Who Can Cash A Business Check?
Posted on: 19 July 2021
Despite the rise in electronic payments, many businesses still use checks to pay for goods and services. It's relatively easy to deposit a business check into another business account, but cashing the check could be more difficult.
The possibility of fraud exists anytime cash is given in exchange for a business check. Financial institutions have strict requirements when it comes to determining who can cash a business check. These requirements are based on the type of business that the check is written out to.
Sole Proprietorship
A sole proprietorship is a type of business where the individual who owns the business and the business itself are viewed as one. A business check written out to a sole proprietorship can only be cashed by the person associated with the business.
It's important that you work with your financial institution to ensure both your legal name and the name of the business you are operating as a sole proprietor are listed on your checking account. This will give you the ability to cash business checks with ease.
Partnership
Partnerships are businesses that are owned by two or more individuals. This type of business structure can pose some challenges when it comes to cashing a business check.
Because there is no single person associated with a partnership, many financial institutions will not cash checks written to a partnership. You may find that you have to deposit the check, then withdraw the same amount from the business account in order to gain access to those funds.
Each financial institution has its own unique regulations, so work with your financial representative to determine how you can go about cashing a check written out to your partnership.
Corporation
Corporations are large business entities that typically employ many people. In order to cash a check written to a corporation, the individual attempting to cash the check must be listed as an authorized signatory on the corporation's account.
Financial institutions will also require that a government-issued ID be supplied, and some institutions may even fingerprint the person attempting to cash a business check written out to a corporation.
These measures are put in place to help prevent fraud and ensure that only authorized individuals can receive cash from checks meant to be issued to a corporation.
It's important that you understand the unique challenges and requirements you will face when cashing checks that are addressed to your business.
Work with your financial institution to streamline the check-cashing process so you can better manage your money over time.
For more information, reach out to a commercial check cashing service.
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