Sole Proprietor Checking Account Features
by Barbara Hurst, BOL Guru Guru Bios
QUESTION: When opening a Sole Proprietor checking account I am used to having only the owner being able to cash checks
payable to the business. Other signers can sign checks, make deposits and conduct normal business but not cash checks payable to the business or less cash on deposits. I'm wondering where these limitations are written or if they are only bank practice.
ANSWER: Our bank used to consider sole proprietor accounts in the same light as single person corporations. The only really good reason to cash checks made payable to the business is tax evasion, and we refused to cooperate in that exercise. All checks payable to the proprietorship had to be deposited into the account. If the proprietor wanted cash back, all he or she had to do was write a check against the account - we provided immediate credit for the deposited item. Having said all that,I don't know how you would limit other signers on your contract not to transact all business, unless you have a special contract for your proprietorship checking accounts. I think the limitation you're talking about is only bank practice.
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