For most industries, going C A S H L E S S is not a big deal. However, this is not the same for the beauty industry, especially when it comes to tips.
A tip or gratuity is an amount given that is more than the cost of the treatment and can be anything from a few pounds upwards, given freely in recognition for a great service. The treatment of this income depends on how the tip is received and who decides on how the tip is distributed. Tips that are given freely are outside the scope of VAT. You can keep track of these using bookkeeping software such as Intuit QuickBooks, within a spreadsheet, or via a salon booking system.
Remember, any income generated from your business must be declared and is subject to income tax. HMRC guidance has a useful breakdown that shows what you are expected to pay tax – www.gov.uk/income-tax
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