Guide to POS Systems for Small Business

guide to pos systems for small businesses

Small businesses face stiff competition, and they need every advantage they can get. Sometimes, an advantage can be found in an unlikely place, such as your point of sale (POS) system. POS systems provide an array of functionality that can help you with marketing, employee management, inventory management and payment processing, among others. So, getting the right system that meets the needs of your business is one way to gain an edge. But, how do you know which POS system is right for you?

Let’s start with the basics.

What Are POS Systems For Small Business?

By definition, a point of sale is where a sales transaction takes place. It could be at a register in a brick-and-mortar store, on a mobile device or even online.

A POS system combines hardware and software that retailers use to process sales transactions. It is not just a credit card processing system.  In reality, a POS can handle a variety of back-office functions in addition to processing credit card payments.

What Functions Does a POS Perform? A POS can have the following capabilities:

Scan barcodes – Use a barcode scanner to quickly input product and sales data into the system.
Process card payments, returns and exchanges – The credit card reader should input the customer’s credit card data from swiping a magstripe, dipping cards with chips or accept contactless payment such as Google Pay and Apple Pay. For mobile sales, you can connect card readers to tablets and smartphones per the headphone jack. Purchases made through your website can be processed with online POS software.
Track customer history – Keep records of customer profile data and sales history. Collect customer contact information and create lists for email marketing.
Keep records of employee performance and time management – Track employee clock-in and clock-out data and record sales performance for commissions.
Track inventory – Maintain current inventory in-stock levels of products and issue alerts for low stock amounts to reorder and prevent missed sales. Store supplier information, wholesale costs and discounts and issue purchase orders.
Produce reports- Produce sales performance reports. For example, track top sellers, identify slow movers and predict seasonal fluctuations.

What are the Key Elements of a POS System?

Pricing – POS systems can cost as little as $0 per month up to $300 per month. All systems charge a payment processing fee. They can be cheap or very expensive to operate, depending on the additional functions provided.

Hardware – POS systems typically work on most Android devices, iPhones and iPads. If you have one of these already, you can start your POS with a low-cost or free card reader and few other hardware costs. However, if you don’t have a barcode scanner, you’ll need to purchase one. Additional hardware costs could be anything from a printer for receipts to a cash drawer.

Plans – POS plans should range from a free (or low-cost) option with little more than the capability to process credit card payments, but have the flexibility to add more sophisticated data tracking and reporting as the business grows.

Top POS Systems for Small Businesses


Square is the POS of choice for mobile businesses. Additionally, it’s also an economical favorite for retailers with physical stores. Many users conduct all of their business with just an iPad and a basic Square plan.

Ventajas – Square has a basic plan with a zero monthly cost, making it easy to get started with a POS system. The software is intuitive and easy to use.
Desventajas – Transaction fees can be slightly higher that other POS systems. Square charges more for transactions with manual entry than other POS providers.


Lightspeed offers more than 40 detailed sales, inventory and analytic reports. It provides nearly any type of data analysis that a retail business would need.

Ventajas – The basic plan starts at $99/month and upfront purchases of hardware can approach $700, but you will receive extensive and sophisticated data analysis and reports.
Desventajas – The ecommerce feature is only available at an additional monthly fee. Shopify and Square offer ecommerce platforms for free. Unlike other POS providers, Lightspeed requires a contract, which means you’re stuck if you don’t like their system.


Shopify has a reputation as one of the best POS systems for ecommerce. It’s easy to set up and has a wide range of options that are customizable for any small business. It also scales up as a business grows.

The plans range from a basic option at $29/month up to the Advanced Shopify at $299/month.

Ventajas – Shopify has affordable subscription and processing fees and offers a 14-day free trial. Its ecommerce tools are some of the best.
Desventajas – Data reporting on the Basic Plan is limited. Shopify doesn’t have a free subscription plan; options with more features gets expensive.


ShopKeep is designed especially for cafes, bars, boutiques and specialty shops. It offers very detailed product and inventory tracking and goes further by keeping track of recipes and ingredients, for example.

Advantages – It offers helpful features for sales staff management, inventory control and reporting.
Desventajas – It doesn’t have fixed-price plans. Company representatives prepare a custom quote for each business application. Generally, higher business volumes reduce the credit card processing fee. ShopKeep offers a free version, but limits the number of items in inventory, number of employees and registers. Even the sales amount is restricted without an upgrade.


How to Choose a POS System

Use the following criteria and ask yourself these questions to determine the best POS systems for your small business:

  1. Price – Is the software and hardware reasonably priced with low monthly fees for a small business?
  2. Payment processing –Do the transaction processing fees compete with other providers?
  3. Inventory management – Does the system produce inventory data that you actually need?
  4. Customer data management – Does the system collect customer profiles, keep lists for email marketing, track customer purchase history, have a customer loyalty option, and offer gift cards?
  5. Employee data – What information does the system provide for individual employee performance?
  6. Customer support – Does the provider have free, live support, and is it available 24/7?
  7. Integrations – Does the system integrate selling, marketing and accounting reports?
  8. Analytics and reporting – What data do the reports provide? Can data be exported? Will the system produce visual charts and graphs?

Making Your Choice

First, decide what you want in a POS system. If it’s just processing credit card transactions, a free card reader with processing charges per individual sale and no monthly fee is good enough. But if you’re looking to add customer data for marketing, inventory management and tracking employee performance, then you’ll need to purchase a system that provides those additional functions.

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