Tag Archive for: atm profits

How Do You Pay Yourself as a Business Owner?

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If you are thinking about starting an ATM business, or any business for that matter, you might be wondering how do you pay yourself as a business owner. When you start your own business, it’s easy to focus on customers, products, and growth and forget one big question: how do you actually pay yourself?

Whether you’re running a one-person freelance operation or managing a small company with employees, paying yourself the right way is crucial for both your finances and your business’s long-term health. Especially in the ATM industry, how do you keep your revenue separate from your business expenses? And how do you calculate your profit? 

In this article, we’ll break down your options and how to do it correctly.

How Do You Pay Yourself as a Business Owner: By Business Structure

How you pay yourself depends first and foremost on how your business is legally set up. The IRS treats each structure differently when it comes to income, taxes, and distributions. 

Sole Proprietorship

If you’re a sole proprietor, your business and personal finances are legally the same. You don’t get a “paycheck”. Instead, you simply draw money from your profits. This is called an owner’s draw and is the most common route for independent ATM deployers (IADs).

With this structure, you’ll pay self-employment taxes (Social Security and Medicare) on your net income so it’s smart to set aside about 25–30% of your profits for taxes.

Partnership

Partners usually take owner’s draws as well based on their share of the partnership’s profits. Therefore, you’ll also pay self-employment taxes on your share. If you are entering into a partnership, make sure your partnership agreement clearly outlines how and when draws are made.

Limited Liability Company (LLC)

How you pay yourself as an LLC depends on whether you’re a single-member or multi-member LLC and whether you elect to be taxed as an S corporation.

In a single-member LLC, you take an owner’s draw, similar to a sole proprietor. In a multi-member LLC, each member takes draws according to ownership percentage.

LLCs can also be taxed as an S corporation. In this scenario, you can pay yourself a reasonable salary through payroll and take dividends/distributions from profits often with potential tax savings.

Corporation (C Corp or S Corp)

If you’ve incorporated, you’re both an owner and an employee. In a C Corporation, you receive a salary as an employee; dividends may be taxed separately. In an S Corporation, you must pay yourself a “reasonable salary” and can also take dividends.

When determining which structure to use when you legally set up your business, consider these distinctions and IRS guidelines. For more information about how to structure an ATM business, check out our article Do You Need an LLC for ATM Business?

Salary vs. Owner’s Draw

There are two terms for business owners paying themselves: salary and owner’s draw. If you’re taking a salary (S Corps, C Corps, LLCs taxed as S Corps), you’ll set up payroll and withhold taxes just like you would for an employee. An owner’s draw is when you take money out of your company’s account for personal use. 

As an IAD (sole proprietors, partners, LLCs), you will probably take a draw—it’s a simple way to pay yourself. However, the funds are considered taxable income and are therefore subject to self-employment taxes. So, it’s more flexible than a salary, but it requires discipline to budget for taxes and business expenses. 

How Much Should You Pay Yourself as a Business Owner?

There is no set number, percentage, formula or one-size-fits all answer to the question of how much you should pay yourself as a business owner. However, there are some guidelines you can use to help you gauge this:

First, make sure your personal needs are covered. Consider your minimum monthly take-home number for rent, bills, and other essentials. 

Then, reinvest in your business. Avoid draining your profits early on. Leave enough cash to fund operations, market, or set aside for emergencies or upgrades.

It’s also a good idea to base your pay on business performance. If profits fluctuate, consider a lower base pay and quarterly bonuses when income is strong. (For S Corp owners, the IRS requires that your salary be “reasonable”—in line with what someone doing your job would earn.)

Since many IADs at least start their ATM businesses as side hustles, these guidelines may not necessarily apply. A regular or full-time job may be covering rent and regular bills. In that case, your profit from your ATM business simply goes into your pocket less the amount you want to reinvest in your business.

How Do You Pay Yourself as a Business Owner: Best Practices

Even if you’re the only person in your business, it’s important to separate your finances to keep things organized, clean, and compliant. Therefore, you should open a dedicated business bank account, use accounting software, automate transfers, and save for taxes.

A dedicated business bank account helps ensure that you don’t use business funds to pay for personal expenses and vice versa. As an IAD, you’ll want two business bank accounts: one from which to withdraw and settle the vault cash for the ATM and a second one into which surcharge revenue is deposited. 

Accounting software like QuickBooks or Wave can help you to track payments and expenses. Don’t forget to allocate a percentage each quarter to taxes, maybe in a separate tax account.

These best practices simplify bookkeeping and make your business more professional.

How to Pay Yourself as an ATM Business Owner (IADs)

If you operate an ATM business—especially as an IAD—the same principles of paying yourself apply, but the cash flow and accounting setup look a little different.

Your income doesn’t come from invoices or client checks; it comes from surcharge fees. Because of that, how you pay yourself depends on how your business is structured and how you manage those cash flows.

Here is what paying yourself might look like as an IAD:

Separate Business and Personal Cash

Keeping business and personal cash separate is especially critical in an ATM business where literal cash is constantly moving. Maintain a dedicated business bank account for surcharge deposits and vault cash management. 

Never take cash directly from the ATM for personal use because it complicates tracking and may raise red flags with processors or regulators. Instead, transfer your profits electronically into your personal account as your “pay.”

Determine What “Profit” Really Means

In the ATM world, “gross surcharge revenue” isn’t the same as profit. Before paying yourself, you must account for a few deductions. These might include processing/network fees, vault cash replenishment, split commissions with location owners, maintenance costs, insurance, internet/telecommunications, repairs, etc. 

What’s left is your true net business income, and that’s where your pay comes from. Check out our article “Is an ATM Business Profitable: How Much ATM Business Owners Make” for more information about how to calculate ATM business profit.

Build a Predictable Payout System

ATM income can fluctuate with transaction volume, so consistency is key.

You can transfer a fixed amount to yourself each month as base pay, then add quarterly bonuses if profits exceed expectations. Use accounting software to track each ATM’s performance and your total net cash flow. And always leave enough in the business account to replenish vault cash and cover service costs.

Keep Tax and Regulatory Compliance in Mind

Because ATM businesses deal with cash and financial networks, your business draws more scrutiny from banks and regulators. To protect yourself, keep accurate digital records of every transaction and payout. You can do this through remote online monitoring of your machine activity. This service should be offered by the processing company you work with. 

Pay self-employment or payroll taxes on your compensation depending on your structure. If your business has partners or investors, clearly document how profits and distributions are divided. If necessary, consult an accountant experienced with ATM operators. They’ll understand the nuances of reporting surcharge revenue and managing cash float.

How Do You Pay Yourself as a Business Owner: The Bottom Line

Treat your paycheck like any other business expense. The more intentional you are about how and when you pay yourself, the stronger and more sustainable your business will be.

For ATM owners, your business might run on quick access to cash, but your pay shouldn’t. Treat your ATM income like any other small business revenue—run it through your books, pay yourself strategically, and always keep tax and vault funds separate. The result is smoother operations, cleaner records, and sustainable profit for the long run.

Still have questions about how do you pay yourself as a business owner in the ATM industry? Don’t hesitate to contact us at ATMDepot before starting your own ATM business. There’s money to be made—we can help!

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!

Improve ATM Performance and ATM Attractiveness to Maximize ATM Profits

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Owning and operating an ATM business is a simple way to earn passive income. But what if your ATM performance isn’t as high as you expected? Is there anything you can do to maximize ATM profits?

You have to keep in mind that although an ATM business is unconventional in many ways, at the end of the day it is still a business. For instance, what do store owners do during slow periods? They run sales, offer coupons, and take out ads. You can do the same for your ATM. 

If your ATM isn’t performing well, don’t worry and don’t quit. There are things you can do to improve your ATM performance, maximize ATM profits, and get that passive income flowing.

Why Isn’t Your ATM Performing?

Before you look at the ways to improve your ATM performance, you need to diagnose the problem. After you identify the reason(s) why your ATM isn’t performing, then you can determine an appropriate solution.

The first factor you want to consider is the location. Is your ATM placed in someone else’s store? How much traffic does it get? Does the location have good reviews? You want your ATM machine in a store where a lot of people pass by and drop in.

What about hours of operation? Is the location 24/7? If not, is your ATM machine inside or outside of the store? Your ATM might not be serving your customers at the times when they need it most.

Think about the placement, too. Is the ATM in a place where people feel safe using it? If the ATM machine is hidden, poorly lit, or not under video surveillance, this could be deterring customers.

Finally, consider your surcharge. Is it too high? Is there another machine close by that offers a lower surcharge? If so, you might want to experiment with a lower fee.

Of course, you might not be sure what the problem is exactly. In that case, there’s no harm in trying all of the following ways to improve ATM performance and maximize ATM profits!

How to Improve ATM Performance

1. Advertise

The first thing you want to do to get customers to use your ATM is make sure they know it’s available. Is there a sign at the location that passers-by can see from the street? If not, add one.

Advertise inside the location as well. Add a topper to the machine that catches the attention of customers and patrons of the location. There should be a clear path to the ATM machine as well. If it’s in patrons’ line of sight, it will be easier to access and therefore will attract more customers.

Does the location or store have a website or Facebook page? If so, you might want to list “ATM” online as a service offering. That can spread the word to people who aren’t even on site or nearby. 

2. Offer Incentives

You might want to partner with the location owner to offer some sort of incentive to customers for using the ATM machine. Coupons can be printed on the ATM receipts to encourage both ATM use and in-store purchases. This creates a win-win situation for you and the location owner.

3. Upgrade Features

Adding upgrades to your ATM machine is an easy way to spruce up an older ATM machine. Even if your machine is new, adding additional features could help customers notice your ATM machine and set yours apart from the competition.

Add a topper to run graphics, messages, store promotions, ads. Install a lighted keypad to make the machine more attractive. And if you don’t already have a camera on the premises, adding one will make customers feel more comfortable using your machine.

You can also invest in a UV-C light device that scans the keypad to sanitize it. This could impress your customers by looking out for their health and safety and set you apart from the competition.

4. Lower Surcharge

You have to set your surcharge strategically. The average ATM surcharge fee is around $2.50-$3.00. If your surcharge is higher than this, it could be deterring customers.

If your surcharge is too high, you might lose customers to a machine with a lower surcharge. Scope out the surrounding area and see what other machines are charging. (If yours is the only ATM nearby, then surcharge likely isn’t your issue.) You want to offer a competitive rate: high enough for you to make income but low enough to encourage transactions.

You can experiment with this. Lower the surcharge for a while. If transactions don’t increase, then this probably isn’t the issue. So raise it back to the original surcharge so that you at least continue to make the same amount of money from the transactions you do get. Only lower the surcharge if it draws in more customers. 

You might also consider offering lower denominations from your ATM machine. Customers in the area where your machine is may need to take out less than a $20 bill. Dispensing a different denomination than the other ATMs around you could also help you stand out from the competition.

5. Move the ATM

If all else fails, move the ATM. This is one of the unique benefits of running an ATM business: it’s mobile. If your location is slow, hidden, going downhill, then it might be a good idea to move the ATM to a different store when your agreement is up. However, let’s not jump to switching locations just yet. Strategic placement of the machine at its current location could do the trick. 

First of all, can passers-by see the ATM before entering the store? If not, is there a place that would make this possible? People have to know that an ATM machine is available in order to use it.

Second, is the ATM machine easy to get to? You might consider moving it close to the front door or straight ahead from the front door without any shelves, lines, or other obstacles. Not only should the machine be easy to get to, but ATM users don’t want to be hidden from cameras or the public eye when they access their accounts. An obscure ATM machine isn’t safe, and your customers are attuned to this.

Third, can the ATM machine be moved outside? If this is feasible, it could extend the hours of operation of your machine if the store isn’t open 24/7. This also solves a couple of the other problems: visibility and accessibility.

Finally, is the ATM in an area where people need cash? There might not be a need for an ATM at its current location. Maybe there are other machines in close proximity that are proving to be too much competition. Or maybe there aren’t a lot of opportunities for people to make cash purchases at any other businesses in the area. If this is the case, it might be time to look for a new location.

How to Improve ATM Attractiveness

Would you rather use a dingy ATM or a shiny new one? Not only does shiny grab users’ attention, it also suggests a certain degree of safety and trust. We aren’t saying you have to purchase (or should have purchased) a brand new ATM. There is nothing wrong with a properly refurbished ATM machine.

What we are saying is that customers are more likely to use a machine that’s clean, attractive, and safe. Users don’t want to use a machine that looks old, run-down, poorly maintained. They might fear losing their debit cards if the machine doesn’t look trustworthy.

There are a few things you can do to make sure your ATM machine is attractive and enticing to customers. First, clean it. Wipe it down regularly. Replace the decals if necessary. Clean the area around the ATM, too. You want people to approach the ATM, not shy away from it.

Second, upgrade some features. Add a topper to run messages and advertisements. Get a security camera. Install a lighted keypad to attract customers and make the machine more attractive. Especially if your machine is used or refurbished, adding a lighted keypad could be a nice touch. 

Third, make sure your machine is functional and has little to no down time. An out of order sign could lose customers’ trust and prevent them from returning to that machine. So if anything ever goes wrong, address it immediately. This includes keeping the machine stocked with cash and receipt paper at all times.

Finally, regularly update your software. You want your machine to run as quickly and smoothly as possible. And you don’t want to run into any technical issues. The more available your machine is, the more potential there is for transactions.

Conclusion

If none of these tips are possible or effective for you, you might want to consider moving to a new location while keeping this list in mind. In order to improve ATM performance and maximize ATM profits, people have to know that the machine exists, they have to need cash, and they have to feel comfortable using the machine. 

It might require a little trial and error to get it just right. There are a lot of factors to consider and a lot of decisions to make. Be strategic and don’t be afraid to try and try again. That’s the beauty of the ATM business: it’s easy to be flexible. Want to know what locations experience the best ATM performance? Check out our article “Choosing an ATM Location: 9 Best Locations for ATM Machines” here.