How to Start a Hair Salon in Tennessee (2026)

Last updated: February 25, 2026

Starting a hair salon in Tennessee requires both an individual cosmetology license and a separate shop license from the Tennessee Board of Cosmetology and Barber Examiners. Individual cosmetologists must complete 1,500 hours of training at an approved school and pass written and practical exams. The shop license requires a facility inspection and costs $150. Tennessee’s no-income-tax environment and growing metro areas make it an attractive state for salon owners.

This guide covers every requirement, cost, and step to legally open and operate a hair salon in Tennessee.

Hair Salon Requirements in Tennessee at a Glance

Requirement	Agency	Cost	Timeline
Individual Cosmetology License	TN Board of Cosmetology and Barber Examiners	$200 (exam $140 + license $60)	After 1,500 hours training
Cosmetology Shop License	TN Board of Cosmetology and Barber Examiners	$150 (initial + inspection)	10 days after application
LLC Formation	Tennessee Secretary of State	$300 (minimum)	2-5 business days
Federal EIN	IRS	Free	Immediate (online)
Business License (Business Tax)	County/City Clerk	$22 minimum	Same day
Sales Tax Registration	TN Department of Revenue	Free	Same day (online)
General Liability Insurance	Private insurer	$500-$1,500/year	Same day

How to Start a Hair Salon in Tennessee (Step by Step)

Step 1: Get Your Individual Cosmetology License

Before you can practice cosmetology or open a salon in Tennessee, you need an individual cosmetology license from the Tennessee Board of Cosmetology and Barber Examiners.

Requirements

Age: At least 16 years old
Education: Complete 1,500 hours of practice and theory at an approved cosmetology school
Exams: Pass both written and practical examinations

Fees

Item	Cost
Examination fee	$140
Original license fee	$60
License renewal (every 2 years)	$60
Late renewal penalty	$25

Reciprocity: If you hold a cosmetology license from another state, Tennessee may grant reciprocity. Contact the Board for specific requirements based on your home state.

Step 2: Form Your Business Entity

Tennessee LLC: $300 minimum through TNBEAR
Federal EIN: Free from the IRS
Business license: From county/city clerk ($22 minimum)

Step 3: Find and Prepare Your Salon Location

Your salon space must meet the Board of Cosmetology’s requirements:

Zoning: Verify the location is zoned for commercial/retail use
Sanitation stations: Each stylist station must have proper equipment and sanitation supplies
Handwashing: Accessible handwashing facilities with hot and cold running water
Ventilation: Adequate ventilation, especially for chemical services (color, perms)
Separate storage: Clean and soiled items must be stored separately
Disinfection area: Designated area for disinfecting tools and implements
Restroom: Clean restroom accessible to clients

Step 4: Apply for a Cosmetology Shop License

A separate shop license is required in addition to your individual cosmetology license:

Apply online: Through the CORE system (core.tn.gov)
Initial license and inspection fee: $150
Inspection timeline: Within 10 days of receiving your complete application and all required documents
Renewal: $75 every 2 years
Relocation or change of ownership: $150 (new inspection required)
Shop name change: $10
Annual inspections: Shops are inspected annually for sanitation compliance

Step 5: Register for Taxes

Sales tax on services: Salon services (haircuts, coloring, styling) are taxable in Tennessee at 7% state + local
Sales tax on retail: Hair products, styling tools, and other retail items are also taxable
Register through: TNTAP
Business tax: Also applicable through your county/city clerk

Step 6: Get Business Insurance

General liability: $500-$1,500/year ($1M/$2M limits recommended)
Professional liability (malpractice): $200-$500/year (covers claims from chemical burns, allergic reactions, hair damage)
Workers’ comp: Required at 5+ employees (private carrier)
Property insurance: For your salon equipment, furniture, and inventory
Business owner’s policy (BOP): Bundles general liability + property insurance at a discount

Step 7: Booth Rental vs. Employee Model

Tennessee salon owners must decide between hiring employees or renting booth space to independent contractors:

Factor	Employee Model	Booth Rental
Control over schedule/methods	You set the rules	Stylist controls their own
Tax obligations	Payroll taxes, withholding, W-2	Renters file 1099; you collect rent
Workers’ comp	Required at 5+ employees	Not required for independent contractors
Insurance	You carry for all	Each renter should carry their own
Licensing	Each stylist needs individual license	Each renter needs individual license

Important: The IRS has strict rules about who qualifies as an independent contractor vs. employee. Misclassification can result in back taxes, penalties, and interest. Consult a tax professional if using the booth rental model.

Cost to Start a Hair Salon in Tennessee

Item	Cost	Notes
Individual cosmetology license	$200	Exam $140 + license $60; renewal $60/2 years
Cosmetology shop license	$150	Includes inspection; renewal $75/2 years
Tennessee LLC formation	$300	Annual report also $300/year
Federal EIN	Free	Apply online at IRS.gov
Business license	$22+	Annual, county/city clerk
Lease deposit + first/last month	$3,000-$15,000	Varies by location
Salon buildout/renovation	$10,000-$75,000	Plumbing, electrical, styling stations
Styling stations and equipment	$2,000-$5,000 per station	Chair, mirror, tools, dryer
Initial product inventory	$2,000-$8,000	Professional and retail products
General liability + professional liability	$700-$2,000/year	Combined coverage
Signage and marketing	$500-$3,000	Website, signage, grand opening

Estimated total startup cost: $20,000-$50,000 (small salon, 2-4 stations) to $75,000-$200,000+ (full-service salon, 6+ stations, premium location)

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Frequently Asked Questions

What licenses do I need to open a hair salon in Tennessee?

You need two licenses: an individual cosmetology license (1,500 hours of school + exams, $200 total) and a cosmetology shop license ($150, includes inspection). Both are issued by the Tennessee Board of Cosmetology and Barber Examiners. Every stylist working in your salon must also hold their own individual license.

How many hours of cosmetology school are required in Tennessee?

Tennessee requires 1,500 hours of practice and theory at an approved cosmetology school. After completing the hours, you must pass both a written and practical examination. The exam fee is $140 and the initial license fee is $60.

How much does a Tennessee cosmetology shop license cost?

The initial shop license and inspection fee is $150. Renewal is $75 every 2 years. If you relocate or change ownership, a new inspection is required ($150). Shop name changes are $10. Shops are inspected annually for sanitation compliance.

Are salon services taxable in Tennessee?

Yes. Both salon services (haircuts, coloring, styling) and retail product sales are subject to Tennessee sales tax at 7% state plus local rates (combined 8.50%-9.75%). Register for a sales tax permit through TNTAP before opening.

Do I need workers’ comp for my Tennessee salon?

Workers’ compensation is required if you have 5 or more employees. Independent booth renters are generally not counted as employees for workers’ comp purposes, but be sure your contractor relationships meet IRS classification requirements. Misclassifying employees as contractors can result in significant penalties.

Can I rent booth space in my Tennessee salon?

Yes. Booth rental is common in Tennessee salons. Each booth renter must hold their own individual cosmetology license, carry their own insurance, and control their own schedule. The renter pays you rent and files their own taxes (1099). Ensure your booth rental agreements clearly establish the independent contractor relationship to avoid IRS misclassification issues.

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About the Author

Robert Smith has run a licensed private investigation firm for 8 years from the Florida-Georgia state line - where he learned firsthand how wildly business licensing rules differ between states just miles apart. He personally researched requirements across all 50 states and D.C., reviewing hundreds of government sources over hundreds of hours to build guides he wished existed when he started. Not a lawyer or accountant - just a business owner who has done the research so you don't have to.

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