Sole Prop, LLC, or S-Corp? For Beauty Businesses
What Beauty Pros Need to Know About Choosing the Right Business Entity
Let’s be real…when you first started your beauty business, you probably weren’t thinking about legal structures or tax classifications. You were thinking about clients. Maybe your first suite or chair rental. How to get your name out there. Whether your logo should be blush pink or taupe.
No one tells you that eventually, the IRS and the state want to know what kind of business you’re running, and that your answer can have a major impact on how much you keep, how much you owe, and how protected you are.
We see it all the time with the salon owners and beauty professionals we work with. You're scaling, building a brand, expanding your services, and still using the same setup you Googled (or skipped) on day one.
If you’ve ever wondered:
Do I need to become an LLC?
Is an S-Corp worth it for me?
Is my business structure helping or hurting me financially?
This one’s for you babe!
Why This Actually Matters (Even If It Sounds Boring)
Think of your business entity like the foundation of your salon. It’s not sexy. It’s not what clients see. But if it's shaky, everything built on top of it is at risk.
Your business structure impacts:
How you pay taxes
Whether you’re personally liable for business debt
Your ability to scale and hire
What you can write off (and how)
So yes, it really matters…especially when you're growing.
Quick Breakdown of the Main Business Entities for Beauty Pros
Let’s break it down without the overly complicated jargon.
Sole Proprietorship
Default mode. If you didn’t register your business with the state, you’re likely operating as a sole prop.
This is how many stylists and estheticians start, but it’s not how most should grow.
Pros:
Easiest to set up
You and your business are one and the same (for better or worse)
Cons:
No legal separation between you and your biz
All income is taxed on your personal return
You're 100% liable if something goes wrong (scary but true)
Best for: super early stage, solo operators who are just testing the waters
LLC (Limited Liability Company)
The most common structure we recommend once your beauty business is actually a business, with income, clients, expenses, and plans.
Pros:
Separates you (the person) from the business
Protects your personal assets (your house, your car, your Beyoncé concert fund)
Adds professionalism + can help with loans or hiring
Cons:
Costs a bit more to set up and maintain
Still taxed like a sole prop unless you elect S-Corp status
Best for: stylists, salon suite owners, and beauty business owners who are scaling or hiring
S-Corporation (S-Corp)
Not a type of business, but a tax election you can make after you’ve formed an LLC (most of the time).
It’s our favorite strategy for established beauty pros pulling consistent profit (generally $75K+ net income/year).
Pros:
Reduces self-employment tax when set up correctly
You pay yourself a salary and take additional profit as distributions
Still has the liability protection of an LLC
Cons:
Requires payroll (either DIY or via software)
More compliance and ongoing accounting support needed
Additional business tax return filing
Best for: growing salon owners or established beauty businesses who want to save on taxes and run a real-deal company
Storytime from the Salon Chair
One of our clients…we’ll call her Jenna…came to us after her third hire. She had a booked-out schedule, a waitlist, and was expanding into a second suite. Her revenue was great, but her profits? Not so much. And she had no idea how much she was overpaying in taxes.
She was still operating as a sole prop because she “hadn’t gotten around to the LLC thing.” Fast forward to now: she’s an S-Corp, runs clean books, and saved thousands on taxes last year alone…money she reinvested in hiring and education for her team.
So... What's the Right Move for You?
There’s no one-size-fits-all answer. But if:
You’re growing
You’re hiring
You’re tired of playing “catch up” with your finances
…then it’s time to revisit your business structure, not just for compliance, but for clarity and confidence.
We Help You Figure This Out
At The Summa Collective, we support beauty pros like you who are ready to run their business like a CEO (without losing the passion or purpose behind it).
We’ll help you:
✨ Understand your current setup
✨ Assess if an LLC or S-Corp is the smart move
✨ Build a strategy around your goals and your growth
Book a free 30-minute consult call to get started!