Depositing a Business Check Into a Personal Bank Account
Although I work a regular full time job, I also run a few fledgling side ventures on the side. As I mentioned about a month ago, I am currently attempting to establish a trade name and open a business bank account in the business’ name to better keep track of venture earnings and assets.
However, I’m currently unable to establish a business bank account because the state agency hasn’t processed and sent me my approved trade name certificate yet. I did not file for expedited service (*snapping fingers in a darnnit motion* ) so it’s taking much longer than expected. Banks will not usually allow an individual to establish a business bank account that doesn’t contain the applicant’s name in the account title without a valid trade name or fictitious business certificate. So for now, I’m stuck without the services of a proper business bank account. However, meanwhile my side businesses have continued to generate income and now I have several business checks made out to my fictitious business name that I am unable to deposit immediately. It has been weeks and the business checks continue to sit on my desk gathering dust and looking quite lonely.
Ideally, business funds should not be co-mingled with personal funds since the Internal Revenue Service (IRS) will require the tax filer to account for his/her business income and expenses on a separate form, although both business and personal income will ultimately be treated as the tax filer’s ordinary income. However, my checks have been sitting around un-deposited for some time and I am getting to the point where I want them in bank accounts and generating interest.
So Am I Permitted to Deposit Business Checks Into My Own Personal Bank Account?
I am tempted to just go ahead and deposit my business checks into my regular checking or savings account at Citibank. I am the only owner and operator of my sole proprietor business so there wouldn’t be stakeholder problems. The pickle is whether my particular financial institution will permit the deposit or not.
Perhaps my deposit will be more willingly accepted by my bank’s ATM machine than by a live teller. There are some readers out there that have indicated that an ATM made deposit will be more readily approved by the bank than one made at the counter since ATM transactions are mostly computerized. The idea is that so long as I properly endorse the back of the check with signatures containing the business name and my own name, the bank will likely accept it as valid, particularly if the check’s numerical amount is not too significant. I’m just not certain on where the business checks go if the deposit into my personal account is denied and rejected.
There are no specific laws governing such deposits that I am aware of and it appears to be a policy decision governed and made by individual financial institutions. In general, business accounts involve higher sums of money with greater transactional frequency, thus demanding more of the financial institution’s attention. This probably explains why many banks tend to require higher maintenance fees for business accounts than personal bank accounts. Because of the higher transactional costs and blanket policy reasons, some banks simply may not be willing to allow this sort of practice and may require business check depositors to open business checking account if they want to deposit a business check made out to the business’ name.
Interestingly, online services like Google Adsense and a few others have permitted me to create direct deposit relationships with my own personal banking account, even though the checks were made payable out to my business name. I’m not sure if these were merely oversights or indicative of more flexible policies, but I wish there was more overall uniformity on the issue.
I think I may ultimately wait this out until my trade name certificate gets cleared since it should be approved in a few more weeks, but I wonder if anyone knows the answer for this question?
December 16th, 2007 at 1:06 am
How about opening a new personal account that you use just for business? I don’t know if the bank will let you convert it to a business account once you have all the documentation, but at least that way you’re not co-mingling funds.
December 16th, 2007 at 12:43 pm
That’s a good option idea. I was trying to see if I could temporarily have the funds held in a separate savings account until I received my trade name certificate from the state. But despite my explanations such as the business and my personal account having the same home address, Citibank still ultimately refused to budge. They were nice about it but also tried to discourage me from attempting to send it through the ATM deposit to game the system, saying it wouldn’t work.
I guess my only recourse now is just to wait it out until I receive the appropriate documentation. I wonder if banks other than Citibank are more liberal or flexible about temporarily depositing business checks into personal accounts?
February 6th, 2008 at 7:18 pm
I have a personal checking account. No business account. I have a check that is made out to a business and then my personal name under the business name. The business name contains my last name, also. The bank will not accept deposit of the check into my personal account. I told the payer to make the check out to me personally but they put both names on the check. I receive approximately two checks a year for audio recording services. It would be cost prohibitive to open a separate business account and pay all of the fees for these small checks. They are usually from schools. The schools can re-issue the checks but it will be approximately one year from now before they can re-issue because of the funds the checks come from. Any suggestions?
February 6th, 2008 at 7:31 pm
Al, any way the school can issue payment via direct deposit or ACH transfer? Many companies have been known to be willing to issue such electronic transfers to a personal banking account even though it’s technically made out to the company name.
But I’m actually in the same boat still. I have a business check that needs to be cashed and the issuing company is refusing to resend it via ACH transfer as I described above. I’ll probably have to find a local bank with a low business account minimum balance requirement and low fees for check cashing purposes.
July 19th, 2008 at 11:42 am
ACTUALLY!!! I work at a bank and it IS the law that you CANNOT deposit a check made to a business into a personal account. That is not the banks decision…IT IS THE LAW, and the banks can’t do anything about it. The IRS will come after the bank if they do this. Just so you know!!!
August 9th, 2008 at 6:09 pm
Sturf,
What about if you sign the check on the back with the business name and sign it over to yourself (Or what ever name is on the personal account) will that make it o.k. for the bank to put the check made out to your small business into your personal account?
February 15th, 2009 at 1:17 pm
Sturf,
You must be an automated teller ( following your bank rules), It is not against the law!!!!!!! It is a banks option. In the worst case, sign the check over to yourself and cash it in your personal account. Change banks if problem persist, I did.
April 9th, 2009 at 2:14 pm
It is a law! A federal law! You can NOT deposit a business check into a personal account even if you sign it over. If the federal auditors find that any bank out there is doing this, they will be fined several million dollars. Its called possible tax evasion. Several banks have been charged with this and fined. The ones that have are VERY strict on this law. Taking into consideration the ecomnomical times and strains that are put onto financial entities at this time, if you find any BANK that is federally insured and governed doing this just know it is temporary until they are caught.
Signed Financial VP
April 9th, 2009 at 3:05 pm
I got the check re-issued a year later to me. I only had to wait on my money for 1.5 yrs. I guess if someone makes a check out to an entity, i.e. “Al Herring Audio” I’m just stuck and can’t get paid. Makes lots of sense doesn’t it? It’s a good thing it’s common. There is no “Common” sense anymore.
June 4th, 2009 at 6:31 pm
This is not a law for a sole proprietorship. If your business is a sole proprietorship(you and the business are one entity) you can deposit a check made out to your business in your personal account. You can not do this for coorporations(this is a law).
August 31st, 2009 at 7:01 am
I have been searching for documentation of such a law, and I’ve yet to find any. Three posters have stated that this policy is dictated by law – please be so kind as to list the specific statute.
September 20th, 2009 at 7:30 pm
If my company is overseas (non US) but still i have a personal bank account in the states, can i deposit checks named to my company into my personal account?
October 14th, 2009 at 12:24 am
One law is the US Patriot Act and the “Know Your Customer” (KYC) provision (section 351). KYC amends the Bank Secrecy Act of 1970 (BSA) and legally REQUIRES US banks to identify their clients and record relevant information pertinent to doing financial business with them. For a “natural person” this may include govt issued ID and a taxpayer ID number. A business is NOT a natural person. A business can NEVER produce a drivers’ license and “cash” a check.
A business (or their agent) CAN endorse a check, deposit a check, and withdraw cash from a business account…but a business itself can never, ever, walk into a bank lobby and “cash” a check–only a natural person can. To comply with KYC a bank will usually ask you to prove the business exists, provide a tax ID number, and establish who can conduct transactions on the account. This can be as simple as a DBA sole proprietor relationship (Wendall Jones, d.b.a. Wendall Jones Dog Walking Service–and even using Wendall’s own social security number as the tax ID number.) Or it can be as complicated as a huge corporation with billions in assets. Both have to provide KYC information.
Either way, without this information on file, a bank can NOT “Know Your Customer.” If you don’t have a business account at a bank, they WON’T have this info on file–therefore, they would be in violation of these US codes if they knowingly negotiated a check made payable to a business. Produce the documents, establish a business account, and a bank can negotiate (but not “cash”) a check made payable to a business.
November 3rd, 2009 at 1:46 am
I’ve had an LLC company for the past five years but it’s just a formality so I can keep things legal for advertising & being paid because I’m the only person doing the work. Because of this I was told in the beginning that long as it was just me, that I could deposit into my personal account. I can’t remember but I’m almost sure my former personal banker at Bank of America told me this. Anyway, for five years anytime I had a payment check to my business, I’d deposit it into my personal checking account … that is until recently. I went in to deposit a check for approx. $1300 the other day. I had intended to deposit it into my attached savings account, but was told I couldn’t put a busines check into my savings account. So, I said OK, just deposit it into my checking & I’ll transfer it to my savings from there. The teller then said “you can’t do that either”. I told her I had been doing it for five years & she said “no, we don’t do that”. I said, well you might not do it now but you HAVE been doing it for five years. She asked her superior who agreed they didn’t do that. They never admitted they had been allowing me to deposit my business checks into my personal checking account for five years. So, now I’m stuck with a check I can’t deposit & since business has been so bad I was considering I might close the business anyway, so do I open a business account just so I can deposit this one check? I’m thinking of trying another bank anyway. I don’t know the laws but I can tell you that the practice of allowing sole ownership companies to deposit their business checks into their personal accounts definitely has been happening, at least up until recently. Does anyone know if I could just simply cash the check, long as I had enough funds in my account at the time to cover it just for their protection until it clears?
November 3rd, 2009 at 2:03 am
Sherry,
Yeah I was confronted with the same dilemma as well when I was presented with a business check made payable to my company name. I had deposited my business checks into my personal savings and checking accounts with no problem for some time when my bank (Citibank) suddenly stopped allowing me to do that. So I finally opened up a business checking account and started paying the monthly fees they charge for business accounts. The fee’s only $10 a month, but I don’t like the idea of paying a fee, no matter how small, for a service I barely use.
If you want to avoid the monthly fees that many banks charge for business account privileges, you might want to check out financial institutions like PNC Bank or BB&T Bank. They offer free business checking accounts so long as you don’t deposit or transact more than a certain amount. If your balances are generally low, they are good cost effective solutions to consider. But I don’t think you can simply cash out the check like a normal personal check in your own name. It has something to do with the Patriot Act – designed to combat against money laundering activities by terrorists. Good luck!
November 3rd, 2009 at 8:08 am
Hello All
About six months ago the teller at my bank questioned me depositing a check into my personal savings account that was made out to my company ( sole proprietor ), she asked her supervisor and she said, in short, we can’t do that and never did. I told her that i have been doing it for eight years here and my other bank and assured her my other bank would and she said it was against the law. Went to my other bank and cashed into my checking account there.
Two days later I met with the first bank branch president and asked him about their policy and he said it is not a problem and will cash business checks into personal accounts. We then straightened out the tellers and the supervisor aka business accounts manager. She greets me everytime I come into that bank and still have only personal accounts. I hate it when service businesses try to tell us how to run our businesses.
Good luck to All
November 4th, 2009 at 2:16 am
Thanks, Raymond. I think that’s what I’m going to have to do. Unfortunately the company that issued the check has been really hard to get money from so I had to wait for this last check 10 months. To get them to reissue another with my personal name included might mean another long wait, so I’ll probably just do as you suggest & open a business account. Like you, I’ve just always liked the convenience of putting my infrequent business checks directly into my personal account, but I’ve been looking for a reason to get away from Bank of America anyway, so maybe this is a good excuse to open this business account at another bank. I’ve been looking for a more small-town bank with still the convenience of online banking & such. I found one that I think will work, so guess it’s just a matter of doing it now
November 4th, 2009 at 2:27 am
Thanks “toead” for your comments. It seems I’m not the only one with this problem – good to know
My local Bank of America has really changed. My former “personal banker” won’t even return calls now. He told me years ago that his customers were complaining that he didn’t call them back but said he was over-worked. The former bank president was a really nice & smart lady but she’s since moved on & unfortunately her replacement doesn’t seem to have the same qualities. In fact, I believe that was who confirmed to this teller that “they don’t do this” in regards to my wanting to deposit this business check into my personal checking; so after a brief argument, I just dropped it. I think the problem is that these large nationwide banks have become so impersonal that if people weren’t locked into mortgages & credit cards, probably more of us would be heading to smaller banks, just for the chance to maybe be treated with logic & friendliness again. I mean it just doesn’t make sense that these banks have been allowing something for years & all of a sudden someone thinks they don’t do it anymore, so they refuse to even admit they ever did – how crazy, HAHA! I mean, why not just say “well, we used to do that but now we don’t”. I could accept that at least 
November 4th, 2009 at 7:48 am
Hey Sherry, good luck with finding a new bank, in my area, M&I or Harris are good.
November 4th, 2009 at 8:50 pm
Thanks, “toead” – here there are mostly the larger national type banks, but there are a few credit unions & one bank that used to be a home savings & loan type, that has been consolidated but still isn’t that large – just a few branches in the state. So, I think I’m going to give them a try. I just dread so much switching all the auto-drafts & my online banking, husband’s paycheck direct deposit, etc. – such a hassle. Nothing seems easy now days
December 14th, 2009 at 4:27 am
So.. am I to understand this correctly, I have a side business without any DBA and received a check from a “client” that is made out to an alias, not my real name, but my real name is in alias just with a computing on the end of it, tomorrow when I go to deposit this into my account they will not let me?? that is wrong on so many levels..
December 14th, 2009 at 4:52 am
Hi Travis – I honestly think you’ve got a 50/50 shot because as I said, my bank allowed me to do it for five years before they suddenly claimed they had never done it before. Apparently, it’s supposed to be against the law but I’ve heard from lots of people who say their bank allowed business checks to be deposited into their personal accounts too. I know I had to end up opening a business account (but at a different bank) & they told me I was signing up for the totally free checking account. Everything they’d ask me, I’d say “is this option free?” & they’d reply yes. When I got my first statement, it had a debit of just over $100 for my new checking package! So, I’m not sure you can find a bank that’s simple & honest, like they were years ago, but good luck
Sherry
December 14th, 2009 at 8:31 am
Travis – Go ahead and deposit into your account as if routine. Sole proprieter does not require a business account. Just be prepared just in case. If they say it is against the law then asked them to print that law out for your future reference. They are professionals in their business and should have that at their finger tips. (There is no law). If they do nothing ask to see the branch president to find a solution to your dilema. I would wish you good luck but you shouldn’t require luck but receive the service you deserve.
December 18th, 2009 at 1:28 am
there is a way to cash business checks if MADE OUT TO THE BUSINESS AND you have a personal account IN YOUR OWN NAME dont let the checks sit around you need a friend who owns HIS OWN SMALL BUSINESS WHO HAS A BUSINESS CHECKING ACCOUNT SIGN CHECK OVER TO HIM AND HE CAN DEPOSIT THE CHECK FOR YOU HIS BANK WILL CASH THE CHECK AND YOU WILL GET PAID DONT LISTEN TO THEM DUMP BITCHES WHO WORK AT BANKS THERE IS NO ANSWERS WITH THESE DUMP ASSES.ITS THE LAW MY ASS.
JOHN
January 22nd, 2010 at 12:14 pm
I initially had this same problem but can offer you a couple of options it will not hurt to try – should your problem today not already be resolved. Option (1): It is not expensive to alter the business name to include your entire first and last name followed by what will be your trade name or business name. Changes to your stationery and any existing papers for a “pending” business will cost little and will benefit your greatly later. Once the business is documented and exists and continually generating income/(profits) you can always change it to anything you like. Option (2): The existing checks you have in the business name – DO NOT ALTER – REPEAT – NEVER ALTER EXISTING CHECKS PAYABLE TO NAME – However, take one check to the ATM and do not even ENDORSE the check with any personal signature of any kind – Instead, on the reverse of the check, write only “FOR DEPOSIT ONLY TO ACCOUNT NO. XXXXXX” – attach your personal account deposit ticket completed reflecting the amount of the check and drop it in the ATM. It will not take long for you to know if it is accepted. LEAVE THE DEPOSITED CHECK AMOUNT in the account for an EXTENDED PERIOD than required and DO NOT WITHDRAW THE AMOUNT (THIS IS VERY IMPORTANT) to ensure that it is clear and posted. Then proceed with depositing one check per deposit weeks apart if you find the result favorable. THEN, future checks will be coming in with your name preceding the business name (per Option 1 above) and with these checks you should not have any problem proceeding to bulk deposits. DO NOT, REPEAT, DO NOT LEAVE THE CHECKS YOU ALREADY HAVE laying around “gathering dust” until them become STALE DATED CHECKS – and nothing will help-!!
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February 10th, 2010 at 3:44 pm
Looks like Lynn’s thought process has run a muck. As sole proprietor, I have and will continue depositing checks made out to my company into my personal checking account. I know – should have turned on spell check and grammar. Have a nice Day!!!
March 15th, 2010 at 3:30 pm
Looks like this post has been going on for a while. I’m bored so I’ll add my 2 cents. I work at a small local bank (not as a teller). From what I understand from asking our Teller Manager, Federal Law (might be the Uniform Commercial Code) requires that a check made payable to a business entity be deposited directly into an account belonging to that business entity. A sole-proprietorship isn’t technically a business account, it’s just a personal account (registered under the owner’s SSN) that has the words, “Doing Business As” or “DBA” followed by the business name. Being a personal account, it’s treated as normal. Depsoit it, cash it, sign it over to a third party, etc. If the business is a Partnership, Corporation, Non-Profit Org, etc, the check can only be depsoited. It can’t be signed over to a third party, can’t be cashed, and can’t be desposited into any account other than one owned by a business named in the payee line. I imagine this is to prevent shady usage of business funds by account signers, and to help the IRS have a paper trail for all of the funds moved out of the account. Money laundering and tax-evasion often attempt to use business accounts to hide the origin of the funds. If a signer on a business account wants to withdraw cash, they must write a check payable to their own name, or simply to “cash”. That way if the issue ever comes up, the bank can say, “Look, Mr. John Doe signed this check authorizing the business to give him money.” Then John Doe is responsible for it.
So to recap: If you have a check written to “Joe & Bob’s Lawn Care”, it can be cashed if the bank has an account including “Joe Smith, DBA ‘Joe & Bob’s Lawn Care’” or something close to that. If Joe & Bob’s Lawn Care is actually Joe & Bob’s Lawn Care, Inc (i.e., Joe and/or Bob provided documentation to the bank proving the government has incorporated that business itno it’s own entity) the check can only be deposited, nothign else. If Joe or Bob wants cash, they need to write a check.
July 6th, 2010 at 2:05 pm
Thanks Joey Z, that was a great detailed explanation. I”m looking for a solution for future business checks to my sole proprietorship, so i’ll just go in and change the acct name to add DBA “..”. Thanks again!
August 26th, 2010 at 2:49 pm
FYI for Bank of America customers, I just ran into exactly this issue (I have a sole proprietorship but in the past have always gotten checks with personal name rather than business name), and BoA told me by phone I would have no problem depositing to my personal account in a branch in person, as long as I brought a business card and/or other docs showing that I am doing business under the company name. She said they’d add the DBA to my personal account and I’d have no problems in the future.