The Pros and Cons to a Cash-Only Business

By Phineas Upham

If you’re looking to open a retail business, you might be wondering whether you’ll need a merchant account or if you can get by as cash only. The good news is cash is the most common form of tender, and it’s only up until recently that the idea of a cash-only business has started to fade. Here, we’ll discuss the pros and cons of a cash-only business.


If you run a cash-only business, you can only accept cash. What happens when a customer doesn’t have enough cash on hand? In addition to the potential for lost customers, your business becomes a target for theft when it’s known you keep large sums of cash on hand. You’re also not exempt from tax forms either. You’ll need to complete form 8300 if you receive more than $10,000 in cash from one buyer.


A business that runs on cash stays funded. It takes time for funds to clear, so running a business on cash helps eliminate a waiting period that can hurt smaller businesses with low liquidity. Cash also involves less bookkeeping since it’s a simple tender, which means businesses save money on hiring bookkeepers or keeping accountants.

Accepting only cash also dramatically reduces the chances a business can be defrauded. It’s still possible to commit cash fraud, but it’s far less common than say check or debit card fraud.

Choosing the Best Option

Ultimately, it’s up to you which choice is yours. Some businesses find it easier to start as cash-only establishments and eventually switch to merchant accounts. Others may find the legitimacy of a merchant account essential to their brand. Either type of business is viable.

Phineas Upham is an investor from NYC and SF. You may contact Phin on his Phineas Upham website or Facebook page.

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