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Signer Depositing Checks into Business Account
by John Burnett, BOL Guru
Guru Bio
Question: We are having a debate in my office. On a corporate business account, is it acceptable for regular signers to deposit checks into the business account that are made out to the signer and not the business?
Answer: It is conceivable that the corporation is cashing checks for its employees or officers. If they aren't payroll checks from the corporation, there is the risk that the company could fit the MSB definition of a check casher. On the other hand, if the checks are for payments due to the corporation, the individual payees could endorse them over to the company and the company could then deposit them. All of that would be compliant with the UCC. However, the deposit of such checks to a corporate account would normally be the exception rather than the norm. The business, after all, has the ability to require that payments to the company be payable to the company. That said, it's been my experience that medical offices in particular seem to deposit a lot of checks payable to the individual physicians in the practice, even though the practice is a professional corporation or LLC, etc. That may well be the vestiges of times when doctors operated solo and the doctors are reluctant to push a change on their patients (or simply don't consider the UCC to be a critical concern). You should discuss the practice with the company's management to determine why third-party checks are being deposited.
First published on BankersOnline.com 5/05/08
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