The purpose of this information is to assist persons in the beauty industry to understand Washington's excise taxes. Beauty-related services include body piercing, haircuts, manicures, and massages.

For additional information or answers to any questions about Washington excise taxes, please contact us.

Contents

Definitions

Definitions

Barber

A person licensed under RCW 18.16 to engage in the practice of barbering. 

Barbering

"The practice of barbering" means the cutting, trimming, arranging, dressing, curling, shampooing, shaving, and mustache and beard design of the hair of the face, neck, and scalp.

Business and Occupation (B&O) Tax

The B&O tax applies to the gross amount received from conducting business. There are different reporting classifications for retail sales, wholesale sales, professional services, and other business activities. Each classification has its own tax rate. Persons performing more than one activity may be subject to B&O tax under more than one reporting classification.

Consumer

A consumer is any person who uses tangible personal property and receives services defined as retail sales. Tangible personal property or services may be for personal use or for use conducting business activities. If you 're a seller, you need to know who is a consumer to know when to collect sales tax. If you are a buyer, you need to know when to pay sales tax to the seller and, if sales tax hasn't been paid, when to pay sales tax (often referred to as "deferred sales tax") or use tax directly to the Department of Revenue.

Cosmetology

"The practice of cosmetology" means arranging, dressing, cutting, trimming, styling, shampooing, permanent waving, chemical relaxing, straightening, curling, bleaching, lightening, coloring, waxing, tweezing, shaving, and mustache and beard design of the hair of the face, neck, and scalp; temporary removal of superfluous hair by use of depilatories, waxing, or tweezing; manicuring and pedicuring, limited to cleaning, shaping, polishing, decorating, and caring for and treatment of the cuticles and nails of the hands and feet, excluding the application and removal of sculptured or otherwise artificial nails; esthetics limited to toning the skin of the scalp, stimulating the skin of the body by the use of preparations, tonics, lotions, or creams; and tinting eyelashes and eyebrows.

Cosmetologist

A person licensed under RCW 18.16 to engage in the practice of cosmetology.

Esthetics

"Practice of esthetics" means care of the skin by application and use of preparations, antiseptics, tonics, essential oils, or exfoliants, or by any device or equipment, electrical or otherwise, or by wraps, compresses, cleansing, conditioning, stimulation, pore extraction, or product application and removal; the temporary removal of superfluous hair by means of lotions, creams, mechanical or electrical apparatus, appliance, waxing, tweezing, or depilatories; tinting of eyelashes and eyebrows; and lightening the hair, except the scalp, on another person.

Esthetician

A person licensed under RCW 18.16 to engage in the practice of esthetics.

Gross Amount

The term "gross amount," which appears at the top of column one on the excise tax return, is a "catch-all" term for whichever of the following terms is applicable to your business: "gross proceeds of sale," "gross income of the business," or "value of products." The gross amount includes all consideration received without deductions for the costs of doing business or other expenses.

Manicuring

"Practice of manicuring" means the cleaning, shaping, polishing, decorating, and caring for and treatment of the cuticles and the nails of the hands or feet, and the application and removal of sculptured or otherwise artificial nails by hand or with mechanical or electrical apparatus or appliances.

Manicurist

A person licensed under RCW 18.16 to engage in the practice of manicuring.

Retail Sales Tax

A tax imposed on the buyer of goods and certain retail services. The seller is responsible for collecting the tax from the consumer and remitting the tax to the Department of Revenue. The sales tax is a combined state and local tax.

RCW

Revised Code of Washington. The Revised Code of Washington (RCW) is the compilation of all permanent laws (i.e., statutes) currently in force.

Salon/shop

"Salon/shop" means any building, structure, or any part thereof where the commercial practice of cosmetology, barbering, esthetics, or manicuring is conducted. This includes individuals leasing space where services are performed. There are specific licensing requirements in Washington: Persons operating a salon/shop, including a mobile unit, or other location, must obtain a specific shop license/location license from the Department of Licensing in addition to getting their business license, and individual cosmetologist, barber, manicurist or esthetician license.

UBI/Tax Registration Number

Sometimes called a registration, tax reporting account, or "C," the Unified Business Identifier (UBI) number is a nine-digit number used to identify persons engaging in business activities. The number is assigned when a person completes a Business License Application to register with or obtain a license from state agencies. Important: Persons operating a salon/shop must also obtain a specific shop license through the Department of Licensing, in addition to the business license.

Use Tax

Use tax is a tax imposed on the use of goods in this state as a consumer when the goods are purchased or acquired without payment of this state's retail sales tax. With respect to the use of goods as a consumer, either sales tax or use tax, but not both, applies. In this manner, use tax serves to complement the sales tax. Like the sales tax, the use tax is a combined state and local tax. Use tax rates and sales tax rates are identical.

WAC

Washington Administrative Code. The Washington Administrative Code codifies the rules (i.e., regulations) of each state agency having rule-making authority.

Service and Other Activities Business and Occupation (B&O) Tax Classification

Service and Other Activities Business and Occupation (B&O) Tax Classification

Cosmetology

• Hair cutting, styling, coloring, bleaching, trimming, shampooing, conditioning, permanent waving, chemical relaxing, straightening, curling, dressing, lightening, tweezing, and waxing
• Mustache and beard trimming, shaving and designing
• Temporary removal of superfluous hair by use of depilatories, waxing, threading or tweezing
• Attaching hair extensions
• Booth or chair rental income
• Ear/body piercing

Barbering

Income received from the following activities performed by a barber is taxable under the Service and Other Activities B&O tax classification:

• Hair cutting, trimming, arranging, dressing, curling, shampooing and shaving
• Mustache and beard trimming, shaving and designing
• Booth or chair rental income

Manicuring

Income received from the following activities performed by a manicurist is taxable under the Service and Other Activities B&O tax classification:

• The cleaning, shaping, polishing, decorating, and caring for and treatment of the cuticles and nails of the hands and/or feet
• The application and removal of sculptured or otherwise artificial nails by hand or with mechanical or electrical apparatus or appliances
• Booth or chair rental income

Esthetics

The income received from the following activities performed by an esthetician is taxable under the Service and Other Activities B&O tax classification:

• The care of the skin by application and use of preparations, antiseptics, tonics, essential oils, or exfoliants, or by and device or equipment, electrical or otherwise, or by wraps, compresses, cleansing, conditioning, stimulation, pore extraction, or product application and removal
• The temporary removal of superfluous hair by means of lotions, creams, mechanical or electrical apparatus, appliance, waxing, tweezing, or depilatories
• The tinting/lightening of eyelashes and eyebrows
• Booth or chair rental income
• Ear/body piercing

Retail Sales Tax/Retailing B&O Tax

Retail Sales Tax/Retailing B&O Tax

All sales of tangible personal property or charges for services defined as “sales at retail” or “retail sales” to a consumer are subject to Retail Sales Tax and taxable under the Retailing B&O Tax classification. The following are examples of items or services typically sold or performed for consumers by cosmetologists, barbers, manicurists or estheticians:

• Sales/cleaning and repairs of wigs, hairpieces and extensions (without attaching them)
• Sales of beauty/cosmetic products such as shampoo, hairspray, nail polish, hair coloring products, etc. (does not include products used in performing services)
• Sales of nutritional supplements
• Sales of combs, brushes, curling irons, hair dryers, hair clippers, etc
• Sales of extensions (without attaching them)
• Charges for tanning, steam or Turkish baths (spas)
  

Wholesale B&O Tax

Wholesale B&O Tax

The income received from sales of tangible personal property or retail services to persons or business entities who will in turn sell them to consumers is taxable under the wholesaling B&O tax provided the seller receives from the buyer a completed reseller permit.

Litter tax

Litter Tax

Washington law, chapter 82.19 RCW, imposes a litter tax on manufacturers, wholesalers, and retailers of certain products which contribute to the litter problem in this state. The specific products listed in RCW 82.19.020 include toiletries.

Litter tax due on gross proceeds - sales of hair, beauty, and personal care related products

The gross proceeds from sales of hair products, and other beauty and personal care related products in Washington, is subject to the litter tax. Report such sales under the litter tax line on the excise tax return. This is in addition to reporting your sales of beauty products under the Retailing B&O tax classification and retail sales tax. For more information, see Litter tax.

Use Tax

Use Tax

Use Tax Obligations of Cosmetologists, Barbers, Manicurists and Estheticians

Use tax is a tax imposed on the use of tangible personal property in Washington when sales tax has not been paid. It is computed at the same rate as the sales tax. Unless specifically exempt by law, all tangible personal property purchased or used in this state is subject to either the sales tax or use tax, but not both, regardless of where or from whom the property is purchased.

There are many instances where sales tax is not paid to the seller. The following are examples of transactions where sales tax may not be collected by the seller:

• Catalog purchases from an out of state seller
• Internet purchases from an out of state seller
• Inventory withdrawals for use by the business

The following equipment and supplies are subject to use/deferred sales tax if sales tax was not previously paid:

• Equipment and supplies such as clippers, scissors, curlers, hair dryers, chairs, capes, smocks, combs, brushes, towels, etc.
• Any tangible personal property consumed while performing any activity taxable under the Service and Other Activities B&O tax. Examples of consumable supplies used to accomplish these tasks are shampoo, conditioners, hairspray, hair coloring agents, tints, hair extensions, perm solutions, nail polish, artificial nails, lotions, wax, hair tonic, creams, hair dye, shaving cream, depilatories, etc
• Computer equipment, prewritten software, and  maintenance contracts that include updates to prewritten software

Chair and/or Booth Rental

Chair and/or Booth Rental

In most cases, when a cosmetologist, barber, manicurist, or esthetician rents a chair or booth within a shop, they are considered an independent contractor instead of an employee.

Note: For specific guidance regarding whether such persons are employees, please see Independent Contractors on the Employment Security Department's website.  

Licensing requirements

Independent contractors are responsible for obtaining their own business license and salon/shop license. This licensing requirement is in addition to getting individually licensed as a cosmetologist, barber, manicurist, or esthetician.

For business licensing information, see the Business Licensing Service. For salon/shop licensing information, please visit the Department of Licensing's website.

Specific licensing required

Specific licensing required

There are specific licensing requirements in Washington State related to cosmetologists, barber, manicurist, or estheticians, and for persons operating such businesses.

If you plan to operate as a business in Washington State, you will need to apply for a business license with Business Licensing Service and then apply to the Department of Licensing for a salon/shop license.  This is in addition to the individual professional license.

• Individual professional licensing: The Department of Licensing administers individual professional licensing for this industry.  For information about individual licensing requirements, please see How to get your license at Department of Licensing’s website.

• Business license: For information about applying for a business license, see Business Licensing Service.  After you file your business license application and get your registration/UBI number, you can apply for your salon/shop, personal service, mobile unit license, as you must include your registration/UBI number with your “salon” license application. 

• Salon/shop license, personal service, mobile unit license: Persons operating a salon/shop, providing personal services in another location such as the client’s home, or operating a mobile unit must apply to the Department of Licensing for a specific salon/shop, personal service, mobile unit license.  This licensing requirement also extends to booth renters, and is in addition to getting a business license and individual professional license.  The Salon license must be posted in the salon/shop along with the Washington State business license and any required city business license.  See Salon/shop licensing information. 

Tax Exercise

Tax Exercise

All-City Hair Salon provides hair, tanning, massage, and nail services. In addition to the two partners, they have an independent stylist that rents a booth/chair and provides hair services. The independent's customers pay that stylist directly. The booth renter pays a flat fee of $250 a month. The salon has a nail technician and a masseuse that are employees. Tanning beds and spas are also available to the salon's customers.

The salon has a monthly reporting frequency. During the month of September 2002, salon revenues were as follows: