Depositing a Business Check Into a Personal Bank Account

Published 12/15/07 (Modified 3/8/11)
By MoneyBlueBook

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?

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36 Responses to “Depositing a Business Check Into a Personal Bank Account” 

  1. Chief Family Officer says:

    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.

  2. Raymond says:

    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?

  3. Al Herring says:

    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?

  4. Raymond says:

    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.

  5. Sturf says:

    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!!!

  6. M. Horton says:

    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?

  7. toead says:

    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.

  8. Juliet says:

    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

  9. Al Herring says:

    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.

  10. Maya says:

    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).

  11. Edward says:

    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.

  12. Carlos says:

    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?

  13. Wendall says:

    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.

  14. Sherry says:

    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?

  15. Raymond says:

    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!

  16. toead says:

    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

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