So, Mr. Soup went to all the trouble and expense of forming a corporation to insulate himself from business obligations and maybe for tax purposes, but he still thinks it's his personal cookie jar? If he had a qualified attorney advise him, that attorney would not be pleased with what he's doing. He's endangering that "corporate veil" that separates him from his business debts (or he might be embezzling, as Randy suggests). Or he could be trying to hide business income from -- are you ready? -- the IRS and state tax authorities.
The bank could be on the hook for some of those taxes.
The IRS might lay an administrative summons on the bank asking for copies of all the checks payable to the corporation that you've cashed for Mr. Soup. How's that going to go over in your records research department? Do you even have a way to do that efficiently? Maybe one of those hang-loose officers who've been going along with this over the years will pitch in to help, right?
It's a poor business practice -- plain and simple.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8