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Tip burden for salon owners
#1
I came across this today, and while I don't necessarily think it's appropriate for this to be spelled out on a salon website in this manner, I think this is a clear explanation around some of the burden salon owners are faced with that might not be obvious. I see many posts of techs complaining about cash-only tip policies or owners nickel and diming costs, etc - so this explains some of the reason behind those policies.

The restaurant industry has a huge lobby telling Congress how they want to be treated, which, among other things is how they can still in 2013 only pay waiters $2.13 an hour. Not paying FICA taxes on tips is another thing they have successfully lobbied for to help keep costs down. In salons, we don't have that advantage. Not only are we paying the cc fees on tips - which might go up to 6% - but an additional almost 8% in FICA taxes. Basically - your $10 tip costs a salon owner almost $1.50, and we get no revenue from it. This might seem insignificant, but it definitely adds up.

Anyway - take a look and if you want to learn more she has some links at the bottom.
http://aidanjamessalon.com/about-us/poli...ng-policy/
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#2
That's not very fair to the stylist. That cost should be factored in to the base price of the service, I think.
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#3
I'm not sure how that's not fair to the stylist - they still get a tip, it just needs to be by cash or check.

I believe the salon also has to pay workman's comp and unemployment insurance on tips - from what I recall in doing my research. On top of that (paying out 17-18% of the tipped amount) in Washington state those tips don't count toward the requirement to pay minimum wage - which is $9.04/hour here. That makes it an expensive proposition when it comes to having employees.

All that said - I don't think I would have posted anything beyond the policy change notice. The rest is information that pertains to the financial workings of the business, which really has no place in information presented to clients IMHO.
Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
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#4
I rarely ever pay with cash. If I wasn't aware of the policy before I had a service, I probably would not go back and tip after paying with my card. It's just a huge inconvenience.
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#5
I never have cash so if the policy is cash only, I end up not tipping at all, which sucks for the tech. Realistically, if salons are doing this it is because they are trying to break the law and not pay taxes on tips all together (well, and not paying the cc fee).

I will not be doing this in my salon - I see it as a cost of business I will have to incur for the convenience of my clients and staff. This was just to demonstrate some of the hidden costs that salon owners pay that people might not be aware of. I was reading a hairdresser's blog this week complaining about her boss and the tipping policy and how the boss just sat back and "collected half of "her" money" and it just riled me up to see no thought given to all of the expenses we incur LOL Undecided
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#6
Tips should be claimed regardless, so in reality that shouldn't even come into play on the tips on cc issue. That's a cost that should already be factored into service prices, as mentioned above. Reality - most don't claim them, both on the business end and employees, which is why the IRS has salons and their workers listed as higher tax fraud risks.

This whole issue is just one of the reasons that a no tipping policy appealed to me, it just keeps things clean all the way around. Personally if I did have employees and allowed tipping I would allow tips to be placed on the card and factor that cost into my pay scale calculations. IMO it's never a good idea to make the clients think too much about the inner/financial workings of the business, I think it detracts from their salon experience.
Candice
Nail Tech/Owner
http://www.PanacheNailStudio.com
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#7
All of this is exactly why I love being a booth renter rather than an employee to anyone.

I take credit cards by square register on my iPad and I have never had a single issue. In my state we are allowed to pass those cc processing fees on to the client (with notification) as the price of using a credit card servicer. I always notify people when they ask me about using a card and I have never had an issue as most of my clients are check writers. I alleviate the problem of bad check writers by scanning their check for deposit while they're still in the chair after I get the "cleared" message I hand it back to them to destroy.

On top of that great stuff almost every one of my clients (both hair and nails) books their own appointments online through style seat to boot.

I love modern technology.
Hair, nails and waxing, I am a triple threat on two legs!!
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#8
Being new to being a tipped employee I can see the plus and minus of cc tips. As a hopeful (eventual) owner I see both too. Of course I prefer my tips in cash but I rarely use cash myself. If I happen not to have enough cash to tip (anyone), I will take the time to go back because I've always known tipped workers depend on this. I am aware that not everyone will do that though. Regardless I try to make sure I have cash on me when going to get a service done as to not inconvenience myself.
As a worker, yes I hate that my tips are taxed but my other concern becomes how the tips are recorded. There was a $20 tip missing through a tech mistake last week! I have two jobs, one that gives you a end of day tip print out with all tips and who gave how much, and one that doesn't. You hope your owners are doing the right thing but face it, some may not be and all are human and can make mistakes. Not to mention in my case the mistake was on the computer...
I also believe that this owner is waayy off with all of that info for her clients. I do believe she can educate her clients about tipping on cc in about 5-7 sentences. It's nice to explain so that people will consider using cash tips across the board. But that is just way too deep.
NY Licensed Nail + Waxing Tech
Owner/Developer Suite Tee
http://www.Facebook.com/TashawnaH
Instagram: @SuiteTee
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