How to Start a Check Cashing Service
You can start a check cashing business by buying a franchise or by starting your own business. Whatever you decide, you need to have full knowledge of how this kind of business operates. As with any financial business, there are laws that govern this kind of business. Make sure you seek counsel from an attorney in order to operate within the prism of the law.
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Things You'll Need
- Capital
- Offices
- Computers
- Internet
- Telephones
- Check cashing machine
- Security
- Employees
Instructions
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Do research on the business to find out whether that is really what you want to do. The information you gather from your research will also help you to draw a good business plan. You will need the plan to raise between $50,000 and $150,000--the required initial capital for starting a check cashing business.
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Determine which business model is better for you--whether to buy a franchise or start a new business altogether. Once you make a decision, register your company with the state in which you want your business to be based. If you register in one state, it does not mean that is where your business will be confined. You can open branches across the country if you wish for as long as you follow laws in each individual state.
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Find out how you can raise the initial capital. If you have a good personal credit score, most banks will be willing to grant you a loan. You will need the money to pay rent for the offices and cash checks. You will also use the money to purchase office equipment such as computers, telephones and furniture. Utility bills, among other things, will have to be paid, too. Venture capitalists are more likely to invest in a company that promises viability. They could determine that from your business plan. Angel investors might also be interested. There are many sources of capital for start-up businesses.
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Recognize the inherent dangers involved in dealing with cash. Armed robbers usually target such places because of the amount of cash that is kept on the premises. In this case, you will need to contract with a security company to keep you and your employees safe. Put cameras in and outside your offices to enable security monitoring from every angle. Install bulletproof glass to protect your employees. You will also need a check scanning machine. You might have to hire a company that provides such a service.
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Follow the laws guiding the financial services industry. You should charge reasonable fees and interest rates. You can do that by following federal and state guidelines. By overcharging, you might be breaking federal and state usury laws that make it illegal for financial retailers to charge exorbitant interest rates.
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Tips & Warnings
You need to do a thorough background check for all your employees. Hiring employees who can be trusted is imperative, because the success of your business is dependent on their honesty. Apart from criminal background, you should do a credit check.
The financial services business requires discipline. There is always a temptation to become extravagant and wasteful. Some people involved in this kind of business end up defrauding their investors. If people invest money in your business, keep the records straight and simple for each investor to look at any time he asks for information about the business.
References
Resources
- Photo Credit signing check image by jovica antoski from Fotolia.com
