Most of the complications come from how the people in your salon are set up, and from money that doesn’t arrive as a simple sale.
Some stylists and estheticians are employees; others rent a chair or room and run their own business. The difference decides whether you deduct CPP, EI and tax, and which slip they get. The CRA looks at how the arrangement actually works, not just what it’s called.
How tips are handled changes how they’re treated. Tips that pass through the business under your control, like a service charge or tips you collect and share out by a set formula, are treated differently from cash a client hands straight to a stylist.
Shampoo, skincare and other products sold over the counter are taxable sales. Recording them separately from services keeps your GST right and shows you whether retail is actually worth the shelf space.
Card processors and booking apps deposit batches, minus fees. I match those deposits back to your sales so the fees are recorded and nothing is missing.
From the CRA’s guidance for barbers, hairdressers and tips. The EI rule below is specific to barbers and hairdressers; estheticians follow the CRA’s general employee-versus-self-employed test. If a worker’s status is unclear, you or the worker can ask the CRA for a ruling.
Much of Lethbridge’s retail runs along Mayor Magrath Drive, the city’s busiest north–south road. Wherever your chair is, the business needs a City of Lethbridge licence, renewed each calendar year. If you work from a home studio, the City’s home occupation licence is $193, or $288 if clients come to you, and development approval comes first.
Outside the city, rules vary by town. In Taber, for example, personal service businesses like hair and esthetics have to contact Alberta Health Services before applying for a town licence. I keep those costs and renewal dates in your books, wherever your chair is.
It depends on how the arrangement works in practice: who sets the prices and hours, who keeps the revenue, whether they can turn clients away, and whether they rent the chair. The CRA looks at the whole picture, and you or the stylist can ask it for a ruling.
Controlled tips (a service charge, or tips the business collects and pays out) are treated as paid by you, so CPP, EI and income tax apply. Tips a client hands straight to the stylist aren’t subject to CPP or EI.
If you’re a GST registrant, product sales are generally taxable at 5% in Alberta, just like your services. Recording retail separately keeps the GST easy to check.
Employees get a T4. For hairdressers and barbers, the CRA treats the salon owner as the EI employer, so a T4 is used even for a chair renter; a T4A applies only where the owner isn’t the EI employer. You or the worker can ask the CRA for a ruling. See T4, T4A & T5018 slips.
Tell me where things stand, even if it’s messy, and I’ll tell you honestly what it’ll take to catch up and keep it that way. Every quote is confirmed after a free review of your books.
Leave a message and Vanessa will call you back.