Choosing a point-of-sale (POS) system is one of the most important technology decisions a business owner can make. Your POS system is where customers pay, but it can also help you manage orders, inventory, employee activity, customer data, reporting, and other daily operations.
The right POS system should fit the way your business works now while supporting the way you want to grow. A small retail shop, full-service restaurant, salon, food truck, and multi-location business may all need different tools, even though they all use a POS to accept payments and track sales.
Before choosing a POS system, it helps to compare your business needs, industry requirements, budget, hardware, software features, payment processing options, integrations, support, and sales tax tools.
What is a POS system?
A POS system, or point of sale system, is the hardware and software a business uses to complete sales and process customer payments. It replaces or expands on the traditional cash register by connecting payment processing with other business tools.
A POS system may include:
- A countertop terminal, tablet, handheld device, or mobile phone
- A credit card reader or contactless payment reader
- A cash drawer
- A receipt printer
- A barcode scanner
- Software for sales, inventory, reporting, customers, employees, and integrations
For many businesses, the POS is also the central system for transaction data. It can show what was sold, when it was sold, who sold it, how the customer paid, and which location or sales channel produced the transaction.
Why choosing the right POS system matters
A POS system affects more than checkout. It can influence how quickly employees serve customers, how accurately inventory is tracked, how easily reports are pulled, and how well different parts of the business connect.
A good POS system can help businesses speed up checkout, accept multiple payment types, track sales and inventory, manage employees and permissions, review sales trends, connect online and in-person sales, and support accounting, payroll, ecommerce, and tax tools.
The wrong POS system can create extra work. If it does not fit your industry, support your reporting needs, or integrate with the tools you use, you may end up relying on manual workarounds that slow your team down.
How to choose a POS system for your business
Choosing a POS system starts with understanding how your business operates day to day. Price matters, but it should not be the only factor. The best POS system for your business should match your sales process, customer experience, staff workflow, reporting needs, and growth plans.
Start with your business type
Different industries need different POS features. A restaurant may need menu management, modifiers, table mapping, tipping, and kitchen routing. A retail store may need barcode scanning, inventory tracking, returns, and e-commerce sync. A salon may need appointments, staff schedules, client history, and service-based checkout.
Before comparing POS providers, think through how customers place orders or make purchases, whether you sell products or services, how many employees need POS access, and whether you sell from one location, multiple locations, online, or across several channels.
Industry fit matters because a POS that works well for a coffee shop may not have the same tools a boutique, grocery store, salon, or full-service restaurant needs.
Compare the features you will actually use
POS systems can include a long list of features, but not every feature matters to every business. Focus on the tools that support your daily operations first.
Common POS features include payment processing, product or menu management, inventory tracking, employee permissions, sales reporting, customer profiles, gift cards, loyalty programs, discounts, tipping, returns, online ordering, ecommerce sync, accounting integrations, and sales tax settings.
It is also helpful to think about where your team has the most manual work now. If inventory counts, order entry, end-of-day reporting, or tax reporting take too much time, those areas should influence your POS decision.
Review hardware requirements
POS hardware can range from a simple card reader connected to a phone to a full countertop setup with terminals, cash drawers, scanners, and receipt printers.
Before choosing a POS system, think about where and how employees will complete transactions. For example, a food truck may need a mobile setup that can process payments quickly in a small space. A restaurant may need handheld devices for tableside ordering, plus kitchen display screens. A retail store may need barcode scanners and receipt printers at each register.
Ask each POS provider what hardware is required, what is optional, and whether the hardware must be purchased through them. You should also confirm whether the system supports contactless payments, mobile wallets, chip cards, keyed-in payments, and offline mode if internet outages could affect your business.
Understand payment processing options
Many POS systems include built-in payment processing, while others may allow businesses to choose from different payment processors. This can affect your costs, contract flexibility, deposit timing, and reporting.
When comparing payment processing, look beyond the headline rate. Review in-person card rates, online payment rates, keyed-in payment rates, chargeback fees, deposit timing, contract terms, cancellation fees, and whether you can use your preferred processor.
A lower monthly POS fee does not always mean a lower total cost. Payment processing fees can add up quickly, especially for businesses with high sales volume or a large number of card transactions.
Make your sales tax less taxing with DAVO.
Look at the full pricing model
POS pricing can include several different costs. Some providers charge monthly software fees. Others charge for hardware, setup, add-on features, support, payment processing, extra registers, or additional locations.
When comparing POS systems, ask for a full breakdown of expected costs, including:
- Software subscription fees
- Hardware costs
- Setup or onboarding fees
- Payment processing fees
- Add-on app costs
- Extra terminal, location, or user fees
- Support fees
- Contract terms, upgrade costs, and cancellation fees
The right POS system should fit your current budget, but it should also make sense as your business grows. A system that seems affordable at one location may become expensive if you add more terminals, employees, features, or locations.
Check integrations before you commit
A POS system is more useful when it connects with the other tools your business depends on. Integrations can reduce duplicate data entry, support better reporting, and help different systems work from the same sales data.
Common POS integrations include accounting software, payroll software, ecommerce platforms, inventory tools, employee scheduling tools, loyalty programs, email marketing platforms, online ordering tools, delivery apps, and sales tax automation.
Before choosing a POS system, make a list of the tools you already use and the tools you may need later. Then confirm whether the POS integrates directly, requires a third-party app, or needs a manual workaround.
DAVO by Avalara integrates with popular POS systems such as Clover, Square, Toast, and more. Looking at integrations early can help you choose a POS system that supports your business now and gives you room to add more automation later.
POS features to compare by industry
The best POS system for your business depends on how you sell, what you sell, and what information you need to manage operations.
| Business type | POS features to prioritize |
|---|---|
| Restaurant | Menu management, modifiers, table management, tipping, kitchen routing, online ordering, handheld devices |
| Retail store | Inventory tracking, barcode scanning, returns, exchanges, customer profiles, e-commerce sync |
| Salon or spa | Appointment scheduling, staff management, tips, memberships, client history, service menus |
| Food truck | Mobile payments, offline mode, simple menus, fast checkout, compact hardware |
| Grocery or specialty food store | Barcode scanning, weighted items, inventory tracking, discounts, high-volume checkout |
| Multi-location business | Centralized reporting, location-level permissions, inventory visibility, scalable hardware, and software |
A POS should make everyday tasks easier for your specific business type. If a system requires too many workarounds for your industry, it may not be the right fit.
How to choose a POS system that can grow with your business
A POS system should support your current needs, but it should also give you room to grow. Switching systems later can take time, training, data migration, and new hardware, so it is worth thinking ahead before you commit.
A scalable POS system should be able to support more products, services, menu items, employees, terminals, handheld devices, online sales, locations, reporting needs, customer loyalty tools, integrations, and tax settings as your business changes.
If you plan to expand, ask how the POS handles multi-location reporting, user permissions, product catalogs, and location-specific settings. A scalable POS can help you add new capabilities without rebuilding your entire checkout process.
Common mistakes to avoid when choosing a POS system
Choosing a POS system can feel overwhelming, especially when providers offer different pricing models, hardware options, and feature packages. Avoiding a few common mistakes can help you make a better long-term decision.
Common mistakes include:
- Choosing based on price alone. A low monthly cost can be appealing, but it does not always reflect the full cost of the system once payment processing fees, hardware, add-ons, support, and upgrade costs are included.
- Ignoring industry-specific needs. Restaurants, retailers, salons, food trucks, and service businesses often need different checkout flows, reporting tools, and integrations.
- Forgetting about integrations. If your POS does not connect with accounting, e-commerce, payroll, inventory, or tax tools, your team may spend more time moving information manually between systems.
- Overlooking support and training. Even an easy-to-use POS requires setup and training, so it is important to review what support is included and how employees can get help.
- Not planning for growth. A POS that works for a single location may not work as well when you add another location, expand online, increase staff, or need better reporting.
- Treating sales tax as an afterthought. Your POS may help calculate and collect sales tax at checkout, but your business still needs a process for setting aside, filing, and paying the sales tax you collect.
Why sales tax should factor into your POS decision
A POS system can help businesses calculate and collect sales tax at checkout, but collecting sales tax is only one part of the process. Businesses also need accurate transaction records, clear sales tax reporting, and a reliable way to set aside, file, and pay the sales tax they collect.
Because sales tax varies by state, city, county, product type, and business location, your POS should support the tax settings your business needs. For example, a retailer may need different tax settings for taxable and exempt products, while a restaurant may need to account for different local rates, prepared food rules, or multiple locations.
When comparing POS systems, look at how each option handles sales tax rates, location-based tax settings, product or menu item taxability, tax-exempt sales, refunds, discounts, sales tax reports, and integrations with accounting or sales tax automation tools.
Your POS may help collect sales tax, but your business is still responsible for filing and paying it correctly. That is why sales tax automation should be part of the conversation when choosing a POS system, especially if your business has high transaction volume, multiple locations, or plans to grow.
Choosing a POS system that works with DAVO
Choosing a POS system is also a good time to think about how your business will manage sales tax beyond checkout. Your POS can help calculate and collect sales tax, but the work does not stop there. Businesses also need to set aside the sales tax they collect, file returns on the correct schedule, and pay the right amount when sales tax is due.
DAVO integrates with Clover, Square, Toast, and many other popular POS systems. DAVO uses your POS sales data to automatically set aside sales tax daily in a separate account, then files and pays it on your filing schedule. DAVO’s on-time and in-full filing and payment service is guaranteed, subject to conditions and limitations.
If you do not see your POS system listed on DAVO’s integrations page, let DAVO know which POS system your business uses.
When comparing POS systems, look for one that supports the integrations your business needs now and the automation tools you may want later. The right POS can help you manage sales, reporting, operations, and sales tax with less manual work. See how DAVO helps automate sales tax for your POS.
Frequently asked questions
What is the number one POS system?
There is no single number one POS system for every business. Popular POS systems such as Square, Clover, Toast, Lightspeed, SpotOn, TouchBistro, Revel, and Epos Now serve different types of businesses, so the best choice depends on how your business sells, what features you need, and which integrations matter most.
What is the best POS system for small businesses?
The best POS system for a small business is the one that fits the business’s checkout process, budget, staff workflow, sales channels, and reporting needs. Square, Clover, Toast, Lightspeed, SpotOn, TouchBistro, Revel, Epos Now, and other POS systems can all work well for different small businesses depending on their needs.
What POS system is best for restaurants?
Restaurants often need POS features built for food service, such as menu management, modifiers, tipping, tableside ordering, kitchen routing, and online ordering. Toast, Clover, Square, TouchBistro, Lightspeed, SpotOn, SkyTab, Revel, Epos Now, Lavu, and Table Needs are examples of POS systems restaurants may compare.
What POS system is best for retail stores?
Retail stores often need POS features such as inventory tracking, barcode scanning, returns, customer profiles, discounts, and e-commerce connections. Square, Clover, Lightspeed, and Revel are examples of POS systems retailers may compare.
Can I switch POS systems later?
Yes, businesses can switch POS systems, but the process may involve moving product, customer, employee, inventory, reporting, and payment data. Before switching, ask the new provider what data can be imported, what hardware can be reused, and how long setup and training typically take.
Do POS systems integrate with sales tax software?
Many POS systems integrate with sales tax software or sales tax automation tools. These integrations can help businesses use POS transaction data to support sales tax reporting, filing, and payment workflows without relying entirely on manual processes. DAVO by Avalara integrates with many POS systems, including Clover, Square, Toast, Lightspeed, SpotOn, TouchBistro, Revel, and more.
How secure are POS systems?
Most modern POS systems include security features designed to help protect payment information and business data. Common features may include encrypted payment processing, secure user permissions, fraud prevention tools, and compliance with industry standards such as Payment Card Industry Data Security Standards (PCI DSS).
However, security also depends on how the system is configured and maintained. Businesses should use strong passwords, limit employee access based on job responsibilities, keep software up to date, and follow the security recommendations provided by their POS vendor.
