Managing Tax on Tips and Gratuities in Australia

Meet the duo determined to beat the salon stereotype and reclaim balance. Bendigo-based hair stylists Paris and Matilda are first-time entrepreneurs with big growth goals. Hairdressing is a tough gig; long hours and weekend work is the norm, as Matilda points out. It’s a stereotype the duo are keen to kick with the opening of their first salon. With years of experience under their belts, Paris and Matilda know what it takes to keep a team of stylists engaged. The business partners have climbed the ranks — from sweeping cutting room floors, to now calling the shots — and know exactly how they’ll grow the business with strategies they’ve learned along the way. We spoke to Paris and Matilda about what sparked their leap of faith, and how they're managing to achieve work/life balance while growing a new business. Why did you decide to open your own salon? Paris The pandemic hit everyone differently. We were both bored at home and unable to work during lockdown, so we thought — why not take the leap? Neither of us had ever owned a business before. Some people thought it was a bit risky doing it while going through a pandemic, but it was something we were both so determined to do. We wanted to have the ability to grow a business for ourselves, that was ours, and to create a better work/life balance. The hairdressing industry certainly isn’t easy and it can be quite tough to find a salon that really cares about allowing their employees to have that balance. It’s been really rewarding being able to do everything exactly how we want to do it, and being in control of our workload. Matilda For as long as I can remember, I've always wanted to push myself and try to give myself the best opportunities to be as successful as I can be — and doing so knowing that I have provided my clients the best possible service. I was starting to lose the love of hairdressing due to working in environments that did not value their staff, and how to keep them happy. So I wanted to create a space that was fun and creative to work in whilst also giving me financial independence and better work/life balance. What makes Hair & Halo different? Matilda One of our main motivations is to break down the stereotype of hairdressing being a hardworking environment with not much reward. The technical expertise required in this creative industry should be acknowledged as it is in other sectors, and we want to create an environment that does this. The pandemic made a lot of people realise they want more balance in their life, and that is something we want at Hair & Halo. We are passionate about our salon being a place where other hairdressers can pursue their talents and careers, whilst enjoying balance in both their work and life. Owning our own salon also means we can provide and deliver the best training, products and work space for our staff — which ultimately leads to the best experience and results for our clients. Having both worked at other salons, we appreciate what works and what makes staff happy. We’ve seen firsthand how this strategy helps produce the best results. How has COVID changed the hair industry? Paris People were forced to stop and slow down, and now they are used to this which means they are more flexible. I've found that a lot of clients would prefer to have their hair appointment throughout the day, or in the evening. A lot of people can work from home now, which means our clients can bring their laptop in and work from the salon — as opposed to having to get their hair appointments done on a Saturday or their day off, outside of working hours. Because of our clients’ flexibility, we have been able to reduce our weekend work. To compensate for this, our trading hours consist of more late night hours throughout the week, which we prefer, and we think our clients do too. Matilda People definitely have more flexibility now, which means we have adapted our service delivery to accommodate these changes. There also seems to be a bit more focus on self care and people taking time out to indulge in things for themselves and we love being part of that experience. Tell us about choosing a payment services provider. Matilda When it came to finding a payment provider we wanted to research it as much as we could, so we knew we were making the right choice for our business. There are so many terminals out there but lots of them have hidden costs to them. We knew we didn't want to rent and that we wanted to purchase one, and that's what we loved about Zeller. We also thought the fees were incredibly reasonable compared to other companies out there. Not only is it super efficient, it also provides us with real time accurate information. It's also super sleek and modern-looking, which is exactly the style of our salon. Where do you see the business in 5 years’ time? Matilda I have great aspirations to expand the business both in Bendigo and in other parts of Victoria. I’m passionate about creating an experience for clients through using the best techniques and latest trends, and continuing to develop my skills through industry training. I understand the hard work required to make the salon the success I know it will be and to this, I see myself having a team of highly skilled and hard working staff who share the same passion and love for hair that I do. Paris We have very high hopes for our business. Our goals are quite big! We want to become one of the leading salons here in Bendigo, and keep growing to the point where we are able to open up another salon in a different location. Although we have only been open for a short amount of time, we are already planning on expanding our team here at Hair & Halo. We would love to have an array of employees including freelancers, apprentices and qualified hairdressers. We believe that the only way we can grow as a business is to have an amazing team behind us who love doing hair as much as we do. In 5 years’ time, we hope to have a successful business here in Bendigo that is one of the leading salons. We do have room in our current space to grow, but not as big as we would like. Our plan would be to find a bigger space that allows us to have a bigger team of amazing hairdressers. We would hope that within this timeline we would be considering, if not already have, a second location where we can grow even further. By sharing your details with us, we may contact you from time to time. We promise we won’t bug you — and you can unsubscribe from communications at any time.

Here's how to choose the right  EFTPOS system for your salon. Whether you’re a hairdresser, nail technician, or beauty therapist — if you're in the business of beauty, then you know that running a successful salon requires more than just talented staff. It's important to have the right business tools and equipment to keep your productivity high, your overheads low, and your customer service consistently great. At the top of the list should be a system for efficiently collecting customer payments. With the declining use of cash, and growing demand for convenient and secure electronic transaction options, it’s important to select a tool that can process every customer's payment quickly. You’ll also need a system that will grow with you — one that can handle an increasing transaction volume, and surface valuable insights about the financial health of your beauty business as your client base grows. With a wide variety of payment options on the market, where do you start? Here are 10 questions to ask yourself when searching for the right EFTPOS terminal for your salon. What equipment is used in a salon? Every beauty salon needs an EFTPOS terminal to process customer transactions. With the declining use of cash, and growing demand for convenient and secure electronic transaction options, it’s important to select a tool that can process every customer's payment quickly. You’ll also need a system that will grow with you — one that can handle an increasing transaction volume, and surface valuable insights about the financial health of your beauty business as your client base grows. With a wide variety of payment options on the market, where do you start? Here are 10 questions to ask yourself when searching for the right EFTPOS terminal for your salon. Is it portable? Portable EFTPOS terminals allow you to provide your clients with a stellar customer service experience, wherever they are. Whether you’re treating a client to an at-home massage, or preparing a bride on location for her wedding day, a portable EFTPOS machine is the perfect solution for processing payments. Being cordless, you can accept payments anywhere — as long as you have internet access. Zeller Terminal connects via WiFi, hotspot, and SIM Card, ensuring you’re never in the awkward situation of not being able to process a payment. A portable EFTPOS machine can also help improve the in-salon customer experience. Client in a hurry? No problem. A portable machine means you can collect payment from the chair during a blow-dry, so they can be on their way as soon as the job is done. Does it integrate with your other salon software? To be successful in the beauty industry, good communication is vital — and that extends to your salon software. Future-proof your salon operations by ensuring that your software tools talk to each other, and will be able to continue doing so even as your business expands and grows. Choose a payment system that makes it easy to add and utilise time-saving functionality, such as inventory software, booking systems, and accounting. You’ll streamline your business operations, save time on admin, and free yourself up to spend more time growing your business. Can you process payments over the phone? Even though you’re running a face-to-face service, having the ability to take payments over the phone can be good for business — especially during gift-giving holiday periods, when gift vouchers for beauty services are in demand. Having the ability to accept payment over the phone also enables you to take a deposit to confirm appointments, which helps to minimise no-shows. Your payment system should allow you to securely process a payment remotely, so that your clients feel confident doing business with you. Check out our guide on Processing MOTO Payments with Zeller Terminal . Does it look good in your salon? As a stylist, you need a solution that not only works the way you need it to, but looks the part as well. You’ve no doubt spent time and money making your salon look clean and inviting — why ruin it with a clunky EFTPOS terminal? Modern EFTPOS terminals feature elegant designs, which means that your payment hardware can enhance your salon’s aesthetics, rather than detract from it. Zeller Terminal has been designed to complement your front counter, which means you don’t have to sacrifice aesthetics for functionality. How quickly can you access your takings? Collecting payments is one thing, but accessing your money is another entirely. There is a lot of variability in settlement times between payment systems, with some online payment systems taking between three to five working days to transfer money into your account so that it can be spent paying suppliers, staff, and yourself. Zeller customers have access to a free transaction account, into which funds accepted via Zeller Terminal are settled nightly. That means you get access to your funds the very next day, and can spend your takings using Zeller Mastercard. There is also the option to have funds settled to any third party bank account — the choice is yours. Does it offer your customers a choice of payment options? Your payment system should have the capacity to process a variety of payment options. Look for a system that can accept the basics — eftpos and major credit cards, such as Visa and Mastercard — as well as contactless payment methods, such as Apple Pay and Google Pay. Keep in mind that many payment providers will charge an additional fee for accepting AMEX, and other card types. An extra couple of cents may not sound like much in isolation, but when you process thousands of transactions every year, it adds up. Will it help to grow your business? A good payment system should do more than just collect your money. It should also provide you with accurate financial insights, so that you can manage your income and cash flow. Look for a system that provides an online dashboard with real-time analytics, so you can see how your business is tracking, and make informed decisions based on performance. Zeller Dashboard provides insight into the financial health of your business at a glance, allowing you to mark smarter decisions, and grow your salon. Are the transaction fees transparent? Keeping transaction fees to a minimum is important, no matter what type of business you run. Transaction fees can eat into profits, if you choose not to implement a surcharge. However, it can be difficult to compare costs if you don’t know what to look out for. Some providers may require you to purchase your hardware upfront, while others may include a terminal as part of a recurring subscription to use the service. Whichever payments provider you choose, you can expect to pay transaction fees. These fees are usually calculated as a percentage of the transaction value, however some providers will charge additional fees. Look for a provider that is up-front with their costs, so you don’t end up being charged hidden fees or paying a recurring fee you can’t get out of. At Zeller, we keep our fees simple and transparent. Once you’ve purchased your Zeller Terminal outright, we offer one low, flat transaction rate for all in-person payments to keep your fees low and simple.There are no minimum transaction volumes, hidden fees or lock-in contracts. You’ll also receive a free business transaction account, and a Mastercard to spend your takings. Is it secure? Protecting your clients’ payment information is common sense. Fraudulent transactions not only cost time and money, but they can also cause long term damage to your reputation. Do your homework, and make sure that the company you choose not only has a system for monitoring and identifying fraudulent activity, but also a robust process for dealing with transaction disputes. The Zeller Terminal is secure out of the box, and every payment is encrypted from end to end. In addition, your account data is protected behind multiple layers of encryption and authentication, and funds are held securely until you need them. Learn more about how Zeller is committed to protecting your data. Is there support for when you need it? While you hope that nothing goes wrong with your payments system, it helps to know that someone is available to help if you ever need it. Check that your provider offers support to solve any technical issues that may arise. Zeller’s Customer Success team offers phone and email support seven days a week, from 9am to 1am (AEST). There’s also a library of resources to help you find quick solutions to your questions. Before you decide on a payment processing system for your beauty salon, be sure to do your homework. Consider the features of each system and how they will benefit your business. It’s a good idea to talk to other salon owners, and see which systems they’re using and why they like (or don’t like) them. Ask questions and get quotes from different providers so that you can make an informed decision about which system is best for your business. With so many options available, there’s no reason to settle for anything less than the perfect payment processing system for your salon. By sharing your details with us, we may contact you from time to time. We promise we won’t bug you — and you can unsubscribe from communications at any time.

Diners are more willing to tip than ever, but only if prompted. Whether it’s a tip jar on the coffee shop counter, a line for a gratuity inclusion on the restaurant bill, or a prompt on the EFTPOS terminal screen, a degree of tipping has been slowly integrated into Australia’s hospitality culture over time. Yet it’s only recently that diners have begun embracing the opportunity to leave a few extra dollars to show their appreciation for great service. Zeller research , conducted in September 2021, found 70% of Australians are willing to leave a tip when dining out or taking away. Compared to prior research, this represents a significant shift in diners' attitudes towards tipping; Australians are 233% more likely to leave a tip today than they were 4 years ago. Not only that, Zeller research also uncovered that diners aged 35 and under are the most likely to tip — and that, overall, diners are more likely to leave a tip when the transaction is processed through an EFTPOS terminal and they are prompted to do so. Keep reading to discover more about the growing tipping trend, and how hospitality merchants can use these insights to grow tips. What’s driving the trend towards tipping? It’s fair to say that tipping is not ingrained in Australian culture. Unlike in the United States, where a percentage-based tip is considered customary, there is no social or cultural expectation to leave a gratuity when dining out. Nevertheless, it’s becoming increasingly common for diners to leave a tip at restaurants, bars, cafes, coffee shops, and even takeaway venues — largely thanks to the convenience of cashless payments, and a generational shift in mindset. For merchants, this represents an opportunity to improve staff happiness and reduce turnover; enable your employees to get tips, and you’ll be more likely to retain them for the long-run. Technology prompts more frequent tipping Research shows that in 2017, just 1 in 5 Australian diners (20%) would regularly leave a tip. Zeller’s new research shows this has now increased to 70% — and that automatic tipping prompts are driving the trend.  Belinda Porra, Manager at Bar Positano, has experienced this shift firsthand. “Payment technology makes a huge difference to tipping. Traditionally people tipped with their spare change, but now a lot of people don’t carry cash. The easier it is to tip at the point of payment the better it is for our venue and our staff,” she says. The correlation between this generous trend and the death of physical cash is clear; the days of slipping a note into the receipt folder are over. The majority of diners are paying for their meals with a card or smart device these days, and 57% of diners say an automatic prompt in the payment flow would make them more likely to leave a tip. After all, it’s far easier for a diner to simply tap your EFTPOS terminal than rummage around for cash. Plus, when tipping via card or smart device, diners aren’t restricted by the amount of notes or coins in their wallet. The generational tipping point The increasing frequency at which Australian diners are tipping can also be attributed, at least in part, to the socially conscious Millennial and Generation Z cohorts. Zeller research shows an increasing tendency to tip in younger diners; 81% of 16 to 25-year-olds and 76% of 25 to 35-year-olds say they would regularly leave a tip. These younger generations are also the least likely to carry cash, instead opting for contactless payment methods such as cards and digital wallets on their smartwatches and mobile devices — which make tipping all the more convenient. That’s not to say older generations don’t tip, yet it indicates a growing generational shift towards tipping. As these diners age and a new generation begins visiting hospitality venues, merchants have an increased opportunity to benefit from this societal shift and grow their tips. The question is, how do you encourage diners to leave the highest tip they are willing to pay, so you’re not leaving money on the table? The key is prompting your diners with the right percentage-based tip amount in the payment flow — so that more diners elect to leave a tip, more often. How much are your customers willing to tip? We analysed thousands of transactions, processed via Zeller Terminals , to determine how much (or how little) diners across Australia tip, and discovered the two most influential factors are the transaction amount and the venue’s location. 1. Average transaction amount It would seem logical to assume that the higher the transaction, the higher the tip — but that’s not the case. Zeller data shows that transactions under $10 and transactions over $100 fetch the highest tips, when considered as a percentage of the total transaction amount. Transactions of $10 and under typically attract a tip of 6.94% — meaning that a $10 sandwich would fetch an average tip of 69 cents. On the other hand, diners whose bill comes to over $100 will leave a 6.45% tip on average. To put that in perspective, a $150 meal fetches an average gratuity of $9.67. This finding shows that the average transaction amount must be taken into consideration when setting tipping prompt amounts. The average tip for a venue’s average transaction amount should be included as an option, rounded to the nearest number. This is the amount the average diner is comfortable paying, so it’s probably the option they’ll select without too much thought. 2. Venue location Tipping attitudes vary widely across Australia, so it’s also important for merchants to consider location in determining their tipping prompt amounts. In New South Wales, diners leave an average of 3.67% — whereas transactions in the Australian Capital Territory fetch a 9.6% gratuity on average. Understanding the level at which your diners currently tip is important. In New South Wales, for example, you may turn diners off tipping entirely if you prompt them to leave  a 15% gratuity — because the average tip is 3.67%. Prompt your diners to tip at the level they are most comfortable, and they'll be more likely to take the option. Customising your payment flow for maximum tips Although there’s a clear trend towards tipping, it remains important to provide diners with options; not everyone will be comfortable tipping the same amount. Prompt a diner to leave a bigger tip than they are comfortable with, and they likely won’t leave one at all. Zeller Terminal allows you to set three custom percentage-based tipping points, or nudge the diner to enter an amount. In setting your tipping amounts, carefully consider how much your customers say they are willing to pay. For example, a cafe owner in Queensland whose customers typically spend around $55 might set their tipping prompts at: 5% — as the average tip for this price point is 4.54% of the transaction amount 7% — as the State’s average tip is 6.93% of the total bill 10% — as some diners will naturally tip more Alternatively, you could invite diners to leave a tip of any amount they wish. However, the convenience of simply tapping one of three options is difficult to beat. You can track tips accepted via Zeller Terminal in Zeller Dashboard and, after a month or so, determine whether your venue is achieving the average tip amount for its location and average transaction amount. Updating your tipping prompts is simple, and will update the settings across multiple terminals and locations instantly. As more and more Australian diners embrace tipping, it pays to ensure you have the ability to accept gratuities. Your staff will be grateful for the opportunity to take home a little extra cash, and you’ll benefit from happy workers with the additional financial motivation to provide every customer with exceptional service. By sharing your details with us, we may contact you from time to time. We promise we won’t bug you — and you can unsubscribe from communications at any time.