Tips and Gratuities
Unsolicited tips and gratuities you receive from your customers are not subject to any state doingbusiness/businesstypes; federal tax may apply to tips.
Service and Other Activities B&O Tax
Gross income from charges for the following activities is subject to B&O tax under the Service and Other Activities classification (sales tax does not apply):
- Hair services, to include styling, cutting, washing, perming, coloring, tinting, waving, braiding (such as cornrows), etc.
- Massage provided by licensed massage therapists
- Manicures
- Pedicures
- Nail, acrylic, linen, silk, gel - applying, maintaining, or removing
- Body hair removal
- Facials
- Cosmetic application
- Ear/body piercing
- Booth/chair rentals
Collecting Retail Sales Tax
Charges for services that are specifically defined as retail sales and sales of goods to consumers are subject to retail sales tax. Collect and remit sales tax on the following sales to consumers:
- Sales/cleaning and repairs of wigs, hairpieces, and extensions
- Sales of beauty/cosmetic products
- Sales of nutritional supplements
- Sales of combs, brushes, curling irons, hair dryers, etc.
- Charges for tanning, steam or Turkish baths (spas)
- Charges for tattoos, including cosmetic tattoos
Pay Tax on Consumables
A salon owes either sales tax or use tax on goods used/consumed in your business, such as:
- Use of beauty/cosmetic products applied onto your customers;
- Use of combs, brushes, curling irons, hair dryers, etc., in your business;
- Tanning equipment, chairs, sinks; and
- Aprons, gloves, tissues, towels, magazines, stylebooks, cleaning supplies, etc.
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