We have a customer wanting us to cash checks that are made out to his LLC (it is a catering business). One person said we have to treat it like a corporate account and all checks should be deposited. Another states it is ok.

Can anyone give me any quidance on this?

Can you - yes. Should you is another question.

What is your opinion on that....

My opinion (although I'm not Randy), is not to do it.

Could you give me some examples of why you wouldn't do it? Just trying to see what kind of liabilites we would be opening ourselves up to....

other than the obvious..

Aiding and abetting tax evasion for one.

LOL. Went right for the gut didn't you? Thanks for the info. Sometimes you just need someone to turn the light on for you...

If the LLC has creditors and you allow the single member to cash checks payable to the LLC you have assisted in defrauding those creditors. A trustee in bankruptcy for the LLC would have no difficulty extracting the funds from you.

At the more fundamental level, if Randy showed up with a check payable to Skittles you would not cash it because they are two different people. If the single member of the LLC shows up with a check payable to the LLC you would not cash it because they are also two different persons as far as the law is concerned.

I agree with the comments made by Randy and Ken. You should review your Deposit Disclosure Agreement. Attorneys who draft these agreements usually try to include some provision to address the authority of authorized signers to cash checks made payable to the entity (with an eye toward the entity holding the bank harmless from any liability if the bank decides to cash the check). On the other hand, if your disclosure agreement states that checks payable to the entity must be deposited, then you know you can't cash the check and can tell the customer that it has contractually agreed to have all checks payable to it deposited into its account.

I'm 100% against cashing checks made out to business entities. Read this prior thread.

The easiest way to look at it is this - how do you prove that they are who they say they are. Are you going to request business documents everytime someone cashes a check and then where do you file it to prove that you did the right thing? I am sure most of this is in the prior thread....