Starting a point-of-sale business is a rewarding venture that combines tech skills and sales expertise with business savvy. The market is worth billions of dollars, with steady demand for modern payment solutions from restaurants, retail shops, and service-based businesses.
This guide will take you through the practical steps of validating your business concept, securing funding, building supplier relationships, and obtaining necessary licenses to help you launch a successful pos business in the U.S.
Step 1: Plan your business and validate your idea
Market and competitor research
Start by talking directly to local business owners in your target niche, like restaurants or retail shops. Ask about their frustrations with their current POS systems. For broader trends, you can review market analyses from firms like Gartner or IBISWorld.
Once you have that data, use review sites like Capterra and G2 to see what customers say about major players like Square and Toast. A frequent oversight is to ignore niche competitors. You should also study systems built for specific industries, as they have dedicated features.
Estimate your startup costs
Speaking of costs, your initial investment will vary. Developing your own software is a major expense, often from $50,000 to over $250,000. For this reason, many new owners first become resellers of established systems to reduce upfront financial risk.
Other typical costs include $10,000 to $30,000 for initial hardware inventory, $300 to $1,000 for business registration, and $2,000 to $10,000 for a website and initial marketing. Your total startup fund should reflect these figures.
Here are 4 immediate steps to take:
- Survey at least 20 local businesses about their payment processing needs.
- Use G2 or Capterra to compare the top three POS systems in your target market.
- Draft a startup budget that includes hardware, legal, and marketing costs.
- Decide whether you will build a custom solution or start as a reseller.
Step 2: Set up your legal structure and get licensed
For most new POS businesses, an LLC is a practical choice. It separates your personal assets from business debts and offers pass-through taxation, which simplifies your filings. A C Corporation is more complex but may be better if you plan to seek venture capital later.
Federal, state, and local requirements
First, get an Employer Identification Number (EIN) from the IRS website. It is free and you will receive it immediately. You need this for taxes and to open a business bank account. Many new owners forget this step and try to use their social security number, which is a mistake.
Next, check with your state’s Secretary of State to register your business. You will also need a seller’s permit from your state’s Department of Revenue. This permit allows you to buy hardware for resale without you pay sales tax. These permits can cost between $0 and $100.
Finally, your city or county will require a general business operating license. While not a government license, you must also understand Payment Card Industry (PCI) compliance. Your clients depend on your system to meet these security standards, so familiarize yourself with the PCI Security Standards Council's requirements.
Here are 4 immediate steps to take:
- Decide if an LLC or C Corporation is the right structure for your goals.
- Apply for a free Employer Identification Number (EIN) on the IRS website.
- Research your state’s requirements for a seller’s permit.
- Review the basic requirements from the PCI Security Standards Council.
Step 3: Secure your business with the right insurance
Key insurance policies
Your business needs several types of insurance. General Liability is the baseline, covering physical incidents like property damage. Expect to pay $400 to $700 annually for a standard $1 million policy. This policy, however, will not cover you for software failures or data breaches.
For those specific risks, you need Professional Liability, also known as Errors & Omissions (E&O) insurance. This protects you if your system fails and causes a client to lose sales. A $1 million E&O policy often costs between $600 and $1,200 per year.
If you hire employees, you must have Workers’ Compensation. If you lease an office or store hardware, you should add Commercial Property insurance. A Business Owner's Policy (BOP) can be a cost-effective way to bundle general liability and property coverage together.
Find a specialized provider
A frequent mistake is to use a general agent who does not understand technology risks. You might want to work with insurers that specialize in tech businesses. Providers like The Hartford, Hiscox, and CoverWallet understand your specific exposures and can offer more relevant policies.
Here are 4 immediate steps to take:
- Get quotes for a $1 million General Liability policy.
- Ensure your Professional Liability policy includes data breach coverage.
- Compare rates from tech-focused insurers like The Hartford and Hiscox.
- Ask about a Business Owner's Policy (BOP) to bundle coverage.
Step 4: Set up your location and source equipment
You do not need a retail storefront. Many POS businesses start from a home office to keep initial costs low. When you are ready for a dedicated space, a 500-1,000 square foot office or light industrial unit is often sufficient for storage and testing.
When you look at commercial spaces, confirm the zoning allows for office use and light storage. During lease negotiations, you might want to ask for a shorter initial term of one to two years. This gives you more flexibility as your business finds its footing.
Source your hardware
Your main hardware costs will come from terminals, printers, and scanners. A modern POS terminal can run from $800 to $2,000. Receipt printers add another $200 to $400, while cash drawers and barcode scanners typically cost between $100 and $250 each.
Build supplier relationships
You will buy hardware from wholesale distributors, not manufacturers. Look into companies like BlueStar, Ingram Micro, and ScanSource. Some require a minimum first order, which can be from $2,000 to $10,000, so ask about their requirements for new resellers.
A frequent misstep is to depend on a single supplier. You should open accounts with at least two distributors to avoid problems with stock availability. You can also explore dropshipping arrangements to avoid holding inventory yourself, which lowers your upfront hardware investment.
Here are 4 immediate steps to take:
- Research commercial lease rates for a 500-1,000 sq ft space.
- Price out a starter hardware kit with a terminal, printer, and scanner.
- Contact a distributor like BlueStar or ScanSource about their partner programs.
- Decide whether you will hold inventory or use a dropshipping model first.
Step 5: Set up your payment processing
As a POS provider, you will partner with payment processors to handle your clients' transactions. You earn a small percentage of each sale. Many new owners overlook this revenue stream, but it can become a significant part of your income.
Look for a processor that offers transparent pricing and good support. Typical rates can range from 2.5% to 3.5% plus monthly fees. Your goal is to find a partner that gives you a fair revenue share while keeping costs low for your clients.
You also need a way to get paid for your own services, like setup fees or hardware sales. For POS businesses that need to accept payments on-site, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone.
Just tap and you are done. At just 1.99% per transaction with no hidden costs or extra hardware needed, it is a great value compared to average commission rates. It is particularly useful for collecting a deposit from a new client right at their business.
- Get Started: Download JIM app for iOS
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone
- Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers
Here are 3 immediate steps to take:
- Research two to three payment processors you could partner with.
- Compare their revenue sharing models for resellers.
- Download the JIM app to test its on-the-go payment features.
Step 6: Fund your business and manage finances
Funding options
An SBA 7(a) loan is a popular route. Lenders often look for a credit score above 680 and a solid business plan. Loans can range from $30,000 to $350,000 with interest rates typically between 8% and 11%. You might also consider equipment financing specifically for your hardware inventory.
Another option is a business line of credit. This gives you flexible access to cash for managing inventory or unexpected costs. Approval often depends on your business's projected cash flow. Many owners overlook this, but it can be a lifesaver when waiting on client payments.
Financial management
Once you secure funding, open a dedicated business bank account immediately. Mixing personal and business finances is a frequent error that creates tax headaches and makes it hard to track profitability. This separation is not just good practice; it protects your personal liability if you are an LLC.
You will need enough working capital to cover your first six months. Based on typical startup costs, plan for $30,000 to $75,000. This buffer covers hardware, marketing, and operational expenses before your revenue stream becomes consistent. Underestimating this figure can sink a business early on.
Here are 4 immediate steps to take:
- Draft a detailed 6-month operating budget.
- Review the SBA 7(a) loan requirements on the official SBA website.
- Open a dedicated business bank account to keep finances separate.
- Get quotes for equipment financing from two different lenders.
Step 7: Hire your team and set up operations
Key roles to fill
Your first two hires will likely be a POS Technician and a Sales Representative. The technician handles installations, client training, and support. Many new owners make the mistake of hiring a general IT person, but you need someone with specific POS hardware experience.
Look for candidates with a CompTIA A+ certification or experience with brands like Elo or Star Micronics. Expect a salary between $45,000 and $70,000. Your sales rep will generate leads and close deals, so their role is just as important for early cash flow.
A typical sales compensation plan includes a base salary of $40,000 to $60,000 plus commission. This structure motivates them to actively build your client base from day one.
Streamline your operations
With a team in place, you need a system to manage jobs. Field service software like Jobber or ServiceTitan helps you schedule installations and track support tickets. For your sales process, a CRM like HubSpot offers a free plan to manage leads and follow-ups.
As your business grows, a good benchmark to aim for is $150,000 to $250,000 in annual revenue per employee. This figure helps you understand if your team size is efficient relative to your income.
Here are 4 immediate steps to take:
- Draft job descriptions for a POS Technician and a Sales Representative.
- Research average salaries for these roles in your specific city.
- Explore a field service management app like Jobber.
- Outline a simple onboarding plan for your first technical hire.
Step 8: Market your business and get customers
Start with direct outreach
Your first clients will likely come from direct visits to local shops and restaurants. This approach builds personal relationships, which are highly valued. Prepare a simple one-page flyer with your contact information and key services to leave behind after your conversation.
A frequent mistake is to rely only on email. Many decision-makers, especially in the restaurant industry, respond better to a phone call or a face-to-face chat. This personal touch can set you apart from larger, impersonal competitors.
Build your online presence
For digital marketing, focus on local SEO. Set up a free Google Business Profile so you appear when someone searches for "POS systems near me." A professional website is also non-negotiable, as it builds immediate credibility with potential clients.
You can also run a content campaign. For example, write a blog post titled "3 Ways Restaurants Lose Money on Old POS Systems." This targets a specific pain point and attracts qualified leads who are already looking for a solution.
You should track your Customer Acquisition Cost (CAC). A target of $500 to $2,000 per new client is a realistic range. For your website, aim for a 2-5% conversion rate on your contact form. These metrics tell you if your marketing spend is effective.
Here are 4 immediate steps to take:
- Create a list of 50 local businesses to contact directly.
- Set up a free Google Business Profile for your company.
- Outline a blog post that solves a problem for your ideal client.
- Draft a simple one-page flyer outlining your services.
Step 9: Set your pricing strategy
Choose your pricing models
A standard approach is to mark up hardware by 15% to 30%. For example, if a terminal costs you $800, you would price it between $920 and $1,040. This gives you an immediate profit on the sale.
For software, a recurring revenue model is common. You can charge a monthly subscription fee, often from $50 to $150 per terminal. This creates a predictable income stream, which is vital for cash flow management.
You should also price your services. One-time installation and training can be a package deal, typically from $500 to $2,000. In addition, you can offer ongoing support contracts for a monthly fee of $50 to $100.
Analyze your competition
To see if your prices are competitive, check what others charge. Review their websites for public pricing. You might also call a few competitors and ask for a quote as if you were a potential customer to get real-world numbers.
Many new owners make the mistake of underpricing their services just to win their first few clients. This can devalue your brand and make it difficult to raise prices later. It is often better to justify a higher price with excellent service.
Here are 4 immediate steps to take:
- Draft a price list for a standard hardware kit using a 20% markup.
- Set your monthly fees for software and a premium support contract.
- Research the installation fees of two local competitors.
- Calculate the total first-year revenue from a single client.
Step 10: Control quality and scale your operations
Measure service quality
To measure client satisfaction, track your Net Promoter Score (NPS). A score above 50 is a strong benchmark. Also, monitor support ticket response times. You should aim to answer urgent requests within one hour and resolve them within four.
Many owners wait for a negative review before they address client feedback. A better approach is to send a simple survey after each installation. This practice helps you catch problems early and shows clients you value their business.
Know when to grow
Once your lead technician consistently handles more than 10-12 installations per month, it is time for a new hire. For sales, add a new representative when your current one exceeds their quota by 20% for a full quarter.
To support this expansion, you might need to upgrade your CRM. While HubSpot's free plan is great for starting, its paid tiers or a system like Zoho CRM can help you manage a larger sales team and client base without details getting lost.
Here are 4 immediate steps to take:
- Create a post-installation client satisfaction survey.
- Set a target for support ticket response and resolution times.
- Define the installation workload that triggers a new technician hire.
- Compare the features of paid HubSpot and Zoho CRM plans.
You have the roadmap to launch your POS business. Remember that success in this field comes from strong relationships with clients and suppliers. Your service matters just as much as your technology. Now, go build a business that helps others grow.
As you get started, you will need a way to get paid for your own services. JIM turns your phone into a card reader for a flat 1.99% fee, with no extra hardware. It is a simple way to collect deposits on the spot. Download JIM and get paid.
