Nail salon bookkeeping: payout math, package liabilities, and two margins

Service and retail are different margins — split the ticket

A gel set and the cuticle oil sold at checkout sit on the same receipt but belong to different businesses. Service revenue carries technician time and consumed supplies; retail revenue carries product cost and shelf shrink. Salon software — Fresha, GlossGenius, Vagaro, Square Appointments — will separate the two if items are set up correctly, so we audit the item list at onboarding: every service mapped to service income, every product to retail income with a cost attached. One blended sales line is how a salon runs busy for a year without knowing that retail is carrying the rent, or that it is dead weight.

Four ways people get paid, four different entries

The payout table below is the spine of nail salon books. The classification question behind it is real: unlike barbers and hairdressers, estheticians have no special deemed-employer EI rule, so CRA falls back on the usual control, tools, and financial-risk factors — and a renter who works your hours on your products can be reassessed as an employee with back CPP, EI, and penalties.

Commission payouts deserve their own note: the percentage usually applies to service revenue net of HST, sometimes net of a product fee, and the POS commission report is only right if every stylist's services were rung under the right name. We reconcile payout runs to POS reports before they hit payroll, because a quiet misring repeats every pay period.

Packages, series, and gift cards are not revenue yet

A six-session facial series or a prepaid mani-pedi package is a deferred revenue liability when sold, and earns into income one redeemed session at a time — the POS session counter is the source of truth. Gift cards work the same way and linger longer. Booking these at sale overstates today and starves the months when the work is actually delivered, which matters in a business planning around seasonal peaks like prom, wedding season, and December.

Supplies vanish into the service — measure them anyway

Monomer, gel, tips, wax, and disposables are consumed at the table, so they are a cost of service, not retail COGS — and they are also the leakiest expense in the industry. We track supply spend as a percentage of service revenue by month; a drifting ratio flags over-ordering, waste, or product leaving in bags. Retail stock gets the counts: shelf quantities against POS on a cycle, margins by brand, and slow movers flagged before they expire on the shelf.

The close, the threshold, and the border

The daily close posts service revenue, retail revenue, deferred package sales, tips to a clearing liability, HST, and card fees as separate lines — after that the monthly close is routine rather than archaeology. Solo estheticians should watch the $30,000 small-supplier threshold; nail and beauty services are taxable, and registration obligations start the moment a trailing four-quarter total crosses it. Most product lines in this industry are imported, and the duty and cost thread lives in our nail salon cross-border tax guide.