Nail salons draw attention from both CDTFA (sales tax) and EDD (payroll), because of high cash volume and the contested 1099-vs-employee question. We represent nail salons in both kinds of audit — using real numbers and statistical modeling to defend you.
Most nail-salon revenue is cash and tips, so the state assumes it's hard to verify and often estimates revenue higher than reality. At the same time, EDD scrutinizes how you pay technicians — if you file 1099 (independent contractor) but EDD deems them employees, you can face years of back payroll tax.
Two agencies, two different risks — but one defense foundation: using real data and expert argument to rebut the state's assumptions.
Cash revenue — The state estimates cash revenue higher than reality, then taxes sales on that inflated figure.
Worker classification (1099 vs W-2) — EDD may rule technicians are employees, not contractors — triggering back payroll tax and penalties.
Sales tax on retail products — Selling polish, tools, or care products to clients can be taxable sales the salon didn't report.
Tips & gift certificates — Tips and gift certificates, if mis-recorded, can be wrongly counted as taxable revenue.
We use statistical modeling to rebut CDTFA's estimated revenue, and represent you before EDD in worker-classification (1099 vs W-2) disputes. One defense foundation, two fronts.
Read: Anatomy of a CDTFA restaurant audit →It can be. EDD applies the ABC test to decide whether a worker is an employee or contractor. If reclassified as employees, you may owe years of back payroll tax. We represent you in that dispute.
We use bank statements, POS data, and statistical modeling to show the state's estimate doesn't fit your salon's real business.
Yes — which is why it helps to have one firm that handles both. We represent you on both fronts so the strategy is consistent.
If CDTFA has contacted you — even informally — call us. The first 30 days of an audit shape its trajectory. Free consultation, no obligation. We speak English and Vietnamese.
(408) 287-1888
We respond within 1 business day.