How to Start a Cosmetology Business: Sole Proprietor or LLC, License, Team

Starting a cosmetology salon or treatment room isn’t just about aesthetics, beauty, and service. It’s also about a well-structured business model, compliance with legal regulations, proper registration, and minimizing legal and financial risks. 

Many entrepreneurs entering the beauty industry fail to give sufficient attention to the legal foundation of their business. As a result, they often face serious problems during inspections, when signing contracts, or when trying to expand, such as fines, disputes with employees, or even having their operations shut down due to a lack of a license.

Since 2006, our team has been supporting businesses in the beauty industry. We've helped over 100 salons and treatment rooms launch and scale successfully, without legal setbacks. In this article, we’ll explain how to properly set up a cosmetology business: which legal structure to choose, how to work with beauty professionals, and when a medical license is required.

With our experience and professional expertise, you’ll avoid common mistakes and stay focused on growing your salon, rather than dealing with urgent legal issues.

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What’s Better for a Cosmetology Business: Sole Proprietorship or LLC?

One of the first decisions an entrepreneur must make before opening a cosmetology salon or treatment room from scratch is choosing the right legal form for the business. The most common options are Sole Proprietorship (SP) and Limited Liability Company (LLC). 

Both have their pros and cons depending on the scale of operations, the number of staff, and the types of services you plan to offer.

Sole Proprietorship: A Simple Start for a Beauty Business

A sole proprietorship is ideal for a practitioner who wants to work independently or with a small team, offering basic cosmetic services. “What type of sole proprietorship should a cosmetologist register?” is a common question when it comes to small salons or private practice.

For cosmetologists, the most suitable tax categories are usually the second or third group under the simplified tax system, but this depends on income level and the nature of collaboration.

Advantages:

• Fast and inexpensive registration;
• Simplified tax system (unified tax);
• Easy reporting and bookkeeping;
• Convenient for solo practitioners or small teams.

Disadvantages:

• Personal liability with all personal assets;
• Challenges in managing multiple employees or attracting investors.

LLC: The Choice for Scaling

An LLC is the better option if you plan to scale, work with multiple specialists, expand your range of medical procedures, or collaborate with corporate clients.

Advantages:

• Flexible management structure, which allows for multiple founders and investor involvement;
• Limited liability, i.e., risks are confined to the size of the charter capital contribution;
• Suitable if you plan to open multiple treatment rooms or salons and work with legal entities.

Disadvantages:

• More complex registration and accounting procedures;
• Higher administrative costs;
• Need to hire an accountant and deal with more complicated reporting.

Which KVED Code Should a Cosmetologist Choose?

The choice of types of economic activity (KVED) code depends on the type of services you offer. It determines whether you need a medical license and which legal requirements you must meet.

1. Without a Medical License – Basic Skincare Procedures

This is the most common option for beginner cosmetologists or beauty specialists. If you only provide superficial skincare treatments, such as facial cleansing, masks, surface-level peels, eyebrow tinting, lash lamination, or hair removal, a medical license is not required.

Primary KVED code for cosmetologists:

• 96.02 – Hairdressing and Other Beauty Treatment Services

2. Medical License Required – Invasive Procedures

If you plan to offer injections (Botox, fillers), laser treatments, or medium/deep chemical peels, you must have a medical degree and a license from the Ministry of Health. Relevant KVED codes include:

• 86.21 – General Medical Practice
• 86.22 – Specialist Medical Services
• 86.90 – Other Human Health Activities

3. Additional KVED Codes for Beauty Businesses

These KVED codes should be added if you plan to expand your business activities—for example, launching an online store, offering training, or selling cosmetics.

• 85.59 – Other Education That Is Not Definable by Level
• 47.75 – Retail Sale of Cosmetic and Toilet Articles in Specialized Stores
• 47.91 – Retail Sale via Mail Order Houses or via Internet
• 46.45 – Wholesale of Perfumes and Cosmetics
• 47.99 – Other Retail Sale Not in Stores
• 63.99 – Other Information Service Activities, Not Elsewhere Classified

Choose your KVED codes based not only on your current services but also on your business growth strategy. A well-chosen combination of codes helps you avoid issues during inspections and scale your business freely.

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Staffing Model: How to Legally Hire Practitioners in a Cosmetology Salon

Properly structuring your working relationship with cosmetologists is a key issue for any salon owner. The model you choose affects not only your tax burden, but also your legal liability and your chance to obtain a medical license.

Given the specific nature of the cosmetology business, it’s essential to understand who is legally allowed to open a cosmetology practice—this depends on their education, the types of procedures offered, and their legal status. Let’s look at the three main staffing models used in the beauty industry.

Sole Proprietor with Hired Employees

An entrepreneur (a Sole Proprietor, SP) opening a salon and planning to work with a team of practitioners often considers hiring staff. This is possible, but it comes with several drawbacks:

• High tax burden. The entrepreneur pays taxes not only for themselves but also for each employee (social security contributions, personal income tax, military tax).
• Full responsibility lies with the owner. Quality control, compliance with standards, and all documentation fall entirely on the SP.
• Medical license. If medical services are offered, the SP must obtain the license, and employees must have the appropriate medical education and be officially employed.

This model is best suited for small salons with a minimal staff and non-medical services.

LLC for Large-Scale Expansion

If you plan to grow your business, open multiple treatment rooms, or offer invasive procedures (injections, laser treatments, chemical peels, etc.), setting up an LLC is the preferred option. Key features include:

• Official employment of staff – all specialists work under formal employment agreements;
• Medical license – a medical director is required, holding a higher medical degree, relevant specialization, and a certificate in "Healthcare Organization and Management";
• Easier to build a brand and attract investors, work with major partners and landlords.

However, this model demands legal precision in document preparation, staffing schedules, employment contracts, and internal regulations.

Collaboration with Sole Proprietor Cosmetologists (Workplace Rental)

A popular and cost-effective option for many salon owners is to partner with cosmetologists who are registered as individual sole proprietors (SPs). In this setup, the salon owner:

• Does not hire practitioners as employees;
• Does not pay taxes on their behalf;
• Rents out treatment rooms or workspaces.

Each cosmetologist, in turn:

• Registers as a sole proprietor;
• Obtains a license to provide medical services;
• Manages their own accounting, pays taxes, and is fully responsible to their clients.

This model helps reduce the tax burden for the space owner while avoiding unnecessary legal obligations related to staff. However, it’s crucial to properly structure the rental agreement to prevent these relationships from being reclassified as employment during inspections.

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What Should a Cosmetologist’s Treatment Room Include?

The setup of a cosmetologist’s room is regulated by specific requirements for premises used to provide healthcare or cosmetology-related services. Compliance with these standards is mandatory for legal operation and for obtaining a medical license.

Before launching your business, it’s important to understand what must be in place to ensure client safety and meet sanitary equipment standards. This includes knowledge of required permits and documentation. Key elements include:

• Sanitary conditions: cleanliness, proper ventilation, availability of disinfectants, and proper disposal of medical waste in accordance with regulations.
• Equipment: certified tools and devices that meet quality and safety standards based on the types of procedures performed.
• Authorization documents: medical license (if applicable), equipment certificates, and documents confirming the cosmetologist’s qualifications.
• Workplace organization: ergonomic workstations, sterile instruments, and proper storage of supplies.

Responsibility for compliance lies with both the salon owner and the cosmetologists working in the treatment room.

Key Requirements for the Premises and Basic Equipment

A space used for aesthetic procedures must meet sanitary, hygienic, and technical standards:

• be isolated to ensure client confidentiality and safety;
• have an appropriate size (recommended: at least 18 m² for a dermatovenereologist’s treatment room);
• be equipped with utility systems—water supply, sewage, ventilation, lighting, and heating;
• have surfaces made of materials that are easy to disinfect (such as tile or moisture-resistant paint).

A standard set of equipment for a cosmetologist’s treatment room typically includes:

• a functional chair or treatment couch for the client;
• a stool for the practitioner;
• a magnifying lamp for focused lighting;
• a tray or trolley for tools and consumables;
• a cabinet or shelf for storing materials and disposable items;
• a mirror and a sink with running water;
• devices for performing cosmetic procedures;
• a sterilizer for instruments (UV, dry heat, etc., ideally in a separate sterilization room);
• a bactericidal irradiator;
• a set of disinfectants, waste disposal containers, and single-use personal protective equipment (gloves, masks, wipes, etc.).

All instruments used during procedures must undergo thorough disinfection and sterilization in accordance with Ministry of Health regulations. The treatment room must have a clear system for separating clean and used materials, as well as proper facilities to ensure staff personal hygiene.

When a Medical License Is Required in Cosmetology

As mentioned earlier, a medical license is mandatory for any activity involving medical intervention. Even if the procedure is not classified as a treatment but cosmetic procedures that involve disrupting the skin barrier or affecting the patient’s body, it is illegal to operate without a license.

When a medical license in cosmetology is mandatory:

• Injectable cosmetology: administering substances into or under the skin (e.g., Botox, fillers, mesotherapy, biorevitalization);
• Laser treatments: laser rejuvenation, removal of spider veins, tattoos, etc.;
• Medium and deep chemical peels: procedures affecting the basal layers of the epidermis;
• Contour plastic surgery, thread lifting, platelet-rich plasma (PRP) therapy, and medical-grade hardware cosmetology.

Please note! Carrying out healthcare-related activities without the appropriate license may result in legal liability, including administrative fines if harm is caused.

It’s also important to understand that when invasive procedures are offered by a cosmetologist operating as a sole proprietor or within an LLC, all such procedures must be performed exclusively by specialists with proper medical education, i.e., doctors who are listed in the licensing documents.

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Preparing to Launch a Cosmetology Business: What Else to Consider

Before launching a beauty business, it’s essential not only to define the concept and range of services but also to carefully plan all expenses and document workflows. A business plan for a cosmetology practice should include costs for renovations and equipment purchases, salaries, licensing, and obtaining all necessary permits.

Don’t forget to consider future prospects if you’re planning to open a cosmetologist’s office. You may eventually want to scale up and grow your cosmetology business into a broader format, with multiple specialists, additional services, or even franchising.

If from the start you plan to offer a wider range of services and work with multiple specialists, you should develop a beauty salon business plan with a more detailed financial and organizational section. It’s also important to consider which documents are required to open a beauty salon. This may include property documents, lease agreements, sanitary permits, and a medical license (if applicable).

It’s worth noting that today’s beauty business isn’t limited to stationary salons or treatment rooms. You can also launch a mobile cosmetology service. However, it’s crucial to take into account the specific requirements and regulations for offering cosmetology services in this format as well.

Why Legal Support Is Essential in the Beauty Industry

Cosmetology is becoming increasingly regulated by the state. Inspections by the State Service for Food Safety and Consumer Protection, the Ministry of Health, and other regulatory bodies have become more frequent and thorough.

In recent years, over 30% of beauty businesses in Ukraine have faced legal issues that could have been avoided with proper legal support. In some cases, salons are forced to shut down or spend tens of thousands of hryvnias on fines and legal fees. The most common problems include:

• violations of licensing requirements;
• improper employment arrangements;
• Breaches of personal data processing regulations.

That’s why legal support in the beauty industry isn’t just an added service—it’s a safety tool that helps you structure your business properly and avoid costly risks. Specifically, it enables you to:

1. Choose the right business model—sole proprietorship, LLC, or private practice.
2. Assess whether a cosmetologist license is required based on the list of services offered.
3. Prepare and submit documents to the Ministry of Health to obtain a medical practice license.
4. Formalize relationships with staff in a way that avoids the risk of civil contracts being reclassified as employment.
5. Navigate inspections by regulatory authorities and protect the business in case of legal claims.
6. Draft client agreements, privacy policies, personal data processing consents, and informed consents for procedures.

Legal Support for Cosmetology: From Launch to Expansion

Our team has hands-on experience in providing legal support for cosmetology businesses at every stage, from initial setup to business expansion, obtaining licenses, and registering with electronic healthcare systems. We know the industry from the inside out, which means you can launch and operate without legal missteps when working with us.

We support your beauty business every step of the way:

• Choose the optimal business model based on your tax burden;
• Register your sole proprietorship or LLC and draft founding documents and employment agreements;
• Prepare a complete documentation package for obtaining a medical license in cosmetology and guide you through the Ministry of Health approval;
• Handle communication with the Ministry of Health at all levels, from submitting applications to obtaining electronic registration
• Ensure peace of mind during inspections (both scheduled and unscheduled) through thorough preparation and legal support
• Protect your interests in disputes with clients, contractors, or government agencies, minimizing fines and reputational risks

We don’t just handle paperwork; we understand the specifics of the cosmetology business, work proactively, and help you build a safe, legal, and stable operating model.

Contact the Pravova Dopomoga Law Firm today to establish a solid legal foundation, so you can scale smoothly tomorrow.