How to Open a Check Cashing Business

Last Updated: November 19, 2021 References

Starting a check-cashing business of your own can be complex, but if you put in the time, it can be a profitably business that helps a lot of people. Not only will it provide jobs in your local area, but it will provide a valuable service to members of the community, as those without bank accounts rely on check-cashing services to help them get the money they need. Our how-to guide will help with you start your business, from deciding what services to provide and writing a business plan to obtaining the licenses you'll need.

Steps

1
Write your business and marketing plans, as these are the foundation of your business. These documents will help you gather your ideas and plan of action on paper as well as give you a clear picture of needs to be accomplished. Many investors and other potential sources of capital require a business plan before considering whether or not to provide funds.^{[1]
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2
Decide what check-cashing services you will offer. You should include an outline of this in your business plan, but know that many check-cashing businesses do not thrive on cashing checks alone. They also offer payday loans based on a personal checks, bill payment services, money orders, and prepaid debit card services.

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3
Secure your start-up investment. Your start-up investment will vary based on whether you are starting your own business from the ground-up or joining a franchise. The investment is large for this type of business and usually does not include franchise, advertising, and marketing fees.^{[2]
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4
Get the necessary licensing and permits as according to your local, state, and federal regulations. At this stage, you should also acquire the necessary business and financial insurance to protect your business from bad checks and dishonest employees.^{[3]
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5
Secure your retail location. This is one of the most important aspects of your business, because people need to be able to locate and enter your facility or you will have a hard time getting customers. If the building is not already equipped, purchase security cameras, security alarm, computers, cash drawers, and a safe for money storage.^{[4]
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6
Purchase your check-cashing business management software system. This software is the biggest part of your business, as it gives you access to various identification databases to ensure you are running in compliance with government standards. It will also verify your checks and help you produce other services, including installment loans, bill pay, recurring bank account transfers, and debit card loading.^{[5]
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7
Take job applications and hire your employees. You need honest employees in this business, as they will be handling money daily. Run background checks to ensure prospects are not lying on their application and have not been convicted of financial crimes that could harm your business. You may also want to consider drug testing employees before employment as well.^{[6]
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8
Open your doors for business. When you are staffed and everyone is trained on how to operate the business, you are ready to start serving customers in your area.

Community Q&A

Question

How do I maintain books for this business and show the income? How do you reconcile a bank account?

Community Answer

Use a service like Quickbooks to do all of your accounting.
Question

What type of license do I need to open a check cashing business?

Community Answer

This depends on your state laws. If you're cashing payroll checks, not personal checks, then you can get away without registering if you keep your maximum check amount to $1000 and below and only cash a check from that person once in 24 hours. If you wish to do more volume and other services, then you must register as an MSB and also maybe the BSA and Fincen.