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Is an ATM Business Profitable: How Much ATM Business Owners Make

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Is an ATM business profitable? Well, yes. Otherwise they wouldn’t exist! Not all ATM machines are owned and operated by financial institutions. Many ATM machines are owned and operated by independent ATM deployers (IADs). 

An IAD’s main source of revenue comes from the surcharge fee imposed on transactions. However, there is more than one way to own (and profit from) an ATM business. When simplified, ATM business profit comes down to a few factors: location, transaction volume, surcharge fee, and operating costs.

For any business, the goal is to maximize revenue and minimize costs. The difference equals profit. In this article, we’ll provide you with a few formulas you can use to calculate ATM business profit. But we’ll also provide you with a look at other ways to make money in the ATM business. Keep reading to learn how to make your ATM business profitable.

How to Calculate Your ATM Business Profit

There are a couple of rules of thumb you can use to gauge how much money your ATM might generate. However, remember that there are many factors that can affect the success and profitability of a location (more on that later). So no location is a guarantee. These formulas simply help to give you an idea of whether or not a location is a good fit and what you can expect in terms of revenue. 

Rule of Thumb #1

The first rule of thumb says that approximately 2-3% of people that actually see an ATM machine in an establishment will likely use the ATM. Say, for example, that your location has an average of 200 customers visiting each day. One would expect or speculate that approximately 5 of those 200 people would use that ATM daily.

You can then take that number of people and multiply it by the amount of your surcharge. If you take that number and multiply it by how many days the location is open during the year, you’ll be able to estimate how much money your machine might make in a year. You can also get a monthly revenue estimate. 

(5 x Surcharge Amount) x Days Open Per Year = ATM Revenue Per Year

Use the calculator here to help do the math more quickly.

Rule of Thumb #2

The second rule of thumb suggests that the number of adult patrons an establishment has in a given day—plus or minus 10%—will use the ATM on a monthly basis.

This rule of thumb is more commonly followed if the establishment accepts credit cards or gives cash back at the point of sale (POS). However, alternate payment methods will affect ATM usage but will also convert some users to cash. This also helps lower credit card fees the establishment pays. Usage could be affected by as much as 20%-40%.

# of Adult Patrons Per Day +/- 10% = # of ATM Uses Per Month

Use the calculator here to help do the math more quickly.

Basically, once you purchase an ATM machine and set it up with processing, it could pay for itself in less than a year if it’s in a good location. It could pay for itself in as little as a few months in a great location. After that, you begin to profit!

The Location Factor

A high-quality location makes an ATM business profitable. While it is actually very difficult to lose money with an ATM business, the sooner your machine pays for itself, the sooner you can begin to make a profit. 

An ATM can be installed anywhere. But for it to be successful, there has to be a need for the service. That means that the more people who both have access to the machine and need cash, the more profitable your ATM business will be. 

So, when selecting a location for your ATM, look for places that see a lot of business or foot traffic, aren’t near direct competition, and offer opportunities to spend money. Cash-only locations are even better and can automatically increase your profit estimates. 

Once you are in business, you will make money every time the machine is used. But you have to make sure that you get enough transactions in a month to cover operational costs.

Operational Costs

Fortunately, there aren’t a ton of operational costs to consider each month. Essentially, you’re looking at travel costs to and from the location, receipt paper and cleaning supplies, and maybe wireless service and general liability insurance. 

If you make more revenue from your machine than what it costs you to operate your business each month, you will profit. 

Don’t forget to factor in revenue share when estimating your profit. If the location receives a portion of the machine’s surcharge revenue, add that to your operational costs if you calculate your profit based on the flat surcharge fee. Or, you can adjust the surcharge in your calculation based on the share that you receive.

Remember, too, that you will have a couple of thousands of dollars tied up in vault cash. This is the cash that you load into the machine to be dispensed each transaction. It’s a good idea to add that amount to your startup costs when determining your ROI goals.

Revenue Streams That Make an ATM Business Profitable

Surcharge

IADs make the bulk of their revenue from the surcharge fee imposed on ATM transactions. The average surcharge fee is about $3-$3.50. Ultimately, this decision is yours. Although, some location owners will want a say in how much to charge their customers for ATM service. So you will work together to find a number that works for everyone. You want a rate that is competitive but that also pays the bills….

Scale

To really make an ATM business profitable, place more than one machine. On average, if you want to earn $1,500 per month from your ATM business, you’ll need 5-7 ATMs in average locations. 

Not all locations perform equally. Obviously, 2 or 3 great locations will make your ATM business profitable faster. But every IAD has a few good ATM locations, a few slow ATM locations, and a few great ATM locations. If your machines have a topper, a wrap, or custom screen graphics, you might also be able to increase your revenue by selling ad space. Then you’ll really be in business!

Other Opportunities in the ATM Business

There are other ways to make money with an ATM business besides owning and operating your own machines. You can really assume responsibility for any one part of the process and hire yourself out to others in the industry.

For example, you can be an ATM site locator. This is someone who negotiates with location owners on behalf of ATM owners. Someone who wants to own and operate an ATM machine but doesn’t want to put in the effort of finding a location can hire a site locator.

A site locator typically does not own any machines but matches locations and ATM owners. In exchange, an ATM site locator can request a flat rate or negotiate for a share of the surcharge from the ATM owner. You could potentially be a site locator as well as an IAD if you wanted to make extra money without managing more machines.

You could also be an ATM vendor, or salesperson. There are business owners who want an ATM machine on site and want to operate it themselves rather than working with an IAD. You would explain ATM options and add your commission rate to the cost of the equipment to make your profit.

Or, you can be an ATM vaulter. If you have access to cash, you can partner with ATM providers to offer cash vaulting services. You would travel to each ATM and make sure it’s stocked with cash. To calculate your profit potential, you could charge a flat rate or create a fee schedule based on distance and travel time.

An ATM Business Is Profitable

If you’re considering an ATM machine or want to get into the ATM business as a side hustle to earn some extra cash or as a passive income, you need at least 3-4 people per day to use your ATM (if it’s available 7 days a week) to pay for the machine and make a few bucks. If you’re looking to make salary-level income, consider scaling your business and placing 5-7 machines.

It is difficult to provide an exact number or even range for how much ATM business owners make. But we can provide you with some guidelines to help you predict your own earning potential based on your location and opportunities available to you. An ATM business is very customizable and therefore very difficult to generalize. But if you follow industry trends, there is really no way you can lose.

Despite certain challenges to an ATM business like location negotiation, competition, and technological advancements in payment platforms, where there is a need for cash there is an opportunity for you to make money. So if you’re a motivated entrepreneur who doesn’t quit too soon, then the ATM business is for you. 

Most people fail because they quit too soon. If your first locations are slow, don’t get discouraged. You can always move them to better locations!

For detailed guidance at every stage of the ATM business process from an ATM business mentor and ATMDepot.com CEO himself, check out the ATM Business Road Map. You can try it risk-free for 30 days. And you don’t have to complete the course to get started right away!

How to Start an ATM Machine Business: Requirements and Process

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In this article, we’ll tell you how to start an ATM machine business. However, this time we will focus on the requirements and process. So at this stage, you should already know what to expect from an ATM business. You’re sure that it is something you want to do. You might even already have equipment and a location.

If that’s the case, you are ready to officially get started. So what’s the first step? 

Starting an ATM machine business does not necessarily require a set of steps to be completed in an exact order. Not every independent ATM deployer goes about starting an ATM business in the same way. And some “steps” can be completed concurrently.

However, when it’s all said and done, there are some things aside from purchasing an ATM machine you’ll need to do to get up and running. Here’s what that looks like: 

Find a Processing Company

To start an ATM business as an independent ATM deployer (IAD), you need an ATM machine. Now, there are a lot of ways to get your hands on one. However, you can’t just purchase an ATM machine from anywhere and set yourself up in business. Your machine won’t work unless you find a processing company to connect your ATM machine to the card networks.

Can you purchase an ATM machine from anywhere? Essentially, yes. But you then need to find a processing company. Fortunately, many ATM vendors also offer processing. So you don’t have to look very far.

The processing company will help make sure your ATM machine is registered, legal, and compliant. This will require some paperwork. You need to know how to start an ATM machine business the right way so that you remain compliant with the law.

Complete Paperwork

First, you will need to provide your driver’s license to prove your identity and pass a background check. This will guarantee that you are legally allowed to run an ATM business. The banking network does not allow anyone convicted of a felony or financial crime to run an ATM business. However, you can get around this by working with a trusted friend or family member and putting the business in his or her name instead.

Your ATM provider should help ensure that you meet all federal government requirements to legally operate an ATM business. With the right ATM provider, the process should be quick and easy.

ATM Processing Agreements

Once it is certain that you meet all compliance requirements, you need to complete your equipment order form. This will indicate what equipment you want to purchase. However, if you’ve already purchased equipment from somewhere else, you will still need to indicate the cash denomination(s) you want to dispense and the surcharge fee you want to charge. This allows your machine to be programmed properly and the appropriate funds to be deposited to your bank account. 

Other documentation your ATM provider will need before you get started includes an ACH form, W-9, ATM operator agreement application, ATM processing agreement, and a voided business check.

An ACH form documents your account information. You will need to provide account and routing numbers and give permission to have funds electronically transferred to your account. And since you will be earning revenue from your ATM machine, you will need to complete a W-9 form to report residuals for tax purposes.

Your ATM application is also known as the ATM Operator Agreement. This form tells banking partners who they are working with and makes sure all federal regulations are met. The ATM processing agreement, on the other hand, lists your rights and obligations as the ATM owner as well as the rights and obligations of the ATM processor. This will be the legal contract between you and the ATM processor that runs your ATM machine program. This contract also ensures your payment as agreed upon.

Finally, a voided business check verifies the legitimacy of your linked account. Your linked account must be a checking account, not a savings account. 

Get an ATM Business Bank Account

You cannot use your personal bank account for vault cash or to deposit your surcharge revenue. You need a specific, dedicated bank account for your ATM business. For more detailed information about the nuanced process of opening an ATM business bank account, check out our article “The Best Banks for ATM Business”. 

One of the most common questions people ask is how to start an ATM machine business without an LLC. While you can operate your ATM machine as an LLC or corporation, the most common route is to register as a sole proprietor under a “doing business as” (DBA) business name. Then, you can open your bank account under that.

Some ATM processors will license you the rights to use their name as part of your company name. This will of course require additional paperwork and a fee for usage rights. However, the nominal fee is often worth the instant credibility. You gain trust by associating your business with one that’s more established and well-known.

You can start inquiring with your local banks about their experience managing ATM business bank accounts before you complete your official ATM paperwork. This way you already have an idea of where to take your business. But you will want to have the above contracts and agreements finalized before sitting down with your banker. That way, you show that you are serious and ready to do business. You will need to be prepared with copies of your contracts when opening the account.

Secure a Location

The same is true of securing a location. You can scout for a location at any point in the process of starting an ATM business. You might want to be sure you will have a place to put the machine once you order it. But again, waiting until you have all of your contracts and agreements in place before meeting with a location owner with your proposal will increase your chances of getting someone to work with you. 

In “Choosing an ATM Location: 9 Best Locations for ATM Machines,” we describe in depth the process of choosing the right location for your ATM machine. Then, when you are ready to close the deal with a location owner, you will want to have a site location agreement (SLA) drawn up and signed. 

Also known as an ATM business contract or placement agreement, the SLA is a documented agreement between you—the ATM owner—and the proprietor or merchant where the ATM will be placed. When you use someone else’s business or space to house your ATM machine, you will need more than a verbal agreement. 

The SLA details the ins and outs of the ATM placement and operation. This protects you if you ever have any issues working with the third party. It might include clauses that cover the responsibilities of each party, revenue split/share, length of effectiveness of the agreement, etc.

You can work with a lawyer to create a personalized contract or agreement, write your own from scratch, or use one of our templates at ATMDepot.com if you become a member. You can also find scripts there for pitching and selling your idea to business owners you’d like to work with to get them on board!

Install and Program

When all of the above is in place, you are ready to install and program your machine for use! Again, there is not just one way to do this. For example, you might have your ATM equipment delivered to your house and then move it to the location yourself. Or, you might have your ATM vendor ship the equipment straight to the location. It depends on the order you complete the process. 

Furthermore, your machine might come pre-programmed from the manufacturer or vendor, or you might end up doing it yourself. You might install the machine yourself as well, or you might hire this out. 

Regardless of what this part looks like for you, just know that it is possible to program and install the machine yourself if necessary. These “7 ATM Installation Tips” can help. It will cost extra to have someone do either or both for you, but it might be worth it for peace of mind. 

This is the final step. Once your machine is bolted in place and programmed to dispense your chosen denomination for the surcharge fee you set, you are ready to do business!

How to Start an ATM Machine Business

To summarize, there are a few things you need to have in place to officially begin making money from your ATM business. You need to get compliant with paperwork and set up an ATM business bank account. You need to determine surcharge fee, cash denomination, and revenue share (how much goes into which accounts). And you need to make sure you are protected with an SLA.

If you want to know everything there is to know about how to start an ATM machine business all in one place, check out the ATM Business Road Map. Because there is not one way to start an ATM business, you do not have to wait until you complete the course to get started. Just refer to the information as you go! Learning from an ATM business mentor is the best way to get from A to Z as quickly as possible and with minimal mistakes. Try it risk free and get started today!

The Truth About Owning ATMs as a Business “Gurus” Aren’t Telling You

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Owning ATMs as a business can be a reality for anyone. With the right information, resources, and support, you could be making semi-passive income with ATM machines if that’s something you are interested in. But just because anyone can do it doesn’t mean that everyone should.

ATM business gurus often provide valuable insights and strategies. But they can sometimes overlook or downplay certain harsh realities of the ATM business world. There are some truths they might not emphasize but that you should be aware of before getting started. Making sure you properly manage your expectations and know exactly what’s ahead is your first step to success owning ATMs as a business.

There Is No Guaranteed Formula

You will often see ATM business gurus touting the wealth and success they’ve experienced owning ATMs as a business. They want you to know exactly what worked for them so that you can follow in their footsteps. 

But what this strategy fails to consider is the fact that each person has different business goals, obstacles, strengths, and weaknesses. What works for one person might not work for the next. And what each person wants out of an ATM business will vary as well. 

There are many ways to make money in the ATM industry. And there are many ways to run an ATM business. No two business models look exactly the same. So to be successful, don’t force yourself into someone else’s formula if it isn’t working for you, regardless of the promises.

Failures Are To Be Expected

Everyone makes mistakes. Successful entrepreneurs often have multiple failures behind them. The path to success is rarely linear and is often paved with setbacks. Fortunately, by following the guidance of gurus and ATM industry experts, you can avoid a lot of major failures and setbacks by learning from the mistakes of others. 

But if you are new to owning ATMs as a business, you will have to learn from your own mistakes as you go. Simply adjust and move forward with your new knowledge. There is really no mistake you can make that can’t be remedied. And the closer you adhere to ATM industry best practices, the fewer and smaller your mistakes will be.

One of the biggest misconceptions many gurus will promote is that owning ATMs as a business will be easy. Compared to other businesses, an ATM business is quite simple. But at the end of the day, it will still require effort to get up and running smoothly. If you can’t power through the challenges, you can’t expect success.

Do Not Expect to Get Rich Quick

Really, don’t expect to get rich at all. Owning ATMs as a business is a great, low-stakes way to generate some extra semi-passive income and maybe even replace your 9-5. But don’t expect to become a millionaire….

Don’t pressure yourself to grow quickly. Prioritize sustainability over rapid growth. Rapid growth is frequently glorified, but sustainable, steady growth is often more beneficial and less risky in the long run. Take your time, study your metrics, and adjust accordingly. If you focus on the business as a whole rather than simply generating more and more revenue, your service will be better and your business will succeed in turn.

Beware of Market Saturation and Competition

Entering a saturated market or facing intense competition can make it exceedingly difficult to gain traction. Not all cities have the same need for ATM service. So success owning ATMs as a business might be dependent on where you are located and the opportunities available. 

However, just because a location has an ATM in place already does not mean that it’s off the table. If the equipment is old, run-down, or frequently out-of-order, that could be an opportunity for you to offer a shiny new ATM. If a business owns its own ATM machine but is tired of maintaining it, that could be an opportunity. Or maybe you find a business that is unhappy with their current service and is eager to work with someone new.

High traffic, high demand locations, like casinos and clubs, are difficult to break into. This is where networking comes in handy. If you already know someone who is a decision-maker at a profitable location, then your chances of operating an ATM machine there improve.

Whatever the situation, it is your job to identify a gap in the market. If you see opportunities for ATM placement in your area, you can be successful owning ATMs as a business.

Be Open to Continuous Learning and Adaptation

Owning ATMs as a business will require a certain degree of flexibility. The business environment is constantly changing. Continuous learning, adaptability, and willingness to pivot are crucial for long-term success. 

Don’t expect to learn everything. Because as soon as you do, something will change. And if you don’t keep up with the changes and dedicate yourself to learning and improving, your business will suffer.

Learning the business is not something you do once. It is an ongoing part of being a business owner and entrepreneur. Don’t neglect this work in your business.

Influencers vs. Gurus vs. Mentors vs. Experts

ATM industry gurus are not all wrong or bad. However, be warned that if it’s too good to be true, it probably is. Beware of influencers, gurus, and mentors online who are just after clout, views, and likes without really explaining how ATM business works. If you really want to know how a successful ATM business works from start to finish, take it from an expert whose success is tied to yours. 

How to Get Started Owning ATMs as a Business

Now, owning ATMs as a business is the ultimate side hustle because of its comparative simplicity, low overhead, and semi-passive revenue. But, like any business, it will come with its fair share of challenges. To be successful, you have to know your strengths and weaknesses and be able to move on from mistakes.

If you want to learn the ins and outs of owning ATMs as a business from someone who’s been in the industry for over thirty years, check out the ATM Business Road Map. What sets this training system apart from others is that it is risk-free and you don’t have to complete it before getting started!

You can use the ATM Business Road Map modules as reference material as you progress through your business journey. You have lifetime access to all training materials, so you can refer back to them any time you have a question about a particular situation.

If you are unhappy with the course or discover that owning ATMs as a business is not for you, just email us within 30 days of purchase or before you start Module 4.2 for a full refund.

Additionally, you can purchase equipment and receive processing from ATMDepot.com—everything all in one place. With this kind of information and support from experts dedicated to your success, you can confidently take the next step in owning ATMs as a business.

Get started today!

Still have questions? Contact us here.

7 Myths About Running an ATM Business in the US

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Running an ATM business is the ultimate side hustle. It offers faster ROIs, lower start-up costs, and fewer barriers than most other side gigs or passive income streams. But there are some common myths and misconceptions about running an ATM business. You might even be surprised to find out that not all ATMs are owned by banks!

What does it entail? What are the possibilities? Once you have an idea of what you can realistically expect from running an ATM business, then you can confidently make the decision to get started yourself! Don’t let the wrong impressions keep you from making a little extra money.

1. Get Rich Quick

There are ATM business gurus who will try to appeal to you with their successful business models that generate thousands of dollars a month. They did it, and so can you. 

While it is absolutely possible to generate a $50,000-$60,000 income with an ATM business, it takes hard work and dedication to get to that point. Many independent ATM deployers (IADs) start with just one ATM machine to generate some extra spending money. It isn’t until you build an entire route of ATM machines that you will start seeing thousand-dollar paydays.

So, whether you want to get started with one machine and earn a few hundred bucks each month or scale up to 12-24 machines and make five to ten grand a month to support yourself, make sure you maintain realistic expectations. You might not get rich, but with a little time and effort, you can definitely make money running an ATM business.

2. Passive Income vs. Semi-Passive Income

You might hear revenue generated from running an ATM business referred to as “passive income”. Passive income typically means that you do some work one time, and that work continues to generate revenue without any further effort. For that reason, it is more accurate to say that an ATM business generates “semi-passive” income.

Running an ATM business generates passive income in the sense that you make money while you do other things: work another job, play golf, sleep…. You make money from your ATM machine(s) without being tied to a location for hours a day. However, it is really only semi-passive because you do have to maintain your business; you don’t just put in the work one time and then forget about it.

You have to make sure your machine is always stocked with cash. You have to address any error codes, repairs, or software updates. And you should probably be regularly monitoring your ATM activity to ensure everything is always running smoothly. But remember, you can monitor activity remotely. That’s the beauty of running an ATM business!

3. You Need Business Experience or Technical Skills

Another common myth that keeps many people from getting into the ATM business is the notion that they need some sort of business experience, technical skills, or industry knowledge. And that simply isn’t the case.

These are all things that you can gain on-the-job. As an ATM business owner, you will be in business for yourself—an entrepreneur. You are the boss; you call the shots. So in that respect, yes, you do need some business acumen. But many IADs get their entrepreneurial start with their first ATM machine; no prior education or training necessary.

But what about technically operating an ATM machine? Well, if you’ve ever used one yourself, you pretty much already know how it works and what the components are. ATM machines are not complex, and each new model is designed to be more user-friendly than the previous; rapid technological advancements and a competitive market make this possible.

Then there are plenty of resources available to you. From technicians to user manuals to Facebook groups to YouTube videos, there is no shortage of information out there. Especially if you work with a reputable ATM processing company dedicated to your success, they’ll walk you through each step you need to get started.

Running an ATM business is not easy. But it is simple. It is simple enough that anyone can do it with the right resources.

4. Easy to Find Profitable Locations

Running an ATM business is not easy. It will require a little leg work. For example, you have to find a location from which to operate your ATM machine. This could be as simple as finding an old, run-down, frequently out-of-order machine and offering to replace it. Or, you might know someone already who owns a retail store and wants to offer ATM service to their customers. Or, you might just have to ask around to find an interested location.

But negotiating a placement agreement isn’t all you need to make money. You want a location that will generate a lot of business for you. So the best locations are going to be high traffic areas with high cash needs. And those aren’t always so easy to find.

Don’t be discouraged. Another benefit of running an ATM business is that if one location isn’t doing well, you can always move it or just place another one somewhere else! An ATM business offers you that flexibility.

5. Easy to Get a Bank Account

Many new ATM entrepreneurs underestimate the patience and finesse required to open an ATM business bank account. Unfortunately, it isn’t as easy as opening an average business bank account. Regularly providing an IAD with large volumes of cash presents banks with a degree of risk and extra effort.

So for a bank to open an ATM business bank account, they have to be sure it will make them money and be worth their time. Be prepared to purchase a number of products (open a line of credit, fund multiple accounts, etc.) to prove that you are a worthwhile customer. And of course, be respectful, patient, and grateful. Some banks don’t open ATM business bank accounts at all. Others might simply refuse you. Just move on and keep looking!

6. You Have to Have an LLC

This often worries a lot of new ATM entrepreneurs because they don’t want to mess with the fees associated with forming and maintaining an LLC. But the good news is that you don’t have to, and most IADs don’t. The most common way to establish your ATM business entity is as a sole proprietor with a fictitious “doing business as” (DBA) business name.

However, if you do plan to scale your business to include a route of multiple machines, an LLC might be a good idea because of the limited liability protection it offers. But if you are just starting out with one or two machines, a sole proprietorship will suffice, and you can always purchase general liability insurance if you want that peace of mind.

7. Cash Is Obsolete

Maybe the biggest myth about running an ATM business in the United States is that cash is becoming obsolete. This keeps a lot of people from investing in an ATM business because they worry about the security and longevity of it.

But while cash is currently competing with a number of digital payment methods, we will not become a cashless society any time soon. There is still too much tradition tied up in cash and there are too many benefits associated with cash payments. 

Cash allows people to budget, avoid debt, conduct business without a paper trail, and manage without a bank account. And, more and more businesses are pushing for cash payments and becoming cash only in an effort to alleviate credit card processing fees. 

So as long as there is a need for cash, there will be a need for ATM machines. And as long as there is a need for ATM machines, there are business opportunities for you.

Conclusion

Now that you know the truth about running an ATM business, hopefully you feel better prepared. There are many reasons why an ATM business is the ultimate side hustle. You can be your own boss, earn semi-passive income, and rest assured that your ATM service will always be needed!

Still not convinced that anyone can start an ATM business? Check out the ATM Business Road Map completely risk free! Take a look at the first three modules, and if it’s not for you, just email us within 30 days of purchase for a full refund.

If you are ready to start your semi-passive ultimate side hustle running an ATM business, get your ATM startup kit today!

Do You Need an LLC for ATM Business?

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Do you need an LLC for ATM business? This is a question commonly asked by new ATM entrepreneurs. It’s also asked by entrepreneurs who might have been in business for a while but are questioning whether or not they need to maintain their LLC. 

The short answer is, no; you do not need an LLC for an ATM business. You have other options. Each option has its own legal, tax, and operational considerations. Therefore, it’s important to research and consult with professionals to determine the best fit for your ATM business based on your goals, preferences, and circumstances.

Every business requires some documentation. While you don’t need a specific license to operate an ATM business, you will still need some sort of business name to complete the agreement with the ATM processor as your ATM vendor and to open a business bank account. Here, we’ll discuss what an LLC entails as well as a glimpse into some alternative options. 

What is an LLC?

LLC stands for limited liability company. It offers limited liability protection and more tax options which other alternatives do not. There are three main benefits an LLC offers.

Limited Liability Protection

One of the primary reasons for forming an LLC is to separate your personal assets from your business liabilities. If someone were to sue your ATM business, having an LLC can protect your personal assets from being at risk. This means your car, house, bank account, etc. are protected in the event your business is sued, is bankrupted, or defaults on a loan. 

There are a number of situations where you might find yourself at risk of liability. Limited liability ensures that, regardless of the outcome of the lawsuit, your personal assets are not threatened. And if you end up struggling to pay back a loan on time and accrue significant debt, your personal assets will remain safe regardless of whether your business pays back the debt as long as you didn’t personally guarantee the loan. 

Tax Considerations

Another benefit of an LLC is tax benefits and options. LLCs offer flexibility in how they’re taxed. By default, they are pass-through entities, meaning profits and losses pass through to your—the owner’s—personal tax returns. This can offer tax advantages depending on your situation. The business’s net income is then subject to income taxes (based on your tax bracket) and self-employment taxes.

A sole proprietorship or partnership is taxed in the same way, but an LLC offers the S-corporation (S-corp) option. An S-corp is an IRS tax status that an LLC can elect which allows business owners to be treated as employees of the business. This can lower self-employment taxes and will allow you to contribute pre-tax dollars to 401k or health insurance premiums.

Whether or not you think you might want this tax option depends on how much your business can/will pay you, the employee-owner. To really benefit from an S-corp, you should expect a reasonable salary of at least $10,000 in distributions a year for the work you perform.

Credibility

Finally, operating as an LLC can convey a sense of professionalism and legitimacy to potential customers, partners, and investors. This can be especially important when negotiating a placement agreement. In order for business owners to agree to share a space of their location with your ATM and to work with you, you’ll need to establish trust and credibility. 

So, do you need an LLC for ATM business? No, but it might be a good idea. It really depends on the scale of your operations, your risk tolerance, and your specific business goals. 

How Much Does an LLC Cost?

Setting up and maintaining an LLC involves some costs and administrative tasks, such as filing articles of organization, annual fees, and potentially more complex tax filings. In addition, with an S corp, your business might need to spend more on accounting, bookkeeping, and payroll services.

While the cost of starting an LLC varies by state, the average cost to form an LLC is $129, while the average annual cost to maintain one is $104. However, other optional LLC costs can range from just $35 to hundreds of dollars a year.

Formation Fees and Publication Requirements

When forming an LLC, you’ll typically need to pay a fee to the state where you’re registering your business. The fee amount varies depending on the state but can range from around $50 to several hundred dollars. 

In some states, newly formed LLCs are required to publish a notice of their formation in a local newspaper. This requirement can add several hundred dollars to the formation costs.

Registered Agent Fees

Most states require LLCs to designate a registered agent who is responsible for receiving legal documents on behalf of the LLC. You may choose to hire a registered agent service, which typically charges an annual fee ranging from $50 to $300 or more.

Operating Agreement

While not always required by law, it’s highly recommended to have an operating agreement in place for your LLC. This document outlines the ownership structure, management roles, profit distribution, and other important details of the business. You can draft the operating agreement yourself and save hundreds of dollars on hiring a lawyer for this. 

Annual Fees

Many states impose annual fees or franchise taxes on LLCs to maintain their active status. These fees can range from a nominal amount to several hundred dollars or more, depending on the state.

Business Licenses and Permits

Depending on your location and the nature of your ATM business, you may need to obtain various business licenses and permits. The costs vary widely depending on the type of licenses and permits required.

Tax Filings

LLCs are typically required to file an annual report with the state and may need to file additional tax returns depending on their tax classification (sole proprietorship, partnership, S-corp, or C-corp). You may choose to handle these filings yourself or hire an accountant, which can add to your expenses.

Ongoing Maintenance

LLCs have ongoing administrative requirements, such as holding annual meetings, maintaining accurate records, and filing necessary reports with the state. While these tasks can often be managed internally, they require time and attention.

While this sounds like a lot, it is important to remember that consulting with legal, financial, and ATM industry professionals can help you navigate the process and ensure compliance with applicable laws and regulations. The process of establishing and maintaining an LLC really depends on the complexity and scale of your business.  

Alternatives to an LLC

Sole Proprietorship

The most common way new independent ATM deployers (IADs) start their businesses is by creating a sole proprietorship and operating under a fictitious business name, or a DBA—doing business as. You will be able to open a business bank account with this as well as be able to set up the vendor relationship for your business with the ATM processor.

While an LLC automatically establishes some credibility, you can also gain this with a sole proprietorship by “borrowing” another company’s name, like your ATM processing company. Some companies will license you the right to use their name as part of your company name. This often requires additional paperwork and a fee for usage rights, but it is an option for making a good impression when you are just starting out.  

This is the simplest and most common form of business structure. In a sole proprietorship, there’s no legal distinction between the owner and the business. It is easy to set up and operate, but you have unlimited personal liability for the business’s debts and obligations. However, some common liabilities can be covered with general liability insurance.

Partnership

If you’re starting the ATM business with one or more partners, you could form a general partnership. Like a sole proprietorship, a general partnership doesn’t provide liability protection for the partners. However, there are also limited partnerships (LPs) and limited liability partnerships (LLPs) that offer some liability protection for certain partners.

Corporation (C-Corp or S-Corp)

Corporations are separate legal entities from their owners, providing limited liability protection. C-corps are taxed separately from their owners, while S-corps are pass-through entities for tax purposes, similar to LLCs. However, corporations have more formalities and administrative requirements than LLCs.

Do You Need an LLC for ATM Business?

If you want to know do you need an LLC for ATM business, think about your business goals. If you want to purchase and place multiple ATM machines and develop an extensive route, then an LLC may be worth your time and effort. 

The more machines you operate, the more you increase your business risk. The more people you work with, the more customers you serve, and the more opportunities there are for something to go wrong. If that happens, you’ll want to be protected by an LLC.

However, if you are just starting small and aren’t sure yet where your ATM entrepreneurship journey will take you, there’s not a huge need to establish an LLC. Keep it simple and start with a sole proprietorship. It’s easy, it’s common, and your business likely will have a relatively low level of risk.

If you want to know more about starting your own ATM business, check out ATMDepot.com’s ATM Business Road Map, or contact us with any questions you might have!