I recently moved into a house in a new housing estate, and i noticed that many thai people convert the front of their houses to run small businesses e.g hairdresers or little minimarts. Do these home businesses have to be registered, and how are they taxed, or do they just pay the usual 5% on any income they make ?

what about the thousands [millions???] of food carts, flower sellers, photo takers, mobile phone bits and sexy tops sellers? How do they get taxed?

Depends where you live. if you live on a private development "Moo Ban" then the answer is NO. If you live in a house in town the answer is "I Dunno"

Even in a private development you can get taxed in some form. The local tessaban may come around and take note of your business and you pay some kind of fixed business fee. In our village (although thinking about it the right of way and upkeep was turned over to the tessaban by the developer a couple of years ago) they noted how many chairs, hairdryers etc. the hairdresser had. She knew this was coming and hid some of her equipment away until they'd visited.

That is obviously not income tax and I don't know if they send out people to inspect this kind of thing.

Even in a private development you can get taxed in some form.

Exactly. Once a year, you have people from the tax department looking around. The tax is a few hundred baht per year, that's all; no income tax, etc...

To avoid paying a fine, a mini-mart (or any small grocery store...) has to get a "licence" from the beginning. It's a small annual tax on Thai cigarettes and another one on foreign brands. Same thing for Thai alcohol and a more expensive one for imported alcohol.