Tag Archive for: How to start an ATM business

How to Start an ATM Business with No Money

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If we said we could tell you how to start an ATM business with no money, would you believe us? It’s no secret that an ATM business has low startup costs compared to other business models. That’s one reason why it’s the ultimate side hustle.

Of course, starting an ATM business will require some startup money. But what if you could find other ways to come up with the money? What if you could start an ATM business today without thousands of dollars already saved up? Here, we’ll share some tips that can allow you to get creative with funding your business. Then, you’ll be left with absolutely no excuses keeping you from getting started.

How to Purchase Equipment

The biggest startup cost will be the ATM machine or equipment itself. You can expect this to cost around $2,000-$3,000 for just one machine. That is considerably low compared to what it costs to start a brick and mortar or other business. But not everybody has that kind of money available. So, if you want to know how to start an ATM business with no money, you have a few options.

Use a Credit Card

If you have a credit card or can open one, you can purchase an ATM machine on credit. The cost of a machine is usually within the range of credit limits. Plus, you can find a good deal where you are offered little or no interest for a certain period of time. This allows you to start generating revenue before interest accrues. This can speed up your return on investment (ROI). You even have the chance to pay off the balance with your ATM revenue before the interest kicks in!

Lease

Another option is ATM leasing, but it is much less common these days. The price of ATM equipment is not as high as it used to be. So, it often makes more sense to purchase a machine on credit than to lease. Unless you’re considering purchasing several ATM machines, it might be more profitable to borrow instead of lease due to the rates on bank financing.

If you have great credit and only want to lease the actual ATM equipment, you can get a lease for as low as $55/mo. Benefits of leasing include a fixed payment, tax deduction, and recuperation of your monthly payment by your business revenue. 

However, an out-right purchase has an ROI of between 3 and 18 months depending on the situation. The national average of all our ATM operators have an ROI of 8.5 months based on a $2 surcharge. Thereby, you avoid the necessity of a long-term ATM machine lease.

Apply for a Loan

You might not have friends and family willing and able to lend you some money to start your ATM business. But you may be able to get a line of credit (LOC) from your bank or other commercial lender. Since $5,000 is a very small loan (microloan), you could consider increasing the line to help cover other expenses if you choose to go this route. 

It’s a bit of a hassle to get a loan. So it might not be worth it to get a loan for less than $25,000 when you could purchase the equipment with a credit card. But some banks will open an LOC for $5,000-$15,000 if you have a good track record with them and decent credit. 

To apply for an LOC, simply visit your bank or other institution where you have money in an account. Interest on a regular loan starts immediately. But on an LOC it only starts once you take the cash, and you only pay interest on the outstanding balance. So prepare yourself before you start using it. Keep in mind, too, that most traditional business start-up loans will require a decent credit score.

Qualify for a Financing Program

Third party business funding is a great way to get cash if you have locations waiting for ATMs and simply need to find the money to purchase the equipment. You can see if you qualify to get financing to start your ATM business. There is no charge to check, and no inquiry will go on your credit report.

All you do is fill out the quick pre-qualification application. Then, a financing representative will give you a call to collect the rest of your information. A soft inquiry will follow. Lastly, the financing rep will let you know what you’ve been approved for in your area based on your credit.

You will know within minutes whether or not you have been approved. If you proceed with the loan, the third party loan provider will work on your behalf to secure multiple revolving credit cards (up to ten) with varying amounts of credit. The total available line of credit could be between $25,000 and $100,000 based on your creditworthiness. So this is really only an option if you are looking to purchase multiple machines. 

The third party will work to secure all of your credit cards to include up to 18 months of no interest. You complete the online form. They qualify you for free and do all of the work to secure your loans without inquiries on your credit report. There is no upfront fee; you don’t pay anything out of pocket. 

However, upon approval and when you receive your first revolving line of credit, a flat fee of $2,997 charges to the first credit card you receive. This way, you’re not out of pocket and have up to 18 months to pay the fee and any other charges you incur on the cards received.

How to Provide Vault Cash

Another ATM business expense is the vault cash. This is the money you will load into the machine for your customers to withdraw. Now, at the end of the day this money is yours, but it will be tied up in your business. And you need it immediately. So how can you easily get $2,000 cash to stock your ATM machine?

Other People’s Money

One option is what we like to call other people’s money, or OPM. Technically, OPM is a slang term used in finance to refer to financial leverage in the form of borrowed capital that is used to increase the potential returns as well as the risks of an investment. However, in the case of an ATM business, it simply means you can fund your venture with help from family, friends, or a business partner in return for an agreed upon share of your business revenue.

Financing

If you decide to finance your business, you might be able to cover your cash needs from this same source. However, keep in mind that normally the credit cards aren’t used for obtaining vault cash. But, if you speak with the loan provider, you may be able to pay an additional small fee to pull cash off the cards.

Location Funding

This is probably the most common option for cash vaulting when an ATM operator is short on funds. You can make this service part of the agreement with the location owner. When you negotiate the placement of your ATM machine in someone else’s business, you will need to discuss the need for the location to provide the vault cash as part of the agreement. 

Obviously, this is only an option if the location owner agrees to this arrangement. In this scenario, you will need to be willing to offer a larger share of your surcharge revenue. This will compensate the location owner for the extra work and responsibility. You will also end up reliant upon him or her for the seamless operation of your business. 

For example, if something happens where the location owner fails to restock the machine, you are out of business until you have cash to offer customers. If you are able to handle the vaulting yourself, on the other hand, you have more control over your business and assume less risk of down time.

What Can Wait

Finally, when planning how to start an ATM business with no money, you want to make sure you stick to the bare necessities to start. Purchase just enough to get going. Then, as you begin to generate revenue with your machine, you can budget for other add-ons and services to enhance your business as you go. 

You will have a lot of options to choose from when it comes to purchasing equipment. You will have to consider screen size, lighting, cassettes, locks, cameras, etc. But many of these upgrades can be added later; they aren’t completely necessary to get started.

Be strategic as you weigh “need to have” against “nice to have”. Bells and whistles can always be added. But you also want to make your ROI as soon as possible. You can only do that with a competitive machine. So if you need help making these decisions, talk to someone with experience in the industry or a trusted ATM vendor. 

How to Start an ATM Business with No Money

The cost to start an ATM business is so low that you technically now know how to start an ATM business with no money. Keep your initial budget limited to equipment that is need to have versus nice to have. Borrow from friends and family when you can, or enter into a business partnership. Seek financing when it makes sense for your business model. Work with a reputable financier who will offer you a fair deal based on the revenue you anticipate and the rate at which you will reasonably be able to make your ROI.

If you still have questions about how to start an ATM business with no money, don’t hesitate to contact us today! You can also check out our comprehensive list of FAQs about how to get into the ATM business. These answers provide more information about what you can expect when getting started.

13 FAQs About How to Get Into the ATM Business

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If you want to know how to get into the ATM business, there are a lot of factors to consider. First, you might want to be sure that getting into the ATM business is something you really want to do. Therefore, you will want to be able to weigh the rewards against the costs before you get invested.

Then, once you are sure you want to start an ATM business, you will likely have a lot of questions about what to expect and how to handle certain situations. We’ve found that many new independent ATM deployers (IADs) have some of the same curiosities and concerns when it comes to getting started. 

Our hope is that by answering these frequently asked questions all in one place, IADs will understand how to get into the ATM business and become confident about getting started. 

What Is an ATM Business?

Before understanding the ins and outs of how to get into the ATM business, you should know what “ATM business” means. Did you know that not all ATM machines are owned and operated by financial institutions? That means that there are other companies and individuals who purchase ATM machine equipment, place it in locations where there is a lot of foot traffic and demand, and make money from each transaction. 

Individuals who purchase, place, and operate ATM machines are known as independent ATM deployers, or IADs. However, there are a lot of other ways to get involved and make money in the ATM industry. There are ATM vendors who sell ATM equipment to businesses who want to operate their own machines. There are vaulters who work with ATM operators to handle the cash stocking. And there are site locators who match businesses and operators so that both parties benefit from the placement.

Regardless of your role, the following FAQs and answers can help you better understand how to get into the ATM business and start making money. 

1. How much does it cost to start an ATM business?

Of course, the question that is on the forefront of everyone’s mind is financial investment versus reward. One reason an ATM business is the ultimate side hustle is because it has a low overhead compared to many other businesses. The biggest cost is the ATM machine itself. This can be about $2,000-$3,000. The next cost is the cash you use to stock the machine if you will vault your machine yourself. This is still your money at the end of the day, but it will be tied up in your business as an investment.

There are other costs that vary from operator to operator. For example, you might pay for installation and programming, equipment upgrades and add-ons, and/or advertising. These are all optional.

So while it’s hard to provide an exact number, you can expect to start an ATM business with just a few thousand dollars. The vault cash is the only expense you need in full up front. You can handle installation yourself if you are comfortable, purchase ATM equipment on credit and pay over time, and you can add custom graphics, cameras, and other features over time and as needed once you start making money.

2. What are the ongoing costs of operating an ATM?

Now, those are the costs to consider when it comes to getting up and running. Ongoing costs will include internet service, insurance, maintenance, and travel.

Purchasing your own wireless device to provide your ATM machine with an internet connection separate from the location’s ISP is essential to maintaining consistent service. If anything happens to the location’s internet and your machine loses connection, you will lose more business than it would have cost to provide your own connection. 

Insurance is optional, but the location may require you to obtain at least general liability insurance as a condition of your placement agreement. General liability insurance typically covers bodily injury, property damage, medical payments, and legal defense. 

Maintenance costs will include cleaning supplies, receipt paper, and any technician calls. These costs can be unpredictable, so it’s a good idea to set aside some money or budget for these things.

Finally, you might want to consider the travel to and from your machine. This is why it is important to try to place your machine close to where you live or work or already go regularly. The farther out of the way your machine is, the more you will spend on travel costs.

3. How do I make money from an ATM?

There are a lot of different ways to make money from an ATM. As an ATM site locator who negotiates with location owners on behalf of ATM owners, you can request a flat rate or negotiate for a share of the surcharge. As an ATM vendor, you can mark up the price of ATM equipment to earn an upfront commission and/or keep a share of the surcharge for servicing the machine.

But most commonly, individuals will purchase and operate their own machines, generating revenue from surcharge fees imposed on transactions. Surcharge fees can range anywhere from $1-$10 depending on the location. Setting the right surcharge fee depends on the location. How much demand is there for cash in the area? How much competition is there? What is the average withdrawal amount? 

When setting a fair surcharge fee, you want it to be high enough to make your return on investment as soon as possible but not too high that customers opt for service elsewhere. Typically, the best surcharge fee is the one that brings in the most users. But you will monitor your data when you start and make adjustments as necessary.

4. What is the typical profit margin for an ATM business?

As an IAD, you can expect to make an annualized return of 35%-70% or more. With just one machine, you can make a few hundred dollars a month. One machine can generate some extra passive income to help supplement your regular salary or fund a savings account or large purchase. But if you want to rely on your ATM business for your salary and make thousands of dollars, plan to scale your business.

To calculate your ATM business profit, multiply your surcharge by the number of transactions you expect to see in a day or month. Then subtract any business costs, and that will be your profit for any given month or year. There are some formulas and calculators you can use to help set the right surcharge fee and estimate your revenue.

Remember that you can always adjust your surcharge fee or even move your machine to a more successful location if you don’t see the numbers you want. And of course, the more machines you operate, the more revenue you will generate.

5. How do I choose a location for my ATM?

Choosing a location for your ATM requires you to consider a number of factors. First, you either need to find a business that wants to offer ATM service to its customers or a gap in the market. Areas that experience high foot traffic and also provide opportunities to spend cash are the best locations for ATM machines.

Remember that you make money from each transaction made on your machine. So you want to see as many transactions as possible. This should really influence where you place your ATM. Will a lot of people pass by your machine? Will those people need cash? Are there clear benefits of an on-site ATM machine for the location owner? 

It is best to start looking near where you live, work, or already travel to frequently. The more you have to travel to and from your machine, the less profit you will make because more of your revenue will be spent on travel costs. 

We’ve created a list of the best ATM locations and how many transactions each typically sees. But each IAD’s situation is unique, so the right location will really depend on the need in your area.

6. Do I need any special license or permits?

You do not need a specific license to operate an ATM business, but you will 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. There are a few options.

You can establish a limited liability company (LLC) to separate your personal assets from your business liabilities. This can be a good idea depending on the scale of your operations, your risk tolerance, and your specific business goals. 

The simplest and most common route among new IADs is to create a sole proprietorship and operate under a fictitious business name, or a DBA—doing business as. There are also partnerships and corporations that can be created depending on your business model and goals.

7. What kind of insurance do I need?

You don’t necessarily need any kind of insurance. However, the owner of your location might require that you at least purchase a general liability policy. General liability insurance covers bodily injury, property damage, medical payments, and legal defense. You can expect to spend about $400-$700 a year for $1 million in general liability coverage.

ATM insurance is an inexpensive way to protect yourself against expensive accidents. Since your ATM machine is not owned by a bank, you are not subject to FDIC protection. While you can get ATM business-specific insurance, you don’t have to. A general liability policy might be enough, depending on your needs.

8. How do I choose an ATM provider?

There are a few qualities to look for in an ATM provider or processing company. First, it’s a good idea to look for a company that also sells ATM machines. This way, you can get equipment and service all in one place. And you know the machines you get from your ATM processor can process using their service.

You might also want to look for flexibility in payment options. Automated payments make your income even more passive and your paydays quicker. You might also want the option to split payments between multiple people or accounts. 

Of course, you want to work with a company that offers free processing. The least amount of hidden and unclear fees, the better. Make sure your ATM provider is transparent about any fees and processes.

Maybe most importantly, choose an ATM provider that offers reliable support. Especially when you are just learning how to get into the ATM business, you want to be confident that you will succeed. The best ATM providers will view your success as their success, offer resources, and be available when you need them.

9. How do I manage cash for my ATMs?

There are a few ways to handle cash vaulting. The most profitable way is to do it yourself. You will need a bank account with a balance that you will withdraw regularly for the sole purpose of stocking your machine. You might need $2,000 or so depending on how busy your machine is and how often you will stock it. Withdrawal amounts from your machine get redeposited to that account by your ATM provider. 

Another option is to have the location owner or other location employee handle the vaulting. This is sometimes a good option for IADs who don’t have enough cash available to tie up in the machine; businesses usually do. However, this extra task might cost you more in a revenue share, meaning you might have to pay a portion of the surcharge revenue to the location owner for taking care of this work.

And of course there are independent vaulters and vaulting companies. Your ATM provider might also offer this service. This is the most expensive option, but it alleviates the burden for you.

10. What kind of maintenance do ATMs require?

Fortunately, ATM maintenance is very simple. Just make sure it is clean, attractive, and functional. Keep it stocked with cash and receipt paper, address any errors immediately, and wipe the machine down regularly. If any decals start to peel, replace them. If someone vandalizes it, clean and repair it. 

Most maintenance you can easily conduct yourself. For more complex problems, simply contact your ATM provider or other ATM technician for help. Consult the manual for your machine when necessary, and check YouTube for how-to videos to save yourself time and money working with someone else. 

Know your machine well by monitoring the activity. That way you can identify errors and anomalies more quickly. The faster you resolve an issue, the less time you spend out of business, and the more money you make.

11. How do I handle security concerns?

There are a number of ways criminals can tamper with an ATM machine to try to access cash or customer account details. However, the simplest barriers can easily deter this activity. The most important thing you can do is be vigilant.

It is a good idea to keep your machine under surveillance. Whether it is always in eyeshot of a location employee or in the line of security cameras, advertising this kind of monitoring can deter criminals as well as reassure customers of their safety. 

Make sure the machine is bolted firmly and evenly to the ground to prevent the machine being moved. Test your machine’s security by trying to nudge or shift it. If it doesn’t give, you are good to go! The more time it will take someone to get access to the machine, the less likely they are to pursue it.

Therefore, you want to try to barricade the machine as well. Keep a straight path to it open, of course, but blocking the sides with furniture or displays can make getting to the machine more difficult. 

And again, know your machine well. You don’t want someone to install a pinhole camera or fake front to your machine that would compromise customer account data. Regularly inspect your machine to ensure that it hasn’t been tampered with. 

12. How do I attract business to my ATM?

There are a lot of free and inexpensive ways to bring more traffic to your ATM machine. A little bit of promotion can go a long way; you need to let people know your ATM exists! 

You can purchase an ATM sign and coordinate with the location owner about displaying it, but if you want to save some money at the start, just consider strategic placement. Put your machine close to a payment counter or somewhere else where all or most customers will pass by and see it.

You can also coordinate with the location owner to offer coupons printed on receipts and even advertise deals and discounts for cash payments. Cash payments save businesses on credit card processing fees, so discounts for cash payments is a win-win-win scenario that can encourage more ATM transactions. 

And take advantage of your ATM screen. Create custom graphics that appeal to users and also brand yourself at the same time. You can do this yourself or hire out for it, but some ATM providers will add custom screens as a perk!

13. What is the best ATM equipment?

You have a lot of options when it comes to choosing ATM equipment. To keep it simple, the leading brands are Hyosung and Genmega. But this doesn’t mean you have to purchase one of these brands. What you do want to look for is reliability and ease of use. 

Be wary of used machines. They might come with complicated issues, be noncompliant, or simply no longer work with ATM networks. Purchase new or certified refurbished. This ensures that the machine will function properly. Newer machines also tend to be more user-friendly because any issues with older models are typically improved with newer ones.

You also have a lot of options when it comes to features. The screens, cassettes, locks, etc. will vary from model to model. So shop around and make a list of features that are “nice to have” and features that are “need to have”. This will help you narrow down your options based on your budget. 

How to Get Into the ATM Business

There is a lot of information for you to consider when starting an ATM business. However, we hope that this list of frequently asked questions helps to simplify some of that information and put you at ease knowing what to expect at every stage of the process. 

Working with a knowledgeable, supportive ATM provider can make or break your business. ATMDepot.com specializes in helping people go from zero to ATM business owner. If you want to get into the ATM business as soon as possible, request an ATM Start-up Kit or check out the ATM Business Road Map risk-free to get a detailed guide for starting an ATM business from the ground up. 

An ATM business is the ultimate side hustle. It is simple, inexpensive, and rewarding. With decades of experience and a wealth of resources available to you, we can show you how to get into the ATM business 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.

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!

15 Questions to Ask When Starting a Business

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There are a number of questions to ask when starting a business to make sure you have a plan and clear expectations. You don’t want to go into business blind, so asking yourself the right questions can help you prepare for success.

Here, we have 15 questions to ask when starting a business. While these questions usually apply to conventional small businesses, they apply to ATM businesses too. 

An ATM business is unconventional in the sense that you aren’t selling a product, you don’t work directly with the public, and you don’t own your own location. But an ATM business owner has many of the same responsibilities as any other business owner. 

There are certain universal considerations, decisions, and liabilities that go into starting a business. We’ve tried to summarize them here so that you can go into business for yourself as an ATM owner with a clear direction and no surprises along the way.

1. What is my business idea and expectations?

The first of many questions to ask when starting a business is what your idea and expectations are. There are many ways to start a business in the ATM industry. So what aspects appeal to you the most? 

Do you want to own and place your own machine? Do you want to start a route of many machines? Would you rather sell machines to locations that want to operate the ATM themselves? Would you like to negotiate placements for other ATM owners? Do you just want to sell a service to other ATM owners like vaulting or technical support? Are you interested in getting into Bitcoin ATMs? 

Once you have a clear idea of your business goal, you can start taking the appropriate steps in the right direction. Managing your expectations early on can save you time and money you’d spend changing your mind mid-way through the start-up process.

2. Is there a market for my service?

Your business idea might (and should) depend on the market. Consider where you live and what opportunities are available to you. If you live in a small town, you might have better success operating your own machine than trying to manage others as there might not be many other independent ATM deployers (IADs) in your area.

You also want to consider the placement of an ATM machine. Are you able to identify a gap in the market? Is there an area with a clear need for ATM service? Are there ATMs in your area that are often out-of-order, outdated, or poorly managed? 

These are questions to ask when starting a business in the ATM industry so that once you have your machine, you know where to put it and how well you expect it to perform. An ATM machine with no transactions won’t make you any money.

3. What are the initial startup costs?

You want to think about the initial startup costs of starting your business so that you know how to budget for and fund your business. As an IAD, you’ll want to plan for the costs of ATM equipment, installation and programming, and vault cash.

4. What are the ongoing expenses?

After the startup costs, how much should you expect to deduct from your revenue in operational costs? This might include ongoing maintenance, wireless service, insurance, and any revenue you share with other parties like the location owner. 

Not every ATM business has the same ongoing expenses. Some you will want to budget for right away; others you can add once you start making money. You may or may not have a revenue share, but you’ll figure that out when you negotiate the placement. But it’s good to have some money set aside for maintenance costs like technical support, tampering or vandalism, and cleaning supplies. 

5. How will I fund my business?

Once you have a good idea of the initial costs of starting an ATM business, you’ll need to figure out how to fund it. If you already have a few thousand dollars saved up, you can fund the business yourself. Fortunately, ATM business startup costs are relatively low, so you should be able to fund the business with your own money, via credit card, or through a loan from a friend or family member.

You might need to decide whether to register as a sole proprietorship, partnership, LLC, corporation, etc., based on legal and tax implications. You will want to set up your business bank account under this entity. A simple route for IADs is to create a sole proprietorship or an LLC and get a fictitious business name, a “doing business as” (DBA), to avoid conducting business under your own name.

7. What technology and tools do I need?

Operating your ATM machine will require some technology and tools. Some are nice-to-have and others are need-to-have. For example, the installation will require certain drills and bits. But you don’t have to handle the installation yourself. If you hire this part out, you don’t have to worry about procuring the installation tools.

Technology that is nice-to-have might include cameras for surveillance or a wireless router to avoid relying on a location’s unpredictable internet service provider. 

Technology that is need-to-have is remote online monitoring. You will want to be able to track your ATM activity from anywhere 24/7. This will help you keep your assets safe as well as keep your machine up and running without any lapses in service.

8. How will I handle day-to-day operations?

Just like you can choose what role you want to play in the ATM industry (IAD, vaulter, technician, etc.), you can choose which aspects of your business to handle and which to hire out. It depends on your level of comfort, how much time you have/want to invest in your business, and how much profit you want to make. 

For example, you can hire someone to vault your machine for you, or you can do it yourself. Just weigh the costs of hiring someone else against the amount you are willing to “pay yourself” for taking the time to handle that aspect of the business.

9. What is my unique value proposition?

This question requires you to identify what sets your business apart from competitors and why customers should choose you. Now, as an ATM owner, there are two ways to look at this:

First, you want to consider the value you offer to the location where you will place your machine. Will your ATM bring in new business? Will it add a much needed service to existing customers? How will the location financially benefit from having an ATM on the premises? These are questions to ask when starting a business so that you know how to approach location owners with a proposal to place an ATM machine on-site.

Second, you want to consider the ATM users. Why should passersby use your machine rather than one a couple of blocks down or at the bank? Can you offer better security? A competitive surcharge fee? Coupons? Superior customer service? Ask yourself these questions, and then do it.

10. How will I handle customer service?

Again, you have two angles to consider here:

How will you ensure that the location owner does not have any problems working with your or your machine? Will you be available to handle any unexpected issues? Do you have a partner or someone you trust to act in your stead if you have to be away? How quickly will you be able to address any problems?

Do you have a process in place for handling customer complaints? What happens if there is a discrepancy with a withdrawal? What if there is a security concern? Is it clear who users should contact and how? Answering these questions early on will save time and money later.

11. What is my pricing strategy?

Really, as an IAD, the only pricing you need to worry about is the surcharge fee. You want your surcharge fee to be low enough to encourage transactions but high enough that you make a decent ROI and profit. There are a number of factors to consider when setting your surcharge fee including any preferences of the location owner and revenue share. 

Remember that your surcharge fee can change, too. You might start low to encourage traffic and then raise it once it’s steady. Or you might start high to reach your ROI quicker. Monitor the activity and trends and adjust the surcharge fee accordingly to find the “sweet spot” that satisfies both the customers and your own business goals.

12. What is my marketing strategy?

When you have your ATM installed and ready to go, you’ll want to think about advertising it. People can’t use your ATM if they don’t know it exists. So how will you encourage transactions? Thinking about this early can help you get a head start and budget extra features into your startup costs. 

For example, you might want to invest in a topper for your ATM machine, custom graphics, and/or a light-up ATM sign for the location window. Speak with the location owner as well to see about offering coupons to encourage transactions and increase in-store sales.

13. What is my growth strategy?

Depending on your business goals, you may or may not plan to grow your business. However, if you do, you will want to think about your growth strategy early to better manage your expectations and work toward that goal purposefully.

You could grow your business by offering additional services (vaulting, placement, technical support, etc.) or by adding more machines to your route. There is nothing wrong with managing just one machine. But the more machines you operate, the more profit you will earn.

14. How will I measure success?

It’s important to set goals for yourself in any endeavor, especially in business. Otherwise, how will you be motivated to keep going? Make a list of SMART goals so that you always know what success looks like, how to achieve it, and how to measure it. Then, you can make adjustments along the way as your business improves, you learn more, and your financial and other goals evolve.

15. What are the potential risks and how will I mitigate them?

Finally, one of the most important questions to ask when starting a business is how to mitigate potential risks. Predicting and planning for risks early not only helps to minimize disasters but also helps overcome obstacles that might be standing in your way of taking the next step. 

Having a plan for the worst case scenario can help put your mind at ease knowing that there’s nothing you can’t handle. Whether it’s a technical problem, a security issue, or a breach of contract, document a procedure you can use to address it. There’s a good chance you’ll never have to, but it’ll be worth it for peace of mind.   

Conclusion

Hopefully this extensive list of questions to ask yourself when starting a business makes the journey smoother for you. We’ve tried to think of everything so that you don’t have to. You don’t have to have any specialized knowledge or training to start an ATM business. But we know that not knowing what to expect can keep many people from taking that first step. And encountering unexpected barriers along the way can keep them from taking the next step.

If you work with ATMDepot, you will receive all of the support you need from choosing the right equipment to negotiating placements to ongoing technical support and business advice. What are you waiting for? Get your ATM business start-up kit today!