Resale Certificate for Spas and Day Spas: Buy Products for Retail Tax-Free
Spas straddle two revenue streams: services (massages, facials, body treatments) and retail product sales (skincare, haircare, candles, supplements). The service side is taxed differently from the retail side, and understanding the distinction determines what your resale certificate covers.
A spa with a healthy retail operation sells $5,000 to $20,000 per month in take-home products. At 7% sales tax, that is $4,200 to $16,800 per year in tax savings on wholesale purchases of retail inventory.
The catch: products consumed during services (massage oils applied during a treatment, facial masks used in a session) are generally NOT resale items. They are supplies consumed in providing a service.
The Service vs. Retail Distinction
This is the single most important tax concept for spa owners.
Products used during a service = taxable business supplies. When an esthetician applies a cleanser, serum, and mask during a facial, those products are consumed in performing the service. The client paid for the facial service, not for a bottle of cleanser. These products are supplies, and your resale certificate does not cover them.
Products sold at retail = resale inventory. The same cleanser sitting on your retail shelf, purchased by the client to take home, is a retail sale. Your resale certificate covers the wholesale purchase of these retail items.
The same product can be both. You may buy Dermalogica Professional from your distributor. Bottles used in treatment rooms are supplies (taxable at purchase). Bottles sold on the retail shelf are inventory (tax-free at purchase with your certificate). If you buy in bulk and split between back bar and retail, you need to track the split.
Most states require you to pay sales tax (or use tax) on the portion consumed in services and claim the resale exemption only on the portion sold at retail.
What You Can Buy Tax-Free (Retail Inventory Only)
- Skincare products (cleansers, moisturizers, serums, sunscreen sold at retail)
- Haircare products (shampoo, conditioner, styling products sold at retail)
- Body care (lotions, body butters, scrubs sold at retail)
- Nail polish and nail care products (sold at retail)
- Cosmetics and makeup (sold at retail)
- Candles and aromatherapy products (sold at retail)
- Supplements and wellness products (collagen, vitamins sold at retail)
- Tools sold at retail (jade rollers, gua sha stones, facial brushes)
- Gift sets and kits (assembled for retail sale)
- Robes and slippers (if sold to clients, not provided during service)
- Gift cards (not taxable at time of sale; tax collected when redeemed on taxable items)
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Massage oils and creams (used in treatments) | Consumed during service |
| Facial masks and peels (applied during facials) | Consumed during service |
| Waxing supplies (hard wax, strips) | Consumed during service |
| Disposable gloves and applicators | Business supply |
| Treatment bed linens and towels | Business equipment |
| Massage table and equipment | Business equipment |
| Steamer and facial equipment | Business equipment |
| Salon furniture | Business property |
| Laundry detergent (for towels) | Business supply |
| Software and booking systems | Business equipment |
Back Bar vs. Retail: How to Track It
"Back bar" refers to professional-size products used during treatments. "Retail" is the consumer-size product sold to the client.
Option 1: Separate SKUs. Most professional skincare lines sell back-bar sizes (liters, gallons) separately from retail sizes (individual bottles). Buy back-bar sizes on your regular account (pay tax). Buy retail sizes using your resale certificate (no tax). This is the cleanest approach.
Option 2: Percentage allocation. If you buy a single large quantity and split between back bar and retail, track the percentage used for each. Claim the resale exemption only on the retail portion. Pay use tax on the back-bar portion. This requires record-keeping but is accepted by most states.
Option 3: Conservative approach. Pay tax on all professional product purchases. Only use the resale certificate for products that are clearly packaged and intended for retail sale. This is the safest method during an audit.
Professional Skincare Distributors
Distributors that will require your resale certificate for wholesale accounts:
- Dermalogica (professional and retail lines)
- Eminence Organic Skin Care (spa-exclusive brand)
- PCA Skin (professional skincare)
- Image Skincare (spa channel brand)
- SkinCeuticals (medical spa and spa retail)
- OPI and CND (nail products, wholesale through salon distributors)
- Universal Companies (spa supplies and retail products)
- Pure Spa Direct (equipment and retail inventory)
- SalonCentric / CosmoProf (L'Oreal professional distribution)
Most professional skincare brands restrict distribution to licensed spas and estheticians. Your state cosmetology or esthetics license plus your resale certificate are both typically required.
Dollar Savings (Retail Product Sales Only)
| Spa Type | Monthly Retail Purchases | Annual Tax Savings (7%) |
|---|---|---|
| Solo esthetician with small retail | $1,500 | $1,260 |
| Boutique day spa (2-4 rooms) | $5,000 | $4,200 |
| Full-service day spa | $12,000 | $10,080 |
| Resort or destination spa | $30,000+ | $25,200+ |
Tax on Spa Services
In most states, spa services (massage, facial, body treatment, manicure, pedicure) are subject to sales tax. Some states exempt certain services. This is separate from the resale certificate question.
Common state variations:
- Services fully taxable: Texas, New York, Ohio, and many others tax spa services.
- Services exempt: Some states exempt personal services from sales tax (varies significantly by state and service type).
- Medical spa services: Treatments performed under medical supervision (Botox, laser, chemical peels with prescription) may be exempt as medical services. This depends on your state and your licensing.
Your resale certificate does not change how spa services are taxed. It only affects the wholesale purchase of retail products.
Common Mistakes
Using the resale certificate for all product purchases. Back-bar products consumed during treatments are not resale items. An auditor will compare your total product purchases against your reported retail sales. If you buy $100,000 in products but only report $30,000 in retail sales, they will question the $70,000 gap.
Not collecting tax on retail sales. When a client buys a moisturizer to take home, that is a taxable retail sale in nearly every state. Spas that bundle retail products into service prices ("take home this serum, it's included with your facial package") may still owe tax on the retail value.
Forgetting about gift card redemptions. Gift cards are not taxed when sold. Tax applies when the card is redeemed for taxable services or products. Your POS needs to handle this correctly.
Not separating product lines on invoices. When placing wholesale orders, having separate line items for back-bar vs. retail sizes makes audit documentation much simpler.
How to Get Started
- Apply for your resale certificate through your state or our service.
- Provide it to retail product distributors. Dermalogica, Eminence, Image, SalonCentric, and any brand whose products you sell at retail.
- Set up separate tracking for back-bar vs. retail. Your accounting should distinguish products consumed in services from products sold at retail.
- Configure your POS correctly. Services, retail products, and gift cards all have different tax treatments.