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"Money Exchange Business": How to Get Started

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The volatility of currency exchange always made it an interesting commodity to garner a lot of profit. In the modern global marketplace, the money exchange industry is crucial for many situations such as international travels, export/import, and even catering the needs of people who wants to invest in different currencies.

Opening a money exchange business can be a very interesting option for those with capital liquidity. Not only it can provide enormous earning and profitability potential, the business is relatively easy to handle and won't require a significant amount of skills and experience.

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Interested to start this business?
Here are a few tips that might help get you started.

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1. The Concept
In general, you will be dealing with the exchange of another currency with equal value. You can establish the business as a brick and mortar shop or an online establishment, as both forms are definitely viable.

2. Legal Requirements
Being a financial institution, your local financial authority might require you to have a certain amount of starting capital as liquidity. In most states, this requirement is not huge. However, in some locations, you might also be required to have a certain amount of minimum net worth and in some cases, surety bond.

Consult your local authorities to get a better information regarding your local legal requirement. A special license for money exchange business is a legal necessity in most locations, and you would be required to pay some amount of fees.

3. Hedging
You can buy your currency with a future contract, avoiding the risk of sudden fluctuations. Other options such as currency option and limit orders are also available to mitigate the risks involved with currency volatility, as well as maximizing profit potential in the process.

There are many resources available to learn your options better, so make sure to conduct a small research to decide on the best possible options for your business.

4. Marketing
If you are opening a brick and mortar shop, having a good location will be an essential part of your marketing. Choose a spot near a tourism area or near the airport.

In this digital day and age, online marketing can also benefit all kinds of businesses. Set up a website and promote it with social media and SEO practices.

5. Taxes and Record Keeping
If you are located in the U.S., the IRS will require individuals with money exchange business to report their earnings regularly.

Thus, an efficient and proper record keeping will be necessary. All receipts, bank statements, and other required records should be filed and maintained. Time to time, government authorities might have the needs to examine these records.

Earning Potential

With high volatility in the currency exchange market, you can get more than 20 to 30% profit from each transaction on an average basis. Therefore, if you invested $100,000 as your starting capital, you can get $30,000 and above for your currency exchange business.

Maintaining the best rates and your marketing efforts will be the keys to success in this business.