Are Employee Benefits Tax Deductible at my Florida Spa?

Dear Dangerously in Love with Your Finances,

We are a luxury spa in Fort Myers FL specializing in massage therapy and esthetics. It’s important that our licensed estheticians and massage therapists always look and feel their best, as their appearance represents the spa. I would like to offer the same spa services to our employees as we offer to our clients. Can the spa deduct employees’ facials, waxes, and massages as business expenses?

~ Keeping Our Employees Feeling and Looking Good

Dear Keeping Our Employees Feeling and Looking Good,

I love seeing the esthetician’s skin glowing and looking healthy when I go to the spa. You are correct – the staff represents the services they provide and the end results. Like many other customers, I will often ask what product/s the esthetician uses and learn about their skin regimen. The inquiry can easily lead to additional product sales and repeat services, in addition to a greater level of overall trust in the business.

The key word in your question is “employee”. Since the licensed estheticians and massage therapists are employees, massage, waxing, and facial services provided by the spa can be included in their employee benefits. Thus, the employer’s portion will be coded as an employee benefit, located on the Profit and Loss statement. This form of employee benefit is not uncommon, most spas offer a 50% discount to their employees.

Before you extend this employee benefit:

  • Decide what percentage or dollar amount the spa is going to pay for. In other words, what is the financial responsibility of the spa?
  • Include the specifics of this employee benefit in the business’ handbook.

If you need help with any other health care accounting principles, please do not hesitate to reach out.

As always, stay dangerously in love with your finances!

– Lozelle Mathai

Your Healthcare Accountant Expert