Money Matters

Tipping Done Right

First and foremost keep your tipping policy client-friendly and report the tips as income.

Salon consultant Neil Ducoff is no great fan of tipping. In fact, recently in his “Monday Morning Wake-Up” e-newsletter he suggested the industry get together and ban tipping altogether. Still, he concedes, as big a problem as tips are, getting rid of them is an even bigger problem. To make tipping work a little better, he suggests the following strategies:

> Make your tip policy client-friendly: Make it simple and make it known to all. Put the client first and the entitlement-seekers second. If the client isn’t happy, no one wins.

> No more cash: Enough with the counting cash, stuffing envelopes, and technicians at the front desk stomping over clients asking for their payola. If you’re going to the bank to get cash for tip payouts, you’re wasting time and money. All tips should be added to paychecks and taxed, as required by law.

> End the credit card fee controversy: Decide what you want to do and do it. Either deduct credit card fees from tips or accept it as a cost of doing business. Forbidding clients to add tips to their credit card charge simply to avoid the fee is an inconvenience and penalizes clients. This is about the client experience.

> Tips are income earned at work: Tips are taxable income. It’s illegal not to report tips and withhold the tax. It’s the law. If employees don’t like it, they can file a complaint with the Internal Revenue Service. Get over it.

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