The sloppy record keeping is almost half the reason I feel you should keep your business legit. If you can remember I said to treat your vending route like a business. Part of this is tracking your income and expenses. If you are dealing purely on a cash basis then how can you ever really know which sites are doing well, which sites are doing poorly, and if your venture is even making money at all.

I know that some of you out there are thinking that you can just see which sites are doing well based on the product levels. Well, please allow me to blow your mind. Did you know that that with the advent of eBay there are literally thousands of duplicate vending keys floating around out there? I have personally seen cases were someone is able to buy a key that fits your machine, and can help themselves to your product and profit.

Look, if you run your business properly there are more than enough legal ways to reduce, if not eliminate, your tax burden. Remember though that all of these benefits only apply if you have a company that makes money. So don’t become so obsessed with taxation that you stop focusing on your primary goal – building a successful vending business. The only way to stay in the zero income tax-bracket is to have zero income.

Now one caveat. I do have them sign an “Ownership Acknowledgment”. It is a simple document that says the machines belong to me and that I can pull them out whenever I want. To make it easy to sign I also include statements that they can kick me out whenever and that all liability for the machine is mine – which is true anyway regardless if the document is signed. All I want is a piece a paper saying that I own the machine. That way if the location ever tries to “steal” the machine – by claiming it is theirs I have paperwork that the police will want to see when they arrive. I consider it my “get out of jail for free card”. Unfortunately locations – especially ones that one have been to for a long time. I’ve had a building manager lock up the rooms my machines were in and tried to keep me from getting them. I had a janitor let me in the room (a side note – always be in good relations with the cleaning staff, they are your greatest allies at a location) and began to remove the machines. The building manager – a real jerk by the way – threatened to call the cops if I didn;t return the machines. I called his bluff. When the cops arrived they asked me if I can prove ownership (I had my signed agreement of course – and the keys!) and they then asked the building manager. He of course had nothing and to boot acted like a jerk. They asked me how long it would take – i told them I’d have been done 30 minutes ago if he wasn’t blocking my way. They allowed me to continue and threaten to “restrain” the building manager if he continued to make himself a nuisance. It was an open and shut case. As a quick side note I ended up spending 45 minutes in the parking lot giving vending advice to one of the officers.

Bottom-line: Locations don’t like to sign contracts (and usually won’t) so don’t even bring it up. Honestly I don’t even use the ownership agreements for the little candy machines ($250 value or less). Locations agreements only tie you to a potentially bad location and start the relationship from a standpoint of obligation and mistrust. I like starting from a much more positive standpoint of trust.

Good Luck!

P.S. – When you start getting larger you’ll start getting specific equipment for large locations (for example malls). In that case you are buying equipment just for that location – use a contract. That is a discussion for some future point…

I use the reverse approach. The location almost always asks if they have to sign some kind if contract I automatically say “No.” I explained that my service is just that, a service. I explain how I have no interest in locking them into any kind of commitment. My machines are there only so long as they like the service and it makes financial sense for me to be there (notice the seed I just planted?). As a matter of fact I tell everyone that I have a “24-hour pull-out guarantee” for the first 90-days. If either one of us is unhappy with the situation I will pull the machines out within 24-hours. Remember that the locations are usually very unsure. They’ve seen poorly maintained vending machines at other locations and don’t one on their premises. You are showing them that you respect their space and they appreciate it. And quite frankly, if they don’t want you there they just move your machine into the back room or make life difficult for you in some other way. A weird note for you here. I had one account that didn’t want me but wouldn’t tell me to my face. They’d just keep unplugging my machine (no it wasn’t a competitor – my spies told me it was the manager). I’d ask them if they’d like me to pull out and they always said, “No.” Go figure.

Read Part 2 of this subject.

Now as far as licenses you have several levels to think about:

FEDERAL - Nothing is required by law for this but you may want to setup a separate business entity and obtain a separate EIN (Employer Identification Number) for your vending business. The only thing the fed require is that you report any income you collect. This doesn’t mean that you have to pay taxes, with a savy account you can even show a loss from year to year and help offset other taxable income.

STATE - If you live in a state that has a sales tax you may be required to pay sales tax on all or part of the vending revenue. You will also be required to pay any fees relating to the entity you chose (for example corp. tax) and of course income tax on revenue you collect (assuming your state has an income tax). Warning – with state budget crunches most states are raising or levying “minimum taxes” on ANY entity that business in the state, regardless if it shows a loss or profit.

TOWN / COUNTY - If you have a business you are probably required to have a local business license. Plus since you are in the food service industry every town /county you have a machine may require an annual fee per machine (this can get expensive).

OK, that that was the hard part. As you can see if you own a business everyone has their hand out to collect a fee/tax of some kind. The interesting thing about vending is that it is an all cash business that is almost impossible for a goverment agency to track. I am NOT suggestion you should break the law. I follow all the local, state, and federal laws – and sleep much better at night because of it.

I hope this helps!