How to Open a Check-Cashing Business

A check-cashing business will get you in the money, but follow these tips to keeping the money flowing.

Difficulty:

Easy

Instructions

1. Find a location where customers will easily find your business. Strip malls and highly visible shopping areas are places that have lots of drive-by traffic, which is a necessity for a business such as this to succeed.

2. Contact the city or county department that handles business licenses and request an application.

3. Find out what other requirements there are for opening a business. You may be required to provide insurance, or you may have to follow certain restrictions for the area.

4. Contact the Franchise Tax Board to get a wholesale permit, if required. This will allow you to purchase goods without paying tax if they are to be used in your business.

5. Research check-cashing operations. Find out what store setup requirements you will have.

6. Decide if you want to purchase a franchise or open an independent business. Talk to owners of existing check-cashing businesses and ask them what problems they've had and what they would do differently if they could. Ask if they want to sell their business. Buying an existing business is a lot easier, but could be more expensive.

7. Make a business plan. You'll need to have all the aspects of opening and running the business worked out for the short and long term.

8. Get financing. Unless you have a lot of money lying around, you will need to borrow money to get started or expand.

9. Advertise your new business. Check-cashing businesses work on the theory of convenience, so you want to make it as easy as possible for your customers to use your service.

Tips & Warnings

• Realize that check-cashing businesses make money by charging customers a flat fee or a percentage of the check cashed. The business is often regulated by the state government regarding usury laws (charging too much interest).

• Check-cashing businesses handle lots of money and may be subject to robberies and theft.

• Beware of bad-check writers. In any business that accepts checks, there is the risk of getting a bad check. Hire a check-scanning firm to cut down on fraud.