All Service Providers know that tips make a big difference! They are a great way to plump up that bottom line. To a degree, entrepreneurs have the ability to maximize their potential for tips by controlling different aspects of service delivery.
Service Providers who are self-employed have control of every detail of the client’s experience. For example, décor, cleanliness, and punctuality are only ripples in the vast sea of customer excellence you can offer to attract a certain clientele.
Tips are a game changer, however, it can get a bit confusing when it comes to claiming them come tax time, especially if you pay yourself as an employee, or have employees.
Do I include tips when calculating CPP and EI deductions?
There are 2 types of tips.
Controlled tips are mandatory to the client. For example, spa parties may include a mandatory 18% gratuity that is included in the bill. If you include or “control” the tip amount in the final bill, then these tips must be included in the insurable earnings (wages + VAC pay + tips + commission). Anything considered “insurable earnings” must be accounted for when calculating the EI and CPP deductions.
Direct tips are out of your control. A client may or may not tip you or your service providers. Only the client is in control of the amount of tip they choose to leave. You as the employer are simply passing the tip from the hands of the client to the hands of your service provider. Direct tips are NOT considered insurable hours and are therefore not included when calculating EI and CPP deductions.
The declaration of tips is the responsibility of the tip reciever when filing their personal taxes.
Your goals and values will help you decide whether you want to pursue a job versus a career. But first, let’s clarify the difference.
Job vs. Career vs. Occupation
An occupation is a group of similar jobs that require some type of training and the continuous development of your skills and knowledge in order to remain current in the field. An occupation is a specific category of work; examples of occupations in the beauty industry include Estheticians, Hairstylists, and Nail Technicians. People can have different kinds of jobs within the respective occupations; for example, Hairstylists can choose to specialize in specific skills within their position, such as cutting vs. colouring.
A job is a particular position you hold doing specific duties. In the beauty industry, if the occupation is Laser Tech, an example of a job is all the duties you would provide at any particular spa, for example, providing IPL/Laser treatments, product sales, customer service, sanitation duties, and any other duties you may agree to when you accept any given job.
A career is the sum of all work activities. You can think of it like a portfolio of all the efforts you make that are related to field you work in, in our case, the beauty industry. In addition to the work activities you achieve, also included are any activities that you do at home, at school, in your community, etc.
Career Development is essential to a long lasting beauty career. With so many new services and the advancement of existing ones, it’s important to stay current.
However, work gets comfortable and it’s easy to forget about career development. Updating your skillset every couple of years increases the longevity of your career, in addition to your satisfaction!
How does ESG help?
Connect with our Career Consultants. As trained professionals, we can help you clarify your goals and organize your career path.
ESG can guide you through the ever-expanding world of beauty educators. Our experts can help you answer questions like, “Are there night classes available?” or “What’s the best course for my budget?” In addition, we can help you find loans or grants to pay for your education when applicable.
What happens AFTER training?
ESG can assist you in finding employment or starting a small business after completing your training.
Beauty Industry salaries vary greatly due to tips and commission. The chart below identifies the salaries of specific beauty occupations for 2021.
Figures were collected from The Alberta Learning Information System.
Is Provincial Regulation a good thing?
Unregulated occupations, such as esthetics are ran by spas, schools, retailers, etc. The collective of all businesses and organizations with beauty services and sales as the common goal is what we call the beauty industry. Moreover, business owners decide the acceptable minimum education of their staff. While many are open to on-the-job training, many of them require at least the minimum training.
Likewise, educators can opt to award students with an acknowledgement of participation, or certificate.
Regulated occupations, such as hairstyling, do not have as many freedoms. As a result, the integrity of these occupations remains intact. Service providers working in a regulated occupation must be tested to ensure they meet standard technical skills.
In conclusion, there are pros and cons to provincial regulation.
Tips can make all the difference.
Don’t forget to consider the money you will earn from tips as “income”. Tips can take your wage from $15 to $30 per hour. Though tips do not provide a consistent amount, they are a constant addition to your bottom line.
Tips to increase your tips.
Salons and spas with good reputations usually attract higher paying clients that are likely to tip a bigger percentage on the service. In the same vein, these employers will have higher expectations of you as a Service Provider.
In addition, training in higher ticket services will increase your tips. Generally, clients tip their Service Provider 15% of the service. Therefore, the bigger the service price, the bigger the tip.
Similarly, you can also increase your tip percentage by providing excellent customer service. Dazzling clients with your skill and personality will earn you a long-lasting career!
Commission also makes a difference.
Like tips, commission can add a few dollars extra per hour to beauty industry salaries. Commission rates vary depending on your employment agreement.
All staff members can take advantage of making money through commission sales. For instance, a salon receptionist can take their wage from $15 per hour to $20 per hour in commission sales.
Increasing commission earnings
“I’m not a good salesperson.” We’ve heard this one time and time again! Don’t let the thought of selling products scare you away from your beauty industry career. The trick to commission is understanding your client and product knowledge.
Firstly, think of yourself, not as “pushing” a product on a client, but as “prescribing” a product to help your client achieve their goal. Secondly, setting an attainable daily sales goal will help you stay organized. Lastly, familiarize yourself with your available products to select the best solution for your client.
Other ESG resources…
We know beauty careers! In other words, talk to us about starting your career in the beauty industry. We can help you develop a career path that will lead you to your goal in time and cost effective manner.
Choosing a training provider can be overwhelming, the choices are endless! Moreover, you want a training provider that will prepare you mentally for your new career. Whatever your long term career goals are, we can help you design a career path that is right for you!