Tax Guide for Barbers and Beauty Shops
There are a growing number of personal care professionals in California. Personal care professionals include barbers, hairstylists, cosmetologists, manicurists, electrologists, and estheticians, among others. We recognize that industry growth leads to an increased need for helpful tax guidance. We developed this guide with topics related to this industry to help you better understand your sales and use tax obligations, so that you can focus more on your business.
How to Use This Guide
Each section of this guide contains information important to your business.
The Getting Started section provides key resources related to registration, filing returns, account maintenance, required licenses, and other important topics.
The Industry Topics section covers many topics in an at-a-glance format which can be expanded to show more extensive information.
Lastly, the Resources section provides links to a wealth of information, including web-based seminars, forms and publications, statutory and regulatory information, and access to live help from our customer service representatives.
Get it in Writing
Our tax and fee laws can be complex and difficult to understand. If you have specific questions regarding this topic, we recommend that you get answers in writing from us. This will enable us to give you the best advice and will protect you from tax, penalties and interest in case we give you erroneous information.
Requests for written advice can be emailed to the California Department of Tax and Fee Administration (CDTFA) or mailed directly to the CDTFA office nearest you.
For more details, please see publication 8, Get it in Writing.
If You Need Help
If you need assistance with topics included in this guide – or with topics not included, please feel free to contact us by telephone or email. Contact information and hours of operation are available in the Resources section.
If you have suggestions for improving this guide, please contact us via email.
If you are a personal care professional in California who sells items such as hair care and styling products, skin care products, tools, etc., you are considered a retailer and you must register with us for a seller's permit and file regular sales and use tax returns. Whether you are a new or existing business owner, you will find these tools helpful in maintaining your account with us.
Online Registration – Register with us for your seller's permit or add a business location to an existing account.
Filing and Payments
- Tax Return Filing Deadlines – Find your filing due dates based on your regular filing schedule.
- File a Tax Return Online – The CDTFA's online filing service is easy, fast, and free!
- Online Payment Options – Make payments online for tax and fee programs.
- Notice of Business Change – Keep your information current by using this form to notify us of any business changes.
- Taxpayer Online Service Portal – Update your account information by logging in to our online services system
Sales and Use Taxes in General
In California, all sales are taxable unless the law provides a specific exemption. In most cases, taxable sales are of tangible personal property, which the law defines as an item that can be seen, weighed, measured, felt, or touched.
Use tax is a companion to California's sales tax, and is due whenever you purchase taxable items without payment of California sales tax from an out-of-state vendor for use in California. You also owe use tax on items that you remove from your inventory for use in California when you did not pay tax at the time of purchase. For example, if you issued a resale certificate to purchase personal care products but took any of these items out of inventory for personal use or in providing the services at your business, you owe use tax based on their purchase price.
In addition, if you use or give away taxable items that you purchased without paying sales tax, you owe an equivalent use tax – usually equal to the sales tax – based on the cost of those items to you.
To pay use tax, report the purchase price of the taxable items under “Purchases Subject to Use Tax” on your sales and use tax return. Those purchases become part of the total amount that is subject to tax.
For more information, see publication 110, California Use Tax Basics.
If you sell tangible personal property in California, you must register with the CDTFA for a seller's permit, file returns, and pay taxes on your retail sales. Registering for a seller's permit is free, although in some cases a security deposit may be required.
Please note: Your seller's permit must be displayed in a conspicuous area at your business location.
If you have multiple locations, you must register each location with us. You can register with the CDTFA for a seller's permit or consolidated seller's permits using our online registration service.
Be sure to let us know about any changes to your business or to your mailing or email address so that we can keep your records up-to-date and inform you of important changes in law, tax rates, or procedure. You can easily update your account information through our online services system by logging in with a username and password, by contacting our Customer Service Center, or any one of our local offices throughout the state. Contact information is available in the Resources section of this guide.
Key Industry Topics
Board of Barbering and Cosmetology
The California Board of Barbering and Cosmetology (Board) regulates the cosmetology and barbering industry in this state and provides information for both personal care professionals and consumers.
On the Board of Barbering and Cosmetology's website, personal care professionals that offer services regulated by the Board can apply for or renew their licenses with the Board and consumers can verify a business license and find information on various topics regarding the services regulated by the Board.
As a personal care professional, the services you provide for your customers are generally not subject to tax.
Services that are not subject to tax include, but are not limited to, hair cutting, coloring, or styling, beard trimming or shaving, facial massage and cleaning, skin piercing, laser treatments (removal of moles and skin tags), hair removal, nail care and polishing. However, you are considered the consumer of the supplies and products you use when performing these services and owe tax on the cost of those items.
For more information, please see Regulation 1506, Miscellaneous Services Enterprises.
Supplies, Products, and Equipment Used in Your Business
Items you purchase for use in your business are subject to tax at the time you purchase the items.
Examples of supplies and products you use in your business include hair and skin care products, brushes, combs, towels, drapes, shears, clippers, razors, tweezers, hair dryers, barber and salon chairs, nail dryers, etc. Normally, you purchase these items from local suppliers who will add and report the sales tax. If you purchase items for use in your business from an out-of-state supplier that does not charge you tax, you are responsible for reporting and paying the use tax to California.
For more information, please see publication 110, California Use Tax Basics.
Personal Care Product Sales to Customers
In general, when you sell hair styling and personal care products, such as shampoos, conditioners, nail polishes, skin care products, etc. to your customers, the sales are subject to sales tax.
Although your personal care services may not be taxable, if you sell products to your customers, you are required to register with the CDTFA for a seller’s permit, file returns, and pay taxes on your retail sales.
For more information, please see publication 107, Do You Need a California Seller’s Permit?
Wig and Hairpiece Sales to Customers
In general, your sales of wigs and hairpieces to your customers are subject to sales tax. However, some of your charges for the services involved in selling a wig or hairpiece may be non-taxable.
When you sell a new wig, any charges you make to your customer for styling, coloring, cutting, and sizing of the new wig are subject to tax. However, your charges for performing such services on a used wig are not taxable. Also, your charges for services to securely apply or install a wig or hairpiece to a customer are not subject to tax.
If a customer purchases a wig or hairpiece from you pursuant to the order of a physician (prescription) for treatment of hair loss due to alopecia, burns, chemotherapy and radiation, your charges for the sale of that wig or hairpiece are not subject to tax. In this instance, you must retain a copy of the doctor's order/prescription, and record the name of the purchaser, date of sale, item sold, and the sales prices.
Items Purchased for Resale
If you have a valid seller's permit, you may purchase merchandise that you plan to resell without paying tax to your suppliers. Sales tax generally applies when you resell merchandise at retail to your customers in California.
When you intend to resell merchandise in your business and do not use the item, other than for demonstration or display before reselling, you may issue a valid resale certificate to your supplier at the time of your purchase. You can use CDTFA-230, General Resale Certificate however, any document that contains all of the following information can also serve as a valid resale certificate:
- The name and address of your business.
- Your seller's permit number.
- A description of the property to be purchased.
- A statement that the described property is being purchased for resale. The document must contain the phrase “for resale.” Phrases such as “nontaxable” or “exempt” are not acceptable.
- The date the document is given to the retailer.
- A signature from you, your employee, or an authorized representative.
As the purchaser, you should not use a resale certificate when buying merchandise that you will:
- Use rather than sell,
- Use in your business, other than for demonstration or display, before you sell it,
- Use for a personal purpose, or
- Hold as an investment for appreciation in value and sell in the future.
Please note: If you purchase products from a vendor that you intend to resell and to use in your business (or for your own personal use), you should let your vendor know which products to charge you tax on and which are for resale.
For more information, please see publication 103, Sales for Resale.
Use of Items Purchased for Resale – Inventory Withdrawal
When you withdraw items purchased with a resale certificate from your resale inventory for business or personal use, you will owe use tax on the purchase price of these items.
For example, you purchase several bottles of shampoo for resale that you intend to resell to your customers. However, you take one of the bottles from the shelf to use for washing your clients' hair. You owe use tax on the bottle of shampoo that you use in your business and must report the tax on your sales and use tax return for the reporting period in which you removed the shampoo from your resale inventory.
For more information, please see publication 110, California Use Tax Basics.
Tax Paid Purchases Resold Prior to Use
If you paid sales or use tax to your supplier for items purchased for business or personal use, but you resold the items before you made any use of them, you may take a deduction on your sales and use tax return when you report the retail sale.
You can deduct the purchase price of the items (excluding the amount of sales or use tax added) under Cost of Tax-Paid Purchases Resold Prior to Use on your sales and use tax return. However, you are only allowed to claim an amount up to your total tax liability for the filing period in which the items were sold.
For more information, please see Regulation 1701, Tax-Paid Purchases Resold.
Charges for booth rentals that provide persons the use of a workspace in a personal care shop (hair salon, barber, etc.) are not subject to sales tax.
As a shop owner or manager, you may rent a booth or space to a personal care professional and grant them the right to conduct business in the booth or space they are renting. This is lease of real property and not subject to sales and use tax.
Many personal care professionals are independent contractors and not classified as employees, such as when you rent a booth or space within a shop.
As an independent contractor, you are generally self-employed and responsible for your own keeping of records, setting your own work hours, creating a menu of services, and collecting your customer payments. If you sell items to your customers you are required to register for a seller's permit with the CDTFA, file regular sales and use tax returns and pay the tax. See Personal Care Product Sales to Customers above.
Other Helpful Information
Books and Records
You are required by law to maintain business records in order to properly report and pay the applicable taxes.
Accurate record keeping will help you keep track of your sales and purchases, and in turn, assist you when preparing your required tax returns and reports. Your records must be maintained for at least four years, unless otherwise specified by the CDTFA. If you do not maintain business records, it may be considered evidence of negligence or intent to evade taxes and may result in penalties and interest.
Examples of records you must keep include:
- Sales Invoices
- Sales Journals
- Cash Register Tapes
- Purchase Invoices
- Purchase Journals
- Resale Certificates
- Bank Records
- Tax Returns
For more information, please see publication 116, Sales and Use Tax Records.
Miscellaneous Business Expenses
Allowable deductions (non-taxable transactions) on the sales and use tax return are those related to the sale transactions. This means that an exemption or exclusion must exist in the Sales and Use Tax Law, for the transaction to be considered non-taxable.
Utility usage and other expenses, such as internet and rent, that you incur to operate your business are not allowable deductions on the sales and use tax return.
- Publication 73, Your California Seller's Permit
- Publication 103, Sales for Resale
- Publication 110, California Use Tax Basics
- Publication 116, Sales and Use Tax Records
Sales and Use Tax Regulations
- Regulation 1501, Service Enterprises Generally
- Regulation 1506, Miscellaneous Service Enterprises
- Regulation 1701, Tax-Paid Purchases Resold
Other Helpful Resources
- CDTFA Offices – A comprehensive listing of all CDTFA offices and contact information.
- CDTFA Online Services – Learn about the online services CDTFA offers.
- City and County Tax Rates – A listing of current and historical tax rates.
- Contact Us – A listing of CDTFA contacts for your questions and concerns.
- Get It in Writing! – The Sales and Use Tax Law can be complex, and you are encouraged to put your tax questions in writing.
- Local and District Tax Guide for Retailers – A tax guide for retailers to learn more about how to properly collect, report, and pay local and district taxes.
- News Releases – CDTFA News Releases cover a broad range of topics, including updates to tax laws and to resources for taxpayers.
- Special Notices – CDTFA special notices are issued whenever there is a change in law, tax rates, or CDTFA procedures.
- Sign Up for CDTFA Updates – Subscribe to our email lists and receive the latest news, newsletters, tax and fee updates, public meeting agendas, and other announcements.
- Taxpayers' Rights Advocate (TRA) – The TRA Office helps taxpayers when they are unable to resolve a matter through normal channels, when they want information regarding procedures relating to a particular set of circumstances, or when there are apparent rights to violations.
- Use Tax – What You Should Know – Helpful information and videos about use tax.
- Verify a Permit or License – You can use this application to verify a seller's permit, Cigarette and Tobacco product retailer license, eWaste account, or Underground Storage Tank Maintenance Fee Account.
- Videos and How-To Guides – These resources will help you avoid common mistakes, file your tax returns online, and more.