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How to Start a Hair Salon in Illinois: Licenses, Costs & Requirements

Illinois licenses a hair salon in two layers, the people and the premises, and both layers are cheap: a $30 practitioner license and a $40 salon registration. The costs that surprise owners sit elsewhere, in the $200 cosmetology exam fee, the yearly LLC annual report, and, in Chicago, a city business license and a city wage floor well above the state's.

Researched from Illinois state sources. Our guides are free. We may earn a commission when you use a partner service, at no additional cost to you.

The regulator: the Department of Financial and Professional Regulation

An Illinois hair salon answers to the Department of Financial and Professional Regulation, through its Division of Professional Regulation, under the Barber, Cosmetology, Esthetics, Hair Braiding, and Nail Technology Act of 1985 (225 ILCS 410) and the rules at Title 68, Part 1175 of the Illinois Administrative Code. The Department licenses people and premises separately: cosmetologists, barbers, estheticians, nail technicians, hair braiders and their teachers on the personal side, and salons and shops on the premises side, through a certificate of registration rather than a second license.

Two features of the Illinois system shape everything in this guide. First, the fees are inverted from what most owners expect: the license itself costs $30, while the state examination costs far more, $200 for cosmetology. Second, Illinois dates do not move. Every license and registration expires on a fixed calendar date, regardless of when it was issued, so a salon holds several renewal clocks at once. Cosmetology services may only be performed in a registered salon or shop, which ties the two layers together: a licensed stylist with no registered premises still cannot lawfully take clients.

Illinois hair salon requirements at a glance

Practitioner licenses: cosmetology covers the whole floor

The cosmetology license is the master credential of the Illinois salon, covering hair cutting, coloring, chemical services and styling, and reaching into the basic skin and nail services the Act assigns to the cosmetology scope. Qualifying takes 1,500 clock hours at a licensed cosmetology school, followed by the state examination. The license application fee set by rule is $30, but the examination fee is $200, and since October 1, 2026 the examination is offered in English, Spanish, Chinese, Korean and Vietnamese. Applicants for original licensure on or after January 1, 2026 also complete education on abnormal skin growths, including melanoma identification, a change made by Public Act 103-0851; the Department names the approved course "The Skinny on Skin" by Impact Melanoma.

Crossovers are built into the Act. A licensed barber reaches the cosmetology license through a 500 hour supplemental cosmetology program rather than a second full course, and cosmetologists return the compliment in the barbering guide. A stylist licensed in another state applies by endorsement for $45. Renewal is where Illinois differs from most states: the renewal fee is calculated at $25 a year, so $50 for the two year cycle, and cosmetologist licenses expire on September 30 of odd numbered years no matter when they were issued. Renewal also carries 14 hours of continuing education, one hour of sexual harassment prevention training plus 13 hours of subject coursework. The first renewal after original issuance is gentler: profession specific coursework is not required, but the one hour sexual harassment prevention course applies from that first renewal onward, and a one time hour of domestic violence and sexual assault awareness training falls due at the first renewal that carries continuing education. A lapsed license restores for $50 plus the lapsed renewal fees, capped at $200.

The establishment credential: the salon registration

The premises credential is a certificate of registration, issued to the salon or shop under Subpart M of the Part 1175 rules. Illinois makes it unlawful to own or operate a cosmetology, esthetics, nail technology or hair braiding salon, or a barber shop, without one. The fee is $40, the same for a single chair studio and a twenty chair salon, because the registration attaches to the location rather than the headcount. One registration covers one location: a second storefront takes a second registration, and a move takes the registration with the Department's records updated, with a change of name or address costing $20 and a reprinted certificate $20.

The registration runs on its own clock, separate from every practitioner in the building. All certificates of registration expire on November 30 of even numbered years, and renewal, calculated at $20 a year so $40 for the cycle, opens in the two months before that date. A registration that lapses restores for $40, and the restoration filing asks for the business's federal employer identification number and, where the salon trades under an assumed name, the assumed name certificate, which is one reason the entity and name filings below come first. The registration holder answers for the premises, including sanitation and the practitioners working under the salon's roof.

Forming your LLC: the $150 filing and the $75 annual report

Most Illinois salon owners form a limited liability company, and Illinois makes formation cheap and the yearly upkeep unforgiving. Articles of Organization, Form LLC-5.5, are filed with the Secretary of State's Department of Business Services for $150, with standard processing running about ten business days; 24 hour expedited service brings the total to $250. The LLC needs a registered agent with an Illinois street address, and Illinois requires no newspaper publication to form, so the $150 is the whole state formation bill.

The follow-on duty is the annual report, and it is the filing Illinois owners most often miss. Every LLC files an annual report with the Secretary of State for $75, due before the first day of the anniversary month of formation, not on the anniversary itself. File more than 60 days late and a $100 penalty attaches; leave the report unfiled long enough and the Secretary of State administratively dissolves the LLC, a serious problem for an entity holding a lease, a salon registration and a bank account. Adopt a written operating agreement even though it is never filed; it governs the money between members, and in a two stylist partnership the default rules are a poor substitute.

Trading under a name: the assumed name split

A salon rarely trades under its legal entity name, and Illinois splits the assumed name filing by structure, which is where owners go wrong. Sole proprietors and general partnerships, and professional corporations, register an assumed business name with the county clerk in the county where the business operates, under the Assumed Business Name Act (805 ILCS 405). Corporations and LLCs skip the county entirely and register with the Secretary of State, an LLC by adopting an assumed name on Form LLC-1.20. Filing at the wrong office leaves the name unregistered.

The county route carries a step the state route does not: newspaper publication. In Cook County the registration fee is $50, the application is signed and notarized, and the owner must then publish the legal notice in a local newspaper once a week for three consecutive weeks, starting within 15 calendar days of registration. Proof of publication, a notarized certificate with the original newspaper clipping, is due back to the Clerk within 50 days of the application, and missing that deadline voids the registration. County fees vary across the state. The Secretary of State route has no publication step. Its fee is prorated on a five year cycle: $150 in a year ending in 0 or 5, stepping down to $30 in a year ending in 4 or 9, so an LLC adopting an assumed name in 2026 pays $120, with renewal at $150 when the cycle turns.

Getting your EIN

Your Employer Identification Number is the one free, fast step in an Illinois opening. Apply on the IRS website and the number issues immediately; every LLC and corporation needs one for banking and payroll, and a sole proprietor needs one once they have employees. Illinois paperwork keys off it: the MyTax Illinois business registration, the unemployment insurance account, and even a salon registration restoration all run under the EIN, and your bank and card processor will ask for it. Get it after the entity exists and before the first state application.

Sales tax: services are not taxed, retail is, and the entity has its own tax

Illinois taxes the shelf, not the chair. The Retailers' Occupation Tax falls on retail sales of tangible personal property, and hair services are not retail sales of property, so the service ticket carries no sales tax anywhere in the state. What a client takes home is different: shampoo, styling products and aftercare sold at retail are taxable, and inventory bought for resale is purchased without tax so the tax lands once, on the sale to the client. One nuance sits between the two: products transferred to the client as an inseparable part of a service can fall under the Service Occupation Tax, measured on the cost of the goods; the Department of Revenue's ST-1 instructions work through the line.

The rate is built by address. The state base is 6.25 percent, and local taxes stack on top: county and municipal shares, home rule taxes, and transit taxes in the Chicago region, which together push the combined rate in Chicago above 10 percent. The Department's Tax Rate Finder in MyTax Illinois gives the rate for the shop's exact address; program that rate into the point of sale. Register before the first retail sale on Form REG-1 through MyTax Illinois, which covers both the sales tax account and employer withholding, and report on Form ST-1.

The entity layer has its own Illinois trap. An LLC taxed as a partnership pays the Personal Property Replacement Tax, 1.5 percent of the LLC's net income under the Illinois Income Tax Act, on top of the 4.95 percent flat income tax the members pay individually. Corporations pay the same replacement tax at 2.5 percent. It belongs in the first year budget.

Booth rent in Illinois: the classification test decides

Illinois has no booth rental statute, no renter license and no salon registration category for a rented chair. What it has is a classification test that most chair rental arrangements fail. Section 212 of the Unemployment Insurance Act (820 ILCS 405/212) treats a worker as an independent contractor only when all three conditions hold: the worker is free from the business's control, the service is outside the usual course of the business or outside all of its places of business, and the worker is engaged in an independently established trade. A stylist renting a chair inside your salon does your salon's usual work, on your salon's premises, which fails the second condition on its face however the rental agreement is drafted. The Department of Employment Security applies that test in unemployment audits, and the IRS applies its own control analysis in parallel.

The registration layer points the same way. Services are performed under your salon's certificate of registration, and the registration holder answers to the Department of Financial and Professional Regulation for what happens on the premises. A renter who looks independent on paper is still practicing inside your registration, your sanitation record and your inspection history. Owners who want genuinely independent stylists under one roof need the structure that gives each operator their own registered premises, worked through in the Illinois salon suite guide. Inside a conventional salon, the clean Illinois model is employment: you set prices and standards, you withhold, and the commission split is a pay plan rather than a tenancy.

Hiring staff: withholding, unemployment, and wages

The first hire triggers the employer stack. Register with the Department of Employment Security within 30 days of starting business as an employer; liability for unemployment insurance generally begins once you pay $1,500 in wages in a calendar quarter or employ someone during 20 weeks of a year. The numbers for 2026: contributions apply to the first $14,250 of each employee's wages, and a new employer pays 3.35 percent until it earns its own experience rate, which for 2026 ranges from 0.75 percent to 7.05 percent including the fund building rate. Reports and contributions run quarterly on Form UI-3/40 through MyTax Illinois, due April 30, July 31, October 31 and January 31. Employers withhold Illinois tax at a flat 4.95 percent and report on Form IL-941, and every new hire is reported to the Illinois New Hire Directory within 20 days. Nearly every employer must also carry workers' compensation coverage under the Workers' Compensation Act.

The wage floor depends on which side of the Chicago line the salon sits. The Illinois minimum wage is $15.00 an hour for workers 18 and older, with a tipped cash wage of $9.00 where tips bring the total to at least the full rate, and overtime at one and one half times the regular rate after 40 hours in a week. Statewide, the Paid Leave for All Workers Act gives every employee 40 hours of paid leave a year for any reason, earned at one hour for every 40 hours worked. Chicago raises both bars, covered in the local section below.

The local layer: Chicago, Cook County, and everywhere else

The state registers the salon; Chicago licenses it again. Every Chicago business takes a city license from the Department of Business Affairs and Consumer Protection, and hair salons, barbershops and nail salons operate under a Limited Business License even though their practitioners hold state licenses; the city's general exemption for state licensed professionals does not cover these premises businesses. The Limited Business License currently costs $500 for a two year term. Check zoning first: the Department's licensing materials flag some beauty, nail and barber shops as special uses in some districts, which can add a zoning approval to the timeline. Heavier city licenses wait for other guides in this cluster: body art and massage establishments take the Regulated Business License instead.

Chicago labor law is the bigger local cost. The city minimum wage is $17.05 an hour for employers with four or more employees, with a tipped cash wage of $12.96, effective July 1, 2026 and adjusted every July 1 by inflation or 2.5 percent, whichever is lower. On top of the state paid leave act, Chicago's own ordinance guarantees up to five days of paid leave and five days of paid sick and safe leave, accruing at one hour for every 35 hours worked. Outside the city but inside Cook County, the county ordinance sets $15.40 an hour and a $9.25 tipped wage in municipalities that have not opted out or set their own rate. The rest of Illinois runs on the state floor of $15.00, and most other Illinois cities leave beauty licensing to the state, adding zoning, signage and a general business license where the municipality requires one.

Insurance and recurring costs

Neither the Act nor the Part 1175 rules conditions a salon registration on a bond or an insurance filing, which makes Illinois simpler than states that build coverage into the application. Insurance still enters through the lease and through prudence: landlords require general liability coverage with the landlord named as an additional insured before handing over keys, and a working salon carries professional liability for services and property coverage for the buildout, equipment and retail inventory. Employers must carry workers' compensation coverage, which is a legal duty rather than a landlord negotiation.

Recurring state costs are light and mostly biennial: practitioner renewals at $50 each, the salon registration at $40 every two years, the $75 LLC annual report, quarterly unemployment and withholding filings, and sales tax returns on the retail side.

Your Illinois renewal calendar

• Every 2 years, expiring September 30 of odd numbered years: cosmetology licenses renew at $50 each, with 14 hours of continuing education per stylist
• Every 2 years, expiring November 30 of even numbered years: the salon registration renews at $40; renewal opens in the two preceding months
• Every year, before the first day of the formation anniversary month: LLC annual report, $75
• Every quarter, due April 30, July 31, October 31, and January 31: unemployment contributions and wage reports on Form UI-3/40 through MyTax Illinois
• Every quarter: employer withholding reported on Form IL-941 at the flat 4.95 percent rate
• Within 20 days of each hire: new hire report to the Illinois New Hire Directory
• On the Department of Revenue's schedule in MyTax Illinois: sales tax returns on Form ST-1 covering retail product sales
• Every July 1: Chicago and Cook County minimum wage adjustments take effect; the state wage is reviewed each January
• On any move: update the salon registration for the new address, a $20 change fee, before operating there

Official Illinois sources for this guide

• Department of Financial and Professional Regulation, Cosmetology: cosmetology licensing, the $200 examination fee, exam languages, and salon and shop registration
• Department of Financial and Professional Regulation, cosmetologist qualifications (011): the 1,500 hours and the 500 hour barber crossover
• Department of Financial and Professional Regulation, license renewal information: restoration fees and steps for lapsed licenses
• Cook County Clerk, assumed business name registration: the $50 fee, publication, and the 50 day proof deadline
• Department of Revenue, ST-1 instructions: the 6.25 percent state rate, local tax layers, and the Tax Rate Finder
• Department of Employment Security, 2026 contribution rates: the $14,250 wage base and the 3.35 percent new employer rate
• Department of Labor, Minimum Wage Law: the $15.00 wage, the $9.00 tipped cash wage, and overtime
• City of Chicago, minimum wage: the $17.05 city wage and the $12.96 tipped wage
• Cook County, Minimum Wage Ordinance and regulations: the $15.40 county wage and the $9.25 tipped wage

This guide is general information researched from official Illinois sources, not legal or tax advice. Requirements, fees and forms change; verify the current rules with the agencies linked above before you file, sign or spend.

Frequently asked questions

Do I need a cosmetology license to own a hair salon in Illinois?

No. Ownership and practice are licensed separately in Illinois. The premises hold a salon registration from the Department of Financial and Professional Regulation, $40 to open and $40 to renew every two years, and every person who provides services holds their own practitioner license. You need a personal cosmetology license only if you will work on clients yourself.

How many hours of school does an Illinois cosmetologist need?

A cosmetologist completes 1,500 clock hours at a licensed cosmetology school, passes the state examination, and pays a $30 license fee; the examination itself costs $200. A licensed barber can cross over with a 500 hour supplemental cosmetology program. The license renews at $50 every two years with 14 hours of continuing education, and expires September 30 of odd numbered years.

How much does it cost to register a salon in Illinois?

The salon or shop certificate of registration costs $40, and renewal is $40 every two years, expiring November 30 of even numbered years. A change of name or address costs $20. The registration is separate from every practitioner's license and from the city business license a Chicago salon also needs.

Can my stylists rent booths in my Illinois salon?

Illinois has no booth rental statute, but Section 212 of the Unemployment Insurance Act treats a stylist who works on your salon floor as an employee, because the work is inside your usual business and at your place of business. Renters also practice under your salon registration, which you answer for. Treat anyone working your floor as an employee unless a classification review says otherwise.

Are haircuts subject to sales tax in Illinois?

No. Illinois taxes retail sales of tangible personal property, not services. Products a client takes home are taxable at the 6.25 percent state base rate plus the local taxes for the shop's address, which stack above 10 percent combined in Chicago. Register on Form REG-1 through MyTax Illinois and report retail sales on Form ST-1.

Does a Chicago hair salon need a city license on top of the state licenses?

Yes. Chicago hair salons operate under a Limited Business License from the Department of Business Affairs and Consumer Protection, currently $500 for a two year term, on top of the state salon registration and practitioner licenses. Chicago also sets its own $17.05 minimum wage and paid leave rules.