Point of sale systems are among the most important parts of a business. While some small business owners may think that POS systems are just one-dimensional solutions, they actually provide a wide range of services. Here is what you should know about point of sale systems, including what they are, why you need them for your small business, and the best point of sale systems for your small business.
What is a Point of Sale System?
A point of sale system is the area where a customer processes their payment for an item purchased. This can occur in person, or with more frequency, online. The corresponding receipts for every POS transaction arrive through a printed receipt or an e-mailed receipt.
Why Do You Need a POS System?
A POS system is vital for small businesses. There are different types of POS Systems such as mobile POS systems, for faster credit card processing and mobile payments, or more traditional ones found at restaurants and stores. POS systems track several metrics of retail within a business.
POS systems can track the following metrics:
- Customer experience (Storing customer data if or when the experience goes badly)
- Employee management (sales performance)
- Gift card (Usage)
- Inventory management (inventory turnover, markdowns, shrinkage, etc.)
- Loyalty programs (tracking incentives for current and new customers)
- Reporting (Generating custom reports, data, and software)
- Sales data
What is the Best POS System for Small Businesses?
The best POS system for your small business will depend on the business that you operate and what you’re seeking to do. There are five point-of-sale systems that you may want to consider, each with their pros and cons.
QuickBooks Point of Sale provides important pros for small businesses. It offers accounting integration with Intuit, which will provide additional benefits. Additionally, you can QuickBooks Point of Sale as a one-time purchase without any monthly fees. Its software is also compatible with the Windows operating system.
In spite of the important pros that QuickBooks Point of Sale has, it also has drawbacks to consider. Since the POS system doesn’t offer monthly payments, you must purchase the software outright. The prices range from over $1,000 for the Basic plan to nearly $2,000 for the Multi-Store plan. Second, these plans only offer simple payment processing and inventory management. If you are trying to utilize employee management or integrated inventory tools, you’ll need to pay for either the Pro or Multi-Store plans. Finally, QuickBooks Point of Sale isn’t offered for the iPad, which can be a drawback to many small business owners.
If your small business is in the beverage or food industries, you may want to consider Revel Systems. Bars, breweries, coffee shops, and restaurants can benefit from analytic and integration tools. Revel Systems also offers customizable loyalty and management services for you, which may be helpful for attracting and retaining more customers.
While it offers a lot of strengths for several industries, the pricing for their POS system isn’t entirely clear. Their system costs $649; each terminal has a monthly fee of $99. Revel Systems also requires a 3-year contract to use its POS system. They charge a flat fee for processing.
If your small business is a retail business, you may want to consider Shopify. It offers affordable processing and subscription fees and e-commerce tools that can assist your retail business. Their monthly fees range from $9 for Shopify Lite to $299 for Advanced Shopify.
Although Shopify is transparent with their pricing, there are still two things to consider with this system. The Shopify Lite plan is for retail business conducted on Facebook. You must subscribe to the $29 monthly Basic Shopify plan if your business doesn’t use Facebook for retail purposes.
There are also differing percentages for payment processing fees. This varies whether the payment occurred in-person, online, or through a third-party. Shopify has a range of 2.4% to 2.7% for in-person processing fees and a range of 2.4% to 2.7% for online processing fees. However, if you work with a third-party that is not Shopify for payment processing, there will be an additional fee of 0.5% to 2%.
For small businesses that have a lot of inventory, ShopKeep may be the best POS system. ShopKeep excels in its inventory management tools as it offers unlimited inventory management. It also offers 24/7 customer support which can be helpful for small businesses in need of assistance at any time.
Though ShopKeep has several benefits, there are drawbacks to consider. Pricing details are scarce and so are transaction fees. It is also limited to only iPad use, which may pose difficulties for business owners who don’t use iPads.
Finally, Square may be the most practical POS system for small business owners. There is no cost for the basic plan. Instead, there are fees based on how transactions occur. Payments in which customers dip, swipe, or tap have a fee of 2.6% plus 10 cents; card-on-file and keyed-in payments have a fee of 3.5% plus 10 cents.
Square for Restaurants and Square for Retail both have a $60 monthly fee and an additional $40 monthly for each additional POS system. However, the transaction fees for both are discounted to 2.5% plus 10 cents per transaction. Businesses with fewer employees also benefit from lower monthly fees. Businesses with two to five employees pay $50 monthly; businesses with six to ten employees pay $90 monthly.
The transaction fees for Square are higher than competitors and entries requiring manual input also result in higher fees.
Once you’ve learned more about how a point of sale system can benefit your business, you’ll need to carefully evaluate what you are looking for out of a POS system. Then, you can choose the best system that fits your business and budget.
Now, you’re ready to move on to the next step and apply for the right permits and licenses to operationalize your business.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.