Salon Payroll: How to Pay Your Team Without the Headaches

Running a salon means you’re never just doing hair or nails. On top of great service, you’re keeping up with commission reports, tips, hours, booth rent, and ever-changing tax and labor rules.

Even with solid systems in place, it’s easy for payroll to feel complicated–and a small mistake can lead to overpaying, underpaying, or scrambling to clean things up at tax time.

This guide walks through how salon payroll actually works, what makes it different from other businesses, what to look for in salon payroll software, and how to switch from manual chaos to something you can actually trust.

TL;DR: A guide to salon payroll

• Understand the complexity: Salon payroll can be complex, often combining hourly staff, commission-based stylists, and booth renters, with tips, overtime, and state labor laws layered on top.
• Know the main pay models: Most salons rely on some blend of hourly wages, commissions on services and retail, and booth rental for independent stylists, which makes correct W-2 vs 1099 classification and clear records essential.
• Focus on the right software: The best salon payroll tools automatically turn sales into commissions, handle tips without extra math, sync time tracking into payroll, support both employees and contractors, and file payroll taxes for you.
• Choose based on your reality: Your ideal solution depends on how you pay your team, what you already use for scheduling, booking, and POS, and how much help you want with HR and compliance.
• Switch in a few focused steps: Map your pay rules, gather team and tax info, set up and test your new payroll system, then go live and monitor the first few runs so everyone gets paid correctly while your admin load drops.

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How salon payroll works (and why it’s different)

Unlike many other businesses, salon payroll is trickier than “hours X rate.” You’re usually blending multiple ways of paying people (e.g. hourly, commission, and independent contractors), then layering tips, overtime, and state-specific rules on top. The mix you choose affects not just paychecks, but also taxes, compliance, and how predictable your labor costs feel month to month.

Let’s dive a little deeper into each kind of pay model your salon might use:

1. Commission-based pay

Stylists earn a percentage of services (as well as selling retail products). This rewards performance, but it means you’re constantly tracking sales by person and applying the right commission tiers.

For example, you might pay 30% commission on all services (flat), or 25% up to $1,000 in sales and 35% above that (tiered)—your payroll system has to calculate that correctly.

2. Hourly staff

Front desk staff, assistants, and new stylists are often paid hourly. That pulls in federal and state rules about minimum wage, overtime, and breaks—and puts a lot of weight on your time tracking.

3. Independent contractors renting booths

In a booth rental model, stylists are independent contractors who pay you a flat fee for a chair. You’re not running payroll on their earnings, but you are collecting rent, managing the space, and often paying other W-2 staff (your regular staff who are on payroll) at the same time.

In reality, many salons mix all three. That’s where payroll becomes more than just cutting checks. You have to classify people correctly, keep commissions and tips straight, and still get taxes and overtime right.

Essential features in salon payroll software

The right payroll software takes care of the math, tax rules, and filing deadlines so everyone gets paid accurately without you living in spreadsheets. 

But not every payroll tool understands how salons work. Here’s what you should be looking for.

1. Automated commission and tip calculations

Your software should turn service and retail sales into pay without you re-typing numbers. It needs to pull in sales totals by stylist, apply the correct commission rates or tiers, and add in tips automatically, whether they’re paid to individuals or pooled and split. Ideally, each pay stub also shows a clear breakdown of services, commissions, and tips so stylists can see exactly how their pay was calculated.

2. Time tracking that actually syncs with payroll

If people clock in on one system and you re-enter those hours in another, you’re doing double work and inviting errors.

Look for payroll that either includes built-in time clocks or integrates tightly with your scheduling and time tracking tool. When hours, roles, and overtime rules flow into payroll automatically, you’re less likely to miss a break, forget a rate change, or guess at someone’s hours, so payroll is right the first time.

3. Tax filing and compliance support

Even with a small team, payroll taxes and filings add up fast. Strong salon payroll software will calculate and withhold the right taxes, file returns on schedule, and generate year-end forms like W-2s and 1099s for you.

You still own the responsibility, but you won’t be hand-editing forms or trying to keep up with rate changes on your own.

4. Support for both W-2 employees and 1099 contractors

If you run a hybrid salon, you shouldn’t need one system for payroll and another for contractor payments. You should be able to run your W-2 and 1099s through the same software. The right tool will let you:

• Pay employees and contractors side by side
• Store different tax forms for each
• Generate the right year-end documents automatically

That way, you can adjust your staffing and pay structure as you grow without having to redo all your payroll systems each time.

Best salon software with payroll in 2026

There’s no one “best” tool for every salon. Your ideal pick depends on how you pay your team and what you’re already using for scheduling, POS, and booking. Here’s a quick overview of some popular options that pair salon workflows with payroll.

Homebase

Best for: Small salons that want scheduling, time tracking, HR, and payroll all together.

Starting price: Six-month free trial, then $49 per month + $6 per person

Homebase started with scheduling and time clocks for hourly teams and added payroll, HR, and compliance on top. For salons, that means you can schedule stylists, track hours, record tips, and run payroll in the same system. Homebase supports both W-2 employees and 1099 contractors, handles tax filings, and includes labor law tools and HR help when questions come up.

Square

Best for: Salons already deep into Square for POS and appointments.

Starting price: $35 per month + $6 per person

If you’re using Square to take payments and book services, adding Square Payroll keeps you in one ecosystem. Service sales and card tips can flow from your POS into payroll, and Square handles tax calculations and filings. It’s a strong choice when you want tight alignment between your payment system and your pay runs.

Vagaro

Best for: Commission-heavy salons that want booking, marketing, and payroll in one platform.

Starting price: $23.99 per month + $10 per person

Vagaro is built for beauty and wellness, so it naturally supports stylist-friendly features like online booking, client profiles, and marketing tools. Its payroll module can work with both hourly and commission structures and pulls data from your service sales and schedules. It’s a good fit if you want to centralize most of your salon operations in one app.

Salonist

Best for: Growing salons that need robust scheduling, POS, and payroll.

Starting price: $79 per month

Salonist offers appointment management, POS, inventory tools, and staff payroll in a single system. It’s built to handle multi-location operations and commission tracking, which can be useful if you’re expanding or managing a larger team and want a more “manager-grade” toolkit.

Mangomint

Best for: Higher-end salons and spas that value polished design and detailed reporting.

Starting price: $165 per month (for up to 10 people)

Mangomint focuses on a clean interface and automation for busy salons. It combines booking, POS, memberships, and rich reporting, including detailed payroll reporting that ties together hours, commissions, tips, and product sales by staff. It’s often a better fit for larger or premium salons willing to pay for a more advanced suite.

Use this list as a starting point to build your shortlist, then narrow it down based on how you pay your team and which tools you might already rely on. From there, demos and free trials will usually make it clear which option actually fits your day-to-day.

How to choose the right salon payroll solution

Instead of starting with features, start with how your salon works—how you pay people, how you book and charge clients today, and where you’re most worried about mistakes. Then look for software that fits that picture, not the other way around.

Consider your pay structure first

Write down how you actually pay people today: hourly, commission, independent contractors, or a combination. Also note how you handle tips (whether they’re direct, pooled, or split by role).

Then, you’ll want to evaluate each tool based on how well it supports your specific mix. If you’re heavy on commission and tips, that should be a core strength of whatever you choose. If you’re mostly hourly, you might prioritize rock-solid time tracking and overtime calculations instead.

Think about your tech stack

Next, look at what you already rely on. If your employee scheduling and time tracking live in one system and your payments in another, decide which one is more central. You might prefer an all-in-one platform that does scheduling, time tracking, and payroll together (like Homebase), or you might lean into a POS-first stack and add payroll from that vendor.

The fewer times you have to copy data between systems, the fewer chances you have to make a mistake.

Don’t forget about support and compliance

Finally, think about how comfortable you are handling compliance on your own. If you’d rather not interpret overtime and break rules (or figure out whether someone should be W-2 or 1099) look for a tool that offers HR support, clear documentation, and state-specific guidance.

Even small touches like built-in alerts for overtime or missed breaks can save you from expensive issues later.

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Getting started with salon payroll software

Once you’ve chosen a tool, setup is mostly about gathering the right information and easing your team into a new routine.

What you’ll need to set up payroll

Plan to collect:

• Basic business details and your Employer Identification Number (EIN)
• Bank account information for direct deposit
• Employee and contractor info, including tax forms and pay rates
• Any commission agreements, tip policies, and Paid Time Off (PTO) balances

If you’re moving from another system or from spreadsheets, you’ll also want year-to-date totals so your new payroll stays in sync for tax season.

How to switch to automated salon payroll

1. Map your pay rules

Write down exactly how you pay people today: who is hourly, who is commission-based, any different rates by role, how tips are handled, and how often you run payroll. This becomes your blueprint when you set up the new system.

2. Gather your team and tax info

Collect what the software will need: employee and contractor details, W-4s and W-9s, direct deposit info, your EIN, and any year-to-date payroll numbers if you’re switching mid-year.

3. Set up your payroll system

Enter your pay rules, add each team member with their rates and classification (W-2 vs 1099), set your payroll schedule, and connect time tracking so hours and roles flow in automatically.

4. Run a test payroll

Before your first live run, do a test cycle or preview. Check that hours, commissions, tips, and taxes look right for a few stylists and roles, and tweak any settings that are off.

5. Go live and monitor

Let your team know what’s changing, then run your first official payroll. Watch the first couple of pay periods closely, encourage people to flag anything that looks off, and make small adjustments until everything is running smoothly.

Watch out for these salon payroll mistakes

Even with software, a few common payroll errors can cause headaches. Keep these in mind as you set up and run payroll.

Misclassifying employees as contractors

Calling everyone a contractor might seem simpler, but if those working in your salon follow your schedule and policies and use your tools, they’re probably employees in the eyes of regulators. Misclassification can lead to back taxes and penalties, so take classifications seriously and get advice if you’re unsure.

Not tracking tips properly

Tips are taxable income, whether they’re cash or on a card. If you don’t track them accurately by person, you risk under-reporting income and shorting your team on what they’re owed. A good system will pull card tips from your POS and let you record or pool cash tips without extra spreadsheets.

Forgetting about overtime and break laws

Busy Saturdays, last-minute corrections, or walk-ins can push staff into overtime or cut into break time without you noticing. You’re responsible for paying overtime correctly and providing required meal and rest breaks based on your state’s rules. Use tools that flag potential issues and make it easy to prove you’ve been compliant.

Salon payroll FAQs

How do salons pay their employees?

Salons typically pay their employees using some combination of hourly wages and commission for W-2 staff, and booth rent for independent stylists. The exact mix depends on your model, but in almost all cases you still need a structured payroll system to handle taxes, overtime, and tip reporting.

What are the three methods of payment in a salon?

The three main methods of paying employees in a salon are hourly wages, commission on services and retail, and booth rental for independent contractors. Many salons use a hybrid, like hourly plus commission for stylists, hourly for support staff, and a few booth renters in the mix.

How much do you get paid for working in a salon?

How much you get paid for working in a salon depends on where you live, your experience, and how you’re compensated. Hourly staff earn at least local minimum wage, and commission-based stylists can earn more as they build a strong client base and sell higher-value services and retail. If you’re renting a booth, your take-home pay depends on what’s left after rent, supplies, and taxes.

How much do salon owners make a month?

How much salon owners make a month depends on total revenue, costs, and how involved they are as working stylists. Owners with a full book and tight control of rent, labor, and products can see healthy profit, where owners with high overhead and under-used chairs will feel it quickly. Solid payroll and reporting tools make it easier to see true margins and adjust before problems snowball.

Do I need separate software for payroll and scheduling?

You don’t necessarily need separate software for payroll and scheduling. Many salons prefer a single system (like Homebase) that handles scheduling, time tracking, and payroll together so hours flow straight into pay runs. If you’re already in love with a particular POS or booking tool, you can also look for payroll that integrates tightly with what you use now. 

Can salon payroll software handle tips and service charges?

Yes, salon payroll software can handle tips and service charges, especially modern tools built for service businesses. They can import tips from your POS, split or pool them according to your rules, and keep tips separate from mandatory service charges for tax purposes, meaning less manual math and clearer records for your team.

Conclusion: Simplify salon payroll so you can focus on what matters

When you move away from manual spreadsheets and choose software that understands commissions, tips, and a varied team, you protect your business, pay your team fairly, and win back hours every pay period.

Homebase was built for hourly and hybrid teams like salons. With scheduling, time tracking, HR, and payroll working together, you can keep your chairs full and your books accurate, without spending your Sundays buried in numbers.

When you’re ready to stop wrestling with payroll and start running a smoother salon, bring your team into Homebase and let it take care of the rest.

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