What Is a POS System? A Simple Guide to Understanding POS Systems

Are you asking “What is a POS system?” and wondering how to use them? Read this article for a simple guide to understanding POS systems. Small businesses need every advantage they can get. Twenty percent of new small businesses fail in the first year. So making sure your point of sale (POS) operations work smoothly might keep your business out of trouble. New, integrated POS systems make running a small business more efficient and allow you to spend your time with customers and staff. They take the worry out of linking all the financial parts together. What is a POS system? It’s okay if you’re not sure, or don’t know why you need one, because we’re here to help. We’re going to give you the rundown in this simple guide.

What is a POS System?

If you have a cash register in your small business you might be asking what is a POS system and why would I want or need one? A point of sale (POS) system is an all-in-one system designed to help you run your small business. POS systems include software and hardware components. They are located at the point of purchase.

What Does a POS System Do?

A POS system is designed to maximize your efficiency. It should integrate your receipts, accounting, wages, and more. Its most basic function is to track customer purchases and ensure the right amount of money is taken and/or refunded. The better systems on the market will also manage your inventory. When you scan the barcode at the POS location and the transaction is completed, the item will be removed from inventory. The POS system can alert you when you need to reorder. POS systems make sure your employees are in when they should be and that they get paid when they’re supposed to. They also help you keep an eye on your labor costs and assess when you need more or less staff.

Employees will login to the POS system. You can track their customer transactions and make sure you’ve got them trained up to do their jobs properly. You can even set up scheduling to make sure you have enough staff each day. Having easy access to robust analytics and reports is one of the best things about a POS operating system. You’ll be able to look at sales by item, sales by customer, sales by day or shift, and so much more. You’ll also be able to offer your customers a better experience through loyalty programs.

What Makes Up a POS System?

The main components of a POS system are either software or hardware elements. The software runs everything. The hardware allows you to directly interact with your customers at the point of purchase.


You can run a POS system on the cloud or at your physical location. Cloud-based software requires less IT skills and knowledge on your staff because the software is maintained externally. On-site software might suit you better if you don’t need multiple logins and don’t wish to pay a monthly subscription fee. On-site systems can be more expensive at first, though. Examples of POS software include Square, Lightspeed, and Shopkeep, but there are many to choose from.


If you’re wondering what is a POS system’s hardware, we’ve got you covered. Hardware includes things like a bar-code reader, card reader, cash drawer, receipt printer, and either a tablet or computer. There might be other hardware components depending on your business model, but almost every business will need these core elements.

Get Your POS System Installed and Boost Your Business

Now that you have the basics in hand of what is a POS system, you can do a deep dive to investigate which kind will work best for you. Whether it’s a cloud system or one housed in your business, and whether you need to pull reports like crazy or you want to make sure you have enough stock on hand, a POS system will make your business run better. You can read more articles about how your business can run better on our website.