The only circumstance in which such activity is permissible is when the business is a sole proprietorship and the individual cashing the checks is the sole proprietor. That's because the business is not a separate legal person from the proprietor. But many banks don't allow checks payable to a business to be cashed or deposited to the owner's personal account even under those circumstances because
- A sole proprietor can direct his or her customers concerning the payee name on any check payments. Checks payable to the individual owner can readily be cashed by the owner; checks payable to the business name aren't so easily cashed.
- Having an exception to a general prohibition only complicated matters for tellers. Give them a simple yes or no policy and they are less likely to mess up.
- Tellers aren't in the best position to determine whether a given customer's business is a sole proprietorship or a separate legal entity, especially because business names don't always help separating one group from the other.
If you allow someone from a business owned by an entity to cash checks payable to the business and the business has creditors (or taxes) that aren't getting paid, once the creditors or tax agency learns that checks have been cashed, they will look at your bank's deep pockets. And the IRS or state tax folks could issue a subpoena for copies of all checks payable to the business that you've cashed. From experience, I know that that subpoena will be a major problem for you.