Tracey Carter-Lunn, 55, allegedly performed the beauty treatments and carried tea to customers at her salon, despite saying she had nerve damage.
Department of Work and Pensions investigator Jess Hefford said Cartner-Lunn used both hands to apply and remove wax strips on her legs.
She told Plymouth Crown Court she also saw Carter-Lunn steadily carrying cups in saucers in the 50 Shades of Hair and Beauty Salon in Efford, Devon.
Carter-Lunn has pleaded guilty to lying about her health to pocket disability payments after failing to tell the DWP her health had improved.
Prosecutors at the fact-finding hearing say her fraudulent claims stretched from 2004 until 2014 – but Carter-Lunn only admits the false claims from early 2013.
She denies that her disability had eased to the extent alleged by the department.
Prosecuting, Jason Beal said the salon owner had falsely claimed just over £24,500 but she admits to falsely claiming a far lower sum of money.
Mr Beal said that Carter-Lunn claimed Disability Living Allowance from 2001, having suffered nerve damage in her arm due to an accident in her youth.
But he added that she did not declare that she had started work as a healthcare assistant in 2004 which involved opening and closing specimen pots and labelling jars.
She then left the hospital in 2012 and bought the salon with her family.
Mrs Hefford said she had her hair done at the salon by another member of staff in July 2014 before Carter-Lunn waxed her legs and carried the teacups.
She said: “When I got my cup it was full, with no tea in the saucer, so I had the impression she was quite steady.”
But Carter-Lunn told the court said: “If I had tried carrying two cups, then everything would be everywhere.”
She added that she used her left hand mainly for waxing clients.
Mrs Carter-Lunn said: “There is no way in a million years I could have removed strips with my right hand.”
The hearing continues.