Best POS Systems for Small Businesses: Square vs. Toast vs. Shopify POS

Quick Take

If you’re a retail store, café, or service business just starting out, go with Square. It’s free to start, works everywhere, and grows with you. If you run a restaurant, Toast is purpose-built for food service and worth the monthly fee. If you’re primarily an e-commerce business that also sells in-person, Shopify POS keeps everything unified.

Most small businesses should start with Square — you can always switch later as you grow.

Quick Comparison Table

Feature	Square	Toast	Shopify POS
Setup Cost	Free	Monthly fee required	Monthly fee required
Best For	Retail, cafés, services	Restaurants only	E-commerce + retail
Processing Fees	2.6% + 10¢ in-person	2.49% + 15¢	2.4% – 2.7%
Inventory Management	Excellent	Good for food	Excellent
E-commerce Integration	Basic	None	Best-in-class
Learning Curve	Easiest	Moderate	Moderate

Square Explained

Square is the best POS system for small businesses because it removes every barrier to getting started. You download the free app, create an account, and you’re accepting payments in ten minutes. No monthly fees, no long-term contracts, no expensive hardware requirements.

How Square makes money: They take 2.6% plus 10¢ from every in-person transaction. Online transactions cost 2.9% plus 30¢. That’s it — completely transparent pricing with no hidden fees.

Real pros:

• Actually free to start — not a trial that expires
• Works on any smartphone or tablet you already own
• Accepts every payment type: cards, Apple Pay, Google Pay, even cash
• Inventory tracking that actually works for retail
• Automatic sales reports and tax calculations
• Integrates with QuickBooks and other accounting software

Real cons:

• Processing fees add up on high-volume sales
• Advanced features require paid plans
• Customer support is mostly online (though it’s quite good)
• Limited customization for complex businesses

Best for: Retail stores, coffee shops, salons, farmers markets, consultants, any business that needs to accept payments without complexity. If you’re a freelancer who occasionally needs to charge clients in person, Square’s free plan handles it perfectly.

Toast Explained

Toast is built specifically for restaurants, and it shows. While Square tries to work for everyone, Toast focuses entirely on food service — from quick-service sandwich shops to full-service restaurants with complex kitchens.

How Toast works: You pay monthly subscription fees (starting around $69 per month per terminal) plus processing fees similar to Square’s rates. The monthly fee gets you restaurant-specific features that general POS systems can’t match.

Real pros:

• Kitchen display systems that replace paper tickets
• Menu management that handles modifiers, ingredients, allergens
• Table management for restaurants with servers
• Staff scheduling and payroll built for restaurant hours
• Inventory tracking for food costs and waste
• Integration with delivery apps like DoorDash and Uber Eats

Real cons:

• Monthly fees whether you use it or not
• Overkill (and expensive) for non-restaurant businesses
• Requires commitment — you can’t just try it casually
• More complex setup than plug-and-play systems

Best for: Any business that serves food. If you have a kitchen, manage ingredients, deal with delivery services, or need to coordinate between front-of-house and back-of-house staff, Toast justifies its monthly cost immediately.

Shopify POS Explained

Shopify POS makes sense for one specific situation: you already sell online and want to add in-person sales. It keeps your online store, in-person sales, and inventory perfectly synchronized.

How Shopify POS works: You need a Shopify store subscription (starting around $29 monthly) plus the POS app. Processing fees range from 2.4% to 2.7% depending on your plan. Everything connects to your existing Shopify admin.

Real pros:

• Unified inventory across online and in-person sales
• Customer profiles that track purchase history everywhere
• Best e-commerce platform integration available
• Sophisticated reporting across all sales channels
• Scales to enterprise level if you grow significantly

Real cons:

• Requires Shopify subscription even for in-person-only sales
• More complex than needed for simple retail
• Limited restaurant-specific features
• Higher total cost if you don’t need e-commerce

Best for: E-commerce businesses adding retail locations, retail stores planning to sell online, or any business that wants sophisticated omnichannel capabilities from day one.

The Cost Difference — This Is Usually the Big One

Let’s look at a coffee shop doing $10,000 monthly in sales to see how costs compare:

Square: $260 monthly in processing fees (2.6%), zero monthly subscription. Total: $260

Toast: $249 monthly in processing fees (2.49%) plus $69 monthly subscription. Total: $318

Shopify POS: $240-270 monthly in processing fees plus $29 Shopify subscription. Total: $269-299

The real calculation: Toast costs $58 more monthly than Square for this coffee shop. Is kitchen management, ingredient tracking, and restaurant-specific features worth $696 annually? For a real restaurant, absolutely. For a simple coffee counter, probably not.

Processing fees matter more as you grow. A business doing $50,000 monthly saves $50-100 monthly by choosing the lowest processing rate — enough to justify switching systems.

When to involve a business attorney or accountant: If you’re processing more than $30,000 monthly, get quotes for custom processing rates. If you’re choosing between multiple locations or franchise systems, have an attorney review any long-term POS contracts before signing.

Which One Should You Pick?

Solo freelancer or consultant: Square, definitely. Use the free plan until you need advanced features. The card reader costs $29 and pays for itself immediately.

Retail store (clothing, gifts, bookstore): Start with Square. Upgrade to Square for Retail ($60 monthly) when you need advanced inventory management or multiple locations.

Coffee shop or simple café: Square unless you’re doing serious food prep. If you’re just heating pastries and making coffee drinks, Square’s simplicity beats restaurant POS complexity.

Full restaurant (any kitchen complexity): Toast or a similar restaurant POS. Square can’t handle ingredient costing, kitchen coordination, or server workflows efficiently.

E-commerce business adding retail: Shopify POS if you’re already on Shopify, otherwise Square. Don’t switch e-commerce platforms just for POS features.

Service business (salon, repair shop, consulting): Square. The appointment scheduling and customer management features work perfectly for service-based businesses.

High-volume retail ($50K+ monthly): Get quotes from multiple processors. At this volume, custom rates matter more than specific POS features.

Can You Switch Later?

Yes, and it’s easier than you think. Most businesses outgrow their first POS system — starting simple and upgrading later is completely normal.

Common upgrade paths:

• Square → Square for Retail (when you need better inventory management)
• Square → Toast (when a café becomes a real restaurant)
• Square → Shopify POS (when retail businesses launch e-commerce)
• Any system → custom solution (for multiple locations or complex operations)

What switching involves: Export your customer data and sales history (every major POS system supports this), set up your new system, and train staff. Most systems offer free data migration for new customers.

Timeline: Simple switches take a weekend. Complex migrations with custom integrations might need a week of parallel operation to ensure everything works.

When switching makes sense: When monthly processing fee savings exceed $100, when you need features your current system can’t provide, or when you’re opening additional locations that need centralized management.

FAQ

What hardware do I actually need for a POS system?
Square works with any smartphone or tablet — you can literally start with the device you’re reading this on. Add a $29 card reader when you’re ready to accept payments. Toast and Shopify POS work the same way but benefit from dedicated tablets for busy operations.

Do I need internet for POS systems to work?
All modern POS systems need internet for payment processing, but Square and others store transactions offline and process them when connection returns. Don’t worry about temporary WiFi outages — your sales won’t disappear.

Can I use my existing business bank account?
Yes. Every POS system deposits daily sales directly to whatever business bank account you specify. Processing typically takes 1-2 business days, similar to any credit card processor.

What about cash sales and tips?
All POS systems handle cash transactions and tip management. They track cash sales for reporting and tax purposes, manage employee tips, and provide end-of-day reconciliation that balances cash drawer totals with recorded sales.

Do I need to integrate with my accounting software?
Not required, but highly recommended. Square, Toast, and Shopify POS all integrate directly with QuickBooks, making tax time significantly easier. The integration is usually one-click setup — much simpler than manual bookkeeping.

What if I operate in multiple states?
All major POS systems handle multi-state sales tax automatically. They calculate correct tax rates by location, track nexus requirements, and generate reports for each state’s tax filing requirements.

Making Your Choice

The best POS system for small businesses isn’t the one with the most features — it’s the one that handles your specific needs without unnecessary complexity. Square dominates because most small businesses need reliable payment processing, basic inventory tracking, and simple reporting rather than advanced restaurant management or enterprise e-commerce integration.

Start with Square unless you’re specifically running a restaurant (choose Toast) or already have significant e-commerce sales (choose Shopify POS). You can always upgrade later as your business grows and your needs become more sophisticated.

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