiting
IRS worker classification audits in the beauty industry look back multiple years. Back payroll taxes, interest, and penalties on a misclassified roster of booth renters can easily exceed what you would have paid for proper management from day one. The cost of getting it right is a fraction of the cost of getting it wrong.
Your Next Transition Window
Payroll transitions with BEG take 30-60 days. We scope your current setup, identify classification and compliance gaps, and move you to a clean, managed structure before the problem becomes a notice. Every cycle you wait is another cycle of exposure.
15 minutes. We scope your payroll, give you a fixed monthly cost, and show you what transition looks like.
FAQ
BEG reviews the actual working arrangement against the IRS common-law test and applicable state tests, which look at behavioral control, financial control, and the type of relationship. If the salon controls how the stylist performs their work, sets their hours, or restricts them from working elsewhere, the worker is likely an employee regardless of what the rental agreement says. We identify those situations and help you restructure before an audit does it for you.
No. BEG operates as your managed payroll team inside your existing system. Migration is an option, never a requirement. If your current system cannot handle commission splits or tip credit calculations correctly, we can recommend a better platform and manage the transition, but only if you want that.
Everything: payroll processing, commission calculations, tip credit compliance, federal and state tax filing, year-end W-2 production, and dedicated BEG support. One flat rate covers all complexity.
BEG checks the commission earnings against the minimum wage floor for every workweek. If a stylist earns less than minimum wage based on commissions alone, we flag it and process the required wage supplement automatically. This keeps you in compliance with FLSA minimum wage requirements and avoids back-wage claims.
Yes. BEG manages state-by-state payroll tax registration, remittance, and compliance across all states where you have employed workers. We apply the correct minimum wage, tipped minimum wage, and cosmetology wage rules for each location so nothing falls through the cracks as you expand.
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