Are the products I sell in my salon taxable in New York?
Products sold at retail in your New York salon are subject to state and local sales tax. This includes shampoo, conditioner, styling products, hair color sold for home use, skincare items, and any other tangible goods customers purchase to take home.
The distinction that confuses many salon owners is that your services are generally not taxable in New York State outside of New York City. Haircuts, coloring, styling, manicures, pedicures, and spa treatments are exempt from sales tax for most Long Island salons. But the moment you sell a physical product, tax applies.
If your salon is located in New York City, the rules change. NYC taxes personal services as well as products, so both your services and retail sales would be subject to sales tax there. For salons in Nassau County, Suffolk County, and the rest of Long Island, only the retail products get taxed.
When you purchase inventory to resell, you can buy it tax-free by giving your supplier a properly completed Form ST-120, the Resale Certificate. This form certifies that you’re buying products for resale rather than for your own use. You then collect sales tax from customers when they buy those products and remit it to New York State. Don’t pay sales tax to your supplier and then collect it again from customers. That’s double taxation and cuts into your margins unnecessarily.
Your bookkeeping needs to separate taxable product sales from non-taxable service revenue. This isn’t optional. When you file your sales tax return, you need to report how much taxable revenue you collected. If your books lump everything together, you’ll spend hours trying to separate transactions or end up guessing. Neither works well.
In QuickBooks, set up separate income accounts for service revenue and product sales. Use one account for haircuts, coloring, and other services. Use another for retail product sales. When you ring up a sale that includes both a haircut and a bottle of shampoo, split it appropriately. Your books will be cleaner and your sales tax filings will be straightforward.
The sales tax rate varies by location. New York State charges 4%, but counties add their own portion. In both Suffolk County and Nassau County the combined rate is 8.625%. Your point of sale system should calculate this automatically, but verify it’s set up with the correct rate for your location.
File and pay your sales tax on schedule. Most small salons file quarterly. The deadline is the 20th of the month following the end of each quarter. Late filing comes with penalties and interest that add up quickly.
Getting this right from the start saves headaches later. Long Island bookkeeping services can help set up your accounts correctly so your taxable and non-taxable revenue stay separate and you’re not scrambling when sales tax returns are due.
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